NEWS RELEASE
14 April, 2015

Orca Exploration to restate 2013 Annual and 2014 Interim Financial Statements and provide against remaining net TANESCO long-term receivable for 2014

TSX-V: ORC.A, ORC.B TORTOLA, British Virgin Islands 14 April 2015: TORTOLA, British Virgin Islands 14 April 2015: Orca Exploration Group Inc. (“Orca” or the “Company”) today announced that it will restate its 2013 audited consolidated financial statements and 2014 unaudited consolidated interim financial statements for the three, six and nine month periods, due principally to computational errors involving Tanzania income tax from 2005 and through to the third quarter of 2014. The errors were discovered in the course of preparing the Company’s consolidated financial statements for the year ended 31 December 2014. As the Songo Songo Production Sharing Agreement (“PSA”) keeps the Company whole against any income tax paid in Tanzania, there is no effect on the Company’s day-to-day operations as a result of the restatement. On the recommendation of management and the Audit Committee, the Board of Directors made the decision to (i) restate the results for the year ended 31 December 2013 in conjunction with the upcoming release of the consolidated financial statements for the year ended 31 December 2014 which it expects to file on or before 30 April 2015, and (ii) restate the condensed consolidated interim financial statements for the three, six, and nine month periods ended 31 March, 30 June and 30 September 2014 in conjunction with the filing of condensed consolidated interim financial statements for the corresponding periods in 2015 which it expects to file on or before the deadlines for such filings. All amounts stated in this news release are in US dollars (US$).

The PSA, which governs substantially all of the Company’s business in Tanzania, provides a mechanism to keep the Company whole for income taxes paid in Tanzania. Pursuant to the PSA, the Company is reimbursed for all income tax payable on income derived from Petroleum Operations by way of an “adjustment factor”, under which the Company is allocated additional Profit Gas of a value equal to the taxes paid/payable, thus reducing the allocation to the Company’s partner in the field, the Tanzania Petroleum Development Corporation (“TPDC”). The additional Profit Gas is recovered from TPDC’s share of revenues as the tax is paid. Income tax paid in respect of the previous year is added to taxable income and included in the calculation of income tax for the current year. This adjustment factor is determined by grossing up tax payable on the current year income only, prior to inclusion of previous year’s taxes paid, to that level of revenue necessary for the Company to remain neutral in the payment of income tax. The computations in question incorrectly included previous year’s taxes paid in the gross up calculation, the net effect of which was to overstate reported revenue, deferred tax expense, net profit/(loss) after tax and funds flow from operating activities, as well as tax receivable and deferred income taxes payable. In addition, in Tanzania taxpayers are required to pay at least 80% of the estimated year’s taxes in four quarterly installments during the year, with a final tax payment for the balance owing made the following year after financial statements are completed. The calculation of taxable income incorrectly only included this final payment, rather than the sum of all of the five payments made for the tax year. The combined effect of these errors was an understatement of taxable income and a cumulative underpayment of tax from 2005 to 31 December 2013 of $3.5 million, which the Company has reported and intends to pay forthwith. The Tanzania Revenue Authority has the right to assess penalties and interest on overdue taxes, which if assessed could be up to $1.6 million and would not be recoverable under the PSA. An estimate of these penalties and interest has been included in the summary of restatement reflected in the periods for which they relate.

In addition, the Company will be correcting reported finance income and finance costs previously recognized on overdue trade receivables for 2013 and 2014. Finance income and finance costs in the amount of $2.6 million respectively for the year ended 31 December 2013 and $1.7 million respectively for the nine months ended 30 September 2014 will be eliminated. As the finance income was fully provided for as finance cost, there is no impact on net profit/(loss) after tax, accounts receivable or cash flows from operating activities for 2013 or the nine months ended 30 September 2014. The Company determined that the recognition of finance income, reflecting interest on amounts overdue from TANESCO, coupled with a full provision of the same amount was in error, as collection was not probable. The cumulative impact of the income tax errors, including applicable penalties and interest, as at January 1, 2013 results in a decrease in accumulated income from $34.1 million to $31.5 million, a decrease in tax receivable (recoverable from TPDC) from $14.7 million to $12.2 million, an increase in tax payable from $6.3 million to $7.8 million and a decrease in deferred income taxes payable from $20.4 million to $19.0 million.

