Mr. Jay Lyons reports

ORCA ENERGY GROUP ANNOUNCES DEFINITIVE AGREEMENT TO DIVEST TANZANIAN BUSINESS

Orca Energy Group Inc. has entered into a definitive share purchase agreement with Taifa Gas Tanzania Ltd. and Amber Energy Investment LLC-FZ, pursuant to which Orca will sell all of the outstanding shares of PAE PanAfrican Energy Corp., its wholly owned Mauritian holding subsidiary. Upon closing of the proposed transaction, Taifa will acquire 49 per cent of PAEM, and Amber will acquire 51 per cent.

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 continuing disputes and claims and the prospects of extending the Songo Songo development licence and production-sharing agreement. While discussions to extend the licence 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, are 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 work force 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 Corp., 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."

Details of the transaction

Orca will divest the Tanzanian business through the share purchase agreement, pursuant to which Orca will sell all of the outstanding shares of PAEM to Taifa (49 per cent) and Amber (51 per cent). The share purchase agreement provides for a nominal cash price of $10 (U.S.) for the PAEM shares, which is in addition to the other covenants, warranties, representations and obligations of the purchasers under the agreement and the strategic and commercial benefits that would accrue to Orca by exiting its Tanzanian business.

Under the share purchase agreement, Orca may cause its subsidiaries to repay any amounts owing to it prior to closing and, subject to applicable solvency requirements, to declare and pay dividends or other distributions prior to closing. Orca also retains the right to receive 50 per cent of certain extraordinary income realized between signing and closing. Following closing of the proposed transaction, Orca will cease to own PAEM and its wholly owned subsidiary PanAfrican Energy Tanzania Ltd., and will not retain any continuing ownership interest in the Tanzanian business, other than the specific preclosing economic entitlements provided for in the share purchase agreement. Accordingly, Orca will not have any further interest or obligation in any favourable or adverse outcomes associated with the extension of the Songo Songo development licence and the production-sharing agreement or arbitrations with the government of Tanzania.

PAEM, through its subsidiary PAET, holds Orca's entire interest in the Songo Songo gas field in Tanzania, including PAET's rights and obligations under the production-sharing agreement among PAET, the Tanzania Petroleum Development and the GoT, and related gas marketing, project agreements and other assets. The Tanzania assets represent 100 per cent of Orca's operating assets and business at this time. The board has determined that, based on the net asset position of PAEM and PAET in the near term, the Tanzanian assets have no material residual value given:

• All geological data and information are the property of the GoT.
• All fixed assets owned by PAET in connection with its operations become the property of the TPDC upon expiry or termination of the Songo Songo licence and the production-sharing agreement.
• The fair market value of PAET's movable assets is nominal.
• PAET's contingent tax and other Tanzanian liabilities are significant.

Closing of the proposed transaction is subject to customary and transaction-specific conditions, including approval or clearance from the Tanzania Fair Competition Commission and the Tanzanian minister responsible for petroleum affairs, approval by a simple majority of the votes cast by Orca shareholders at a special meeting of shareholders to be called for that purpose, acceptance by the TSX Venture Exchange of the proposed transaction and related matters requiring the exchange's approval or acceptance, and the release of Orca from remaining guarantees and related undertakings in favour of the International Finance Corp. in respect of obligations of PAEM and PAET. Any party may terminate the share purchase agreement for any reason.

Orca intends to seek shareholder approval of the proposed transaction at a special meeting of shareholders to be held on a date to be announced by subsequent news release. Orca will prepare and distribute a management information circular in connection with that meeting, which will contain additional information on the proposed transaction. Shaymar Ltd., Orca's major shareholder, has indicated to the board that it intends to vote its Orca shares in favour of the proposed transaction.

The board has not made any decisions on the timing and amount of further distributions to shareholders at this time.

No finder's fee is payable in connection with the proposed transaction. The purchasers are not non-arm's-length parties of the company or any of its insiders, associates or affiliates (as defined in the TSX Venture Exchange policies). The proposed transaction is not a related-party transaction within the meaning of Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions).

About Orca Energy Group Inc.

Orca Energy is an international public company engaged in natural gas development and supply in Tanzania through its subsidiary, PanAfrican Energy Tanzania. Orca trades on the TSX Venture Exchange under the trading symbols ORC.A and ORC.B.

We seek Safe Harbor.