Orca Energy has decided to exit Tanzania by selling its stake in the Songo Songo gas field, citing excessive risks and uncertainties. The company has entered a definitive agreement to sell its shares in the operator, PAE PanAfrican Energy Corporation, to a consortium of Taifa Group and Amber Energy Investment.

Reasons for Divestment

The decision follows a lengthy assessment of the challenges in Tanzania. Key factors include an ongoing, years-long dispute with the government over the failure to grant a licence extension, which is now in arbitration. There is significant uncertainty regarding the outcome and terms of any potential extension to the Songo Songo development licence and production sharing agreement (PSA), which is set to expire in October 2026. The board concluded that remaining in the country would require maintaining large cash reserves to address highly uncertain future commitments, including potential capital expenditures, development obligations, and contingent tax liabilities linked to ongoing arbitration and litigation.

Terms of the Sale

Orca will sell all its shares in PanAfrican Energy for a nominal cash price of US$10. The primary financial benefit for Orca is the elimination of future uncertain financial obligations, which it describes as significant. Upon deal closure, Amber Energy Investment will control 51% of PanAfrican Energy, with the Tanzanian Taifa Group holding 49%. The identity behind Amber is not disclosed.

Buyer Profile and Strategic Outlook

Taifa Group is a market leader in Tanzania's LPG sector. Orca's chairman expressed confidence that the buyer consortium possesses the operational presence, sector focus, and long-term commitment needed to advance the project. The chairman of Taifa Group described the transaction as pivotal for Tanzania, expressing hope it will encourage greater local participation in the extractive sector and the development of clear government frameworks to promote investment and strengthen local capacity.

Asset Background

The Songo Songo gas field, located on Tanzania's southern coast, began production in 2004 and was producing 100 million cubic feet per day of gas in 2024.