Orca Extends Tanzanian Deal Deadline Again
Canadian independent Orca Exploration Group has "indefinitely" extended the timing for the closing of tranches 2 and 3 of its deal with Tanzania's Swala, it said July 17.
Delays by the Tanzania's populist government in giving its approval to the transaction, and a critical report by a parliamentary committee, are understood to underpin the decision to extend the deadline.
Orca-owned PanAfrican Energy Tanzania (PAET) operates the shallow water Songo Songo gas field, one of the longest producing fields in Tanzania in which the Canadian firm has reinvested profits. Orca has already extended the deadline at least once for Swala to achieve key stages in the up-to-US$130mn acquisition of a 40% interest in PAET.
"The decision was taken in consideration of the uncertainty in the timing of regulatory approval of Swala’s prospectus and listing application in Mauritius," the Toronto-listed firm said adding: "Orca's decision not to set a specific date to complete the second and third tranches does not terminate the Swala Investment, and Orca continues to support Swala’s efforts in closing its financing."
Orca did however say that it retains the right to terminate the extension at any time. Swala already acquired a 7.9% stake in PAET worth $17mn in December 2017 and still wants to scale up its stake to 40%. But the government in Dar-es-Salaam announced in late February that it was putting the deal on hold, pending further review.
Last year the government issued a swingeing demand for $190bn for 'unpaid back-taxes' against Canadian Barrick Gold-run mining subsidiary Acacia, prompting Shell CEO Ben van Beurden to say that Tanzania's "fiscal environment needs to be conducive." Shell and a rival offshore gas resource holder Equinor have hesitated over investments in potential LNG projects there. That contrasts with Mozambique where offshore developers are now speeding towards final investment decisions, for LNG project start-ups in 2022-23. Barrick later settled with the government but denies the allegations against it.
Orca said last year it was looking to boost Songo Songo's production capacity to 180mn ft3/d, from nameplate of 155mn ft3/d but restrictions on capacity meant it only produced 37.4mn ft³/d (Songo Songo is its sole producing interest) in 1Q 2018. It lost US$4.6mn that quarter, thanks to ongoing loan repayments to the World Bank and a one-off fee that the bank was entitled to charge on the 7.9% asset sale to Swala.