The cumulative impact of the combined income tax and finance income errors, including applicable penalties and interest, on the 2013 consolidated financial statements results in a decrease of revenue from $54.7 million to $53.5 million, an increase in general and administrative expenses from $15.4 million to $16.2 million, an increase in income tax expense from $1.7 million to $2.2 million, an increase in net loss after tax from $5.5 million to $7.9 million, a decrease in tax receivable (recoverable from TPDC) from $14.6 million to $10.9 million, an increase in the tax payable from $2.0 million to $7.0 million, a decrease in deferred income taxes payable from $12.1 million to $8.3 million, and a decrease in accumulated income from $28.6 million to $23.7 million. In addition, the errors have no impact on cash flows from operating activities but do result in a decrease in funds flow from operating activities from $39.8 million to $32.4 million and funds flow from operating activities per share from $1.15 to $0.93 basic and diluted respectively.

The cumulative impact of the combined income tax and finance income errors, including applicable penalties and interest, as at 30 September 2014 and for the nine months then ended results in a decrease of revenue from $47.6 million to $47.0 million, an increase in general and administrative expense from $14.6 million to $14.7 million, an increase in income tax expense from $7.9 million to $8.2 million, a decrease in net profit after tax from $8.5 million to $7.4 million, a decrease in tax receivable (recoverable from TPDC) from $16.0 million to $11.6 million, an increase in tax payable (including penalties and interest) from $nil to $7.7 million, a decrease in deferred income taxes payable from $12.3 million to $6.3 million, and a decrease in accumulated income from $37.1 million to $31.1 million. In addition, the errors have no impact on cash flows from operating activities but do result in a decrease in funds flow from operating activities from $28.7 million to $23.6 million and funds flow from operating activities per share from $0.82 to $0.68 basic and diluted respectively.

release summary Management and the Audit Committee have concluded that the Company’s consolidated financial statements as at and for the year ended 31 December 2013 and as at and for the three and nine month periods ended 30 September 2014 as previously published can still be relied upon when read together with this news release. The financial information set out in the table above represents management’s best estimate of the effects of the restatement, however, the amounts have yet to be audited. The Company expects to release the restated consolidated financial statements for the year ended 31 December 2013 in connection with the filing of the consolidated financial statements for the year ended 31 December 2014, which it expects to do on or before 30 April 2015. The Company will also restate its 2014 condensed consolidated interim financial statements in connection with the filing of the corresponding 2015 interim periods ended March 31, June 30 and September 30, 2015 which it expects to do on or before the deadline for such filings. Management’s Discussion and Analysis (“MD&A”) will also be prepared reflecting these changes.

TANESCO net long-term receivable

Unrelated to the 2013 and 2014 restatement items noted above, in connection with the preparation of its 2014 consolidated financial statements, the Company has reassessed the net long-term receivable from TANESCO in light of recent events and circumstances and due to the increased uncertainty associated with the timing and amount of ultimate collection, the Company intends to make a provision against the entire remaining net long-term receivable outstanding which was $27.9 million as at 31 December 2014. Amounts collected with respect to the long-term receivable in the future will be reflected in earnings when payment is received. Notwithstanding this provision, the Company and TANESCO continue to operate in accordance with the terms of the Portfolio Gas Supply Agreement whereby natural gas continues to be delivered by the Company and TANESCO payments remain current on current deliveries. This provision against the TANESCO net long-term receivable will not prejudice the Company’s rights to payment in full or its ability to pursue collection in accordance with the terms of the agreement with TANESCO. In conjunction with the filing of consolidated financial statements for the year ended 31 December 2014 and related MD&A, the Company will also file a certification related to its annual filings by each of its Chief Executive Officer and its Chief Financial Officer, as required by National Instrument 52-109 for the year ended 31 December 2014.

