Orca Energy Group has entered into a definitive Share Purchase Agreement with Taifa Gas Tanzania and Amber Energy Investment pursuant to which Orca will sell all of the outstanding shares of PAE PanAfrican Energy Corporation ('PAEM'), its wholly-owned Mauritian holding subsidiary. Upon closing of the Proposed Transaction, Taifa will acquire 49% of PAEM and Amber will acquire 51%.
Transaction Rationale
The Board of Directors decision to exit the Tanzanian business follows a lengthy and comprehensive assessment of the risks and challenges Orca faces regarding its Tanzanian operations and the future of its business, including ongoing disputes and claims and the prospects of extending the Songo Songo development license and production sharing agreement. While discussions to extend the license and production sharing contract continue, there is significant uncertainty on the outcome and terms of any such extension.
In that context, the Board determined that retaining the business would require Orca to maintain significant cash balances to address highly uncertain future commitments and contingent tax liabilities, including potentially material capital expenditures, development-related obligations and the costs of arbitration and other litigation, the timing and outcome of which are years away and uncertain. The Board therefore believes that preserving cash for shareholder distributions and divesting the Tanzanian business, together with its associated commitments and liabilities is in the best interests of the Company and its shareholders and consistent with Orca's long-stated objective of realizing value from its Tanzanian business in an orderly and strategic way.
The Board also believes that the Proposed Transaction moves the Songo Songo asset to its next phase under a buyer group anchored by Taifa, a market leader in the importation, storage and safe handling, distribution and export of liquified petroleum gas in Tanzania, and one whose established operating presence and sector focus are aligned with continued development of Tanzania's domestic gas sector.
David Ross, Chairman of Orca, said:
'The Songo Songo project has been a landmark undertaking for Tanzania and Orca. Having been involved with the project through its inception, negotiation, execution and development, I know the role it has played in opening Tanzania's natural gas era, supporting the development of gas-fired power generation and industrial supply, and building a highly skilled Tanzanian workforce and broader domestic capability in the sector. We are grateful for the opportunity to have participated in that journey with the Government of Tanzania, the Tanzania Petroleum Development Corporation, our employees, customers and other stakeholders.
We believe the time is now right for an orderly transition of the asset into its next phase. In Taifa and its partners, we see a buyer group with the operating presence, sector focus and long-term commitment to Tanzania that can take the project forward.'
Rostam Azizi, Chairman of the Taifa Group, said:
'This deal is a pivotal moment for Tanzania. We have worked diligently over several years to make this a reality, and we are proud that Taifa will now play a significant role in shaping the future of our nation's energy landscape.
Songo Songo creates real value for Tanzania – government revenues, domestic energy supply, employment, skills development, local procurement and long-term investment. Greater Tanzanian ownership builds on those benefits, deepens industrial capacity and keeps profit in country, creating wealth for everyone.
I hope this transaction encourages broader Tanzanian participation in the extractive sector, and that development continues, by the Government of clear, practical frameworks that promote investment, support viable projects and strengthen local capacity alongside long-term investment partners.'
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Source: Orca Energy
