Financial and Operating Highlights

----------------------------------------------------------------- --------

Three months ended Nine months ended

30-Sep 30-Sep 30-Sep 30-Sep

2009 2008 Change 2009 2008 Change

----------------------------------------------------------------- --------

Financial (US$

except where

otherwise stated)

Revenue 7,536 7,301 3% 17,480 17,411 0%

Profit/(loss)

before taxation 2,682 1,609 67% 4,083 (7,831) n/m

Operating netback

(US$/mcf) 2.17 2.79 (22%) 2.17 2.71 (20%)

Cash and cash

equivalents 9,703 11,178 (13%) 9,703 11,178 (13%)

Working capital 12,147 8,705 40% 12,147 8,705 40%

Shareholders'

equity 67,159 64,142 5% 67,159 64,142 5%

Profit/(loss) per

share - basic and

diluted (US$) 0.05 0.03 67% 0.06 (0.32) n/m

Funds from

operations before

working capital

changes 4,247 3,773 13% 8,228 7,783 6%

Funds per share

from operations

before working

capital changes

- basic (US$) 0.14 0.13 8% 0.28 0.26 8%

Funds per share

from operations

before working

capital changes

- diluted (US$) 0.14 0.12 17% 0.27 0.25 8%

Net cash flows from

operating

activities 1,959 363 440% 5,591 5,765 (3%)

Net cash flows per

share from

operating

activities - basic

(US$) 0.07 0.01 600% 0.19 0.19 0%

Net cash flows per

share from

operating

activities -

diluted (US$) 0.06 0.01 500% 0.18 0.19 (5%)

----------------------------------------------------------------- --------

Outstanding Shares

('000)

Class A shares 1,751 1,751 0% 1,751 1,751 0%

Class B shares 27,770 27,863 0% 27,770 27,863 0%

Options 2,797 2,847 (2%) 2,797 2,847 (2%)

----------------------------------------------------------------- --------

Operating

Additional Gas sold

(MMcf) - industrial 581 425 37% 1,554 1,083 43%

Additional Gas sold

(MMcf) - power 2,493 2,097 19% 5,756 5,036 14%

Average price per

mcf (US$) -

industrial 9.01 13.29 (32%) 7.96 12.67 (37%)

Average price per

mcf (US$) - power 2.41 2.41 0% 2.39 2.37 1%

----------------------------------------------------------------- --------

Highlights

- Increased profit before taxation by 67% to US$2.7 million for the

quarter (Q3 2008: US$1.6 million).

- Increased funds from operations before working capital changes by

13% to US$4.2 million for the quarter (Q3 2008: US$3.8 million).

- Increased working capital by 40% to US$12.1 million (Q3 2008:

US$8.7 million).

- Increased Q3 2009 sales of Additional Gas to Dar es Salaam

industrial customers by 37% to 581 MMcf or 6.3 MMcfd (Q3 2008:

425 MMcf or 4.6 MMcfd).

- Increased Q3 2009 sales of Additional Gas to the power sector by 19%

to 2,493 MMcf or 27.1 MMcfd (Q2 2008: 2,097 MMcf or 22.8 MMcfd).

- Designed a 140 MMcfd permanent expansion upgrade to the existing

infrastructure system that processes and transports the gas to Dar es

Salaam. It will be possible to expand the system to handle up to 200

MMcfd with the addition of a new onshore pipeline.

- Commenced work to identify a jack up rig for the drilling of Songo

Songo West in 2011.

- Re-activated the new venture team to identify two new high impact oil

opportunities in proven hydrocarbon basins in West Africa and the

Middle East. Shortly after the quarter end, the Company participated

in a joint bidding application for an exploration licence.

President & CEO's Letter to Shareholders

Orca Exploration reports a positive third quarter. This is the second consecutive quarter in which gas sales and cash flows from operations increased and G & A expenses decreased. Results were also up significantly over the same period in 2008. These encouraging results were achieved despite infrastructure limitations and current relatively low levels of gas fired generation in the country.

Sales of Additional Gas averaged 33.4 MMcfd (3.1 Bcf for the quarter), an increase of 22% on the volumes sold in Q3 2008. Funds flow from operations before working capital changes increased 13% to US$4.2 million compared with US$3.8 million in 2008 and this trend is expected to continue through 2010. The Company currently has working capital of US$12.1 million and cash of US$9.7 million.

Having successfully weathered the global financial storm of the past year, your Company is again ready to seek out new high potential exploration opportunities to compliment the steady growth of our cash flow generating business and exploration potential within Tanzania. The initial focus is on acquiring two oil exploration prospects with our principle areas of interest being West Africa and the Middle East where the Orca new ventures team has excellent technical experience. The Company's strategic criteria for these new opportunities is that they must be in proven hydrocarbon basins, have significant upside and can be drilled within 24 months. In accordance with this strategy the Company has participated in a joint bidding application in relation to an exploration opportunity. We look forward to updating our shareholders on this and other developments in the coming months.

Tanzanian reserves and exploration

The current Songo Songo gas wells continue to perform well and in line with expectations. Based on current simulations, the main Songo Songo field has established adequate reserves to meet an average gas demand of 160 MMcfd (including approximately 40 MMcfd of Protected Gas) with the addition of two new development wells. Highly sensitive downhole gauges installed in the second quarter were successfully pulled from each producing well just after the end of the third quarter and are currently being analyzed in advance of the year end reserves evaluation by McDaniel & Associates Consultants Ltd.

Orca is planning for the exploration drilling of Songo Songo West in 2011. The well will be drilled utilizing a jack up rig and the Company is discussing the possibility of sharing a rig with other operators in Tanzania and Mozambique to reduce mobilization costs. The Songo Songo West prospect has independently assessed mean unrisked resources of 552 Bcf.

Power sector

Tanzania continues to experience electricity blackouts caused by a shortage of generation capacity at a time of increasing demand for electricity. Currently the Tanzanian electricity utility, TANESCO, has 148 MWs of generation operating on Additional Gas.