Non-GAAP measures

The Company discloses in this news release financial measures that do not have any standardized meaning prescribed under GAAP. These financial measures include “funds flow from operating activities”, which is defined for these purposes as cash flows from operating activities (as defined by GAAP) before working capital changes. Funds flow from operating activities per share basic and diluted is calculated on the basis of the funds flow from operating activities divided by the weighted average number of shares, consistent with the calculation of net income (loss) per share. These are key measures as they demonstrate the Company’s ability to generate cash necessary to achieve growth through capital investments. Investors should be cautioned that these measures should not be construed as an alternative to other measures of financial performance as determined in accordance with GAAP. Orca's method of calculating these measures may differ from other companies, and accordingly, they may not be comparable to similar measures used by other companies. Funds flow from operating activities reconciled to cash flows from operating activities is as follows: funds flow Orca Exploration Group Inc. Orca Exploration Group Inc. is an international public company engaged in natural gas exploration, development and supply in Tanzania through the wholly-owned subsidiary PanAfrican Energy Tanzania Limited (“PanAfrican Energy”), as well as oil and gas appraisal in Italy. Orca trades on the TSX Venture Exchange under the trading symbols ORC.A and ORC.B. PanAfrican Energy is party to the PSA with respect to the Songo Songo Block in Tanzania with TPDC and the Government of Tanzania, and is party to a gas sales agreement, the Portfolio Gas Supply Agreement, respecting Songo Songo natural gas production with TANESCO and TPDC.

Financial reports and other corporate information concerning Orca may be found on the Company’s website at www.orcaexploration.com or on the Company's profile on SEDAR at www.sedar.com. For further information please contact:

For further information please contact:
W. David Lyons, Chairman and CEO
+44-7717-100-200
wdlyons@orcaexploration.com
Robert S. Wynne,
Chief Financial Officer and Director
+1 (403) 399-8046
rswynne@orcaexploration.com

Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward Looking Statements
This press release contains forward-looking statements. More particularly, this press release contains statements concerning, but not limited to, timing of S-11 development well being tied in and expectations of management regarding production from the well; infrastructure constraints in respect of the SS-11 development well; estimated cost for the S-11 development well; expected drilling results from the S-11 development well; the Company's plans with respect to the SS-12 development well; planned infrastructure expansion in Tanzania; the Company's plans with respect to the S-9 well and future testing of other wells; anticipated increase to plant capacity as a result of the Songo Songo plant expansion; the reserve potential of Songo Songo West; discussions with TPDC and the GNT regarding the PSA and the Company's plans to defend its position, including the use of dispute mechanisms; discussions regarding disputed costs in respect of the PSA; timing of drilling of wells in Italy and the Company's anticipated earnings from such wells; the Company's plans for the Longastrino block; the status of the Elsa appraisal opportunity; terms of decree issued by the Italian Government and anticipated implications on the Elsa appraisal opportunity and expected timing of drilling; terms of loan agreement with Stanbic Bank Tanzania Limited; and the Company's strategic plans. Although management believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, operational, competitive, political and social uncertainties and contingencies. Many factors could cause Orca's actual results to differ materially from those expressed or implied in any forward-looking statements made by Orca.

These forward-looking statements involve substantial known and unknown risks and uncertainties, certain of which are beyond Orca's control, including, but not limited to, the impact of general economic conditions in the areas in which Orca operates; civil unrest; industry conditions; changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced; increased competition; the lack of availability of qualified personnel or management; fluctuations in commodity prices; foreign exchange or interest rates; stock market volatility; competition for, among other things, capital, drilling equipment and skilled personnel;  failure to obtain required equipment for drilling; delays in drilling plans; failure to obtain expected results from drilling of wells; effect of changes to the PSA on the Company; changes in laws; imprecision in reserve estimates; the production and growth potential of the Company's assets; obtaining required approvals of regulatory authorities; risks associated with negotiating with foreign governments; ability to access sufficient capital; and risk that the Company will not be able to fulfill its obligations. In addition there are risks and uncertainties associated with oil and gas operations, therefore Orca's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking estimates and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking estimates will transpire or occur, or if any of them do so, what benefits that Orca will derive therefrom.

Such forward-looking statements are based on certain assumptions made by Orca in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors Orca believes are appropriate in the circumstances, including, but are not limited to, the ability of Orca to add production at a consistent rate; infrastructure capacity; commodity prices will not deteriorate significantly; the ability of Orca to obtain equipment in a timely manner to carry out exploration, development and exploitation activities; future capital expenditures; availability of skilled labour; timing and amount of capital expenditures; uninterrupted access to infrastructure; the impact of increasing competition; conditions in general economic and financial markets; effects of regulation by governmental agencies; that the Company will have sufficient cash flow, debt or equity sources or other financial resources required to fund its capital and operating expenditures and requirements as needed; current or, where applicable, proposed industry conditions, laws and regulations will continue in effect or as anticipated as described herein; and other matters.

The forward-looking statements contained in this press release are made as of the date hereof and Orca undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

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