Africa Oil 2015 first quarter financial and operating results and notice of AGM
Friday, May 15, 2015
Africa Oil Corp. (“Africa Oil” or the “Company”) (TSX:AOI)(OMX:AOI) is pleased to announce its financial and operating results for the three months ended March 31, 2015.

During the first quarter of 2015, seven wells finalized drilling across the South Lokichar Basin and the North Turkana basin in Block 10BA, Kenya. In addition, the Company is continuing its extensive exploration and appraisal program in the South Lokichar Basin in Blocks 10BB and 13T. The extensive appraisal activities in Kenya, including the planned Extended Well Test (“EWT”), along with the development concept studies completed in 2014, will enable a draft Field Development Plan (FDP) to be prepared by end 2015. One drilling rig is currently active in the South Lokichar Basin.

The current ambition of the joint venture partnership is to position the South Lokichar Basin development, and an export pipeline, for possible sanction by the end of 2016, subject to receipt of all necessary permits and approvals. Good progress continues to be made towards development of these oil resources and as part of the ongoing collaboration between the Governments of Kenya and Uganda on the oil export pipeline for the Lake Albert and South Lokichar resources, a joint technical adviser was appointed in late 2014. The independent technical studies being undertaken by the adviser, with extensive support from the Kenya and Uganda upstream partners, are progressing rapidly and should assist in the finalization of the pipeline route.

At March 31, 2015, the Company had cash of $187.4 million and working capital of $53.2 million. During February 2015, the Company completed a brokered private placement issuing an aggregate of 57,020,270 shares at a price of SEK 18.50 per share for gross proceeds of SEK 1,055 million or $125.0 million. A cash commission was paid in the amount of $4.5 million. Subsequent to the first quarter of 2015, the Company entered into an investment agreement relating to a non-brokered private placement wherein 53,623,377 shares will be issued at a price of CAD $2.31 for gross proceeds of CAD $121.6 million (US $100 million). The Company expects the closing to occur by end of May 2015.

Operating expense decreased $10.5 million for the three months ended March 31, 2015 compared to the same period in the prior year. The majority of the decrease can be attributed to a reduction in stock -based compensation and a gain on the loss of control by the Company in regards to its investment in Africa Energy. The decrease in stock-based compensation expense can be mainly attributed to a significant reduction in the fair value of each option granted in the first quarter of 2015 compared to the first quarter of 2014. During the three months ended March 31, 2015, 5,194,000 stock options of AOC were issued to directors, officers and employees at an average exercise price of CAD $2.45 per option versus 5,958,500 stock options of AOC issued at an average price of CAD $8.44 per option during the three months ended March 31, 2014. The Company’s investment in Africa Energy changed from a position of control to a position of significant influence during the first quarter of 2015, which requires the Company’s investment in Africa Energy to be recorded as an equity investment. The accounting for the equity investment resulted in the recognition of a gain for accounting purposes of $4.2 million. In the first quarter of 2014, the Company made a $0.8 million donation to the Lundin Foundation versus nil in the first quarter of 2015.

Intangible exploration assets increased during the quarter by $77.3 million as a result of the Company continuing to invest in its oil and gas properties in East Africa. The Company continues to finance its activities primarily through equity and completed a private placement during the quarter in which 57,020,270 shares were issued. The Company is debt free.

Investing activities related to the Company’s oil and gas activities in East Africa accounted for majority of the cash consumption of the Company. Cash inflows during the quarter are primarily related to the private placement in which 57,020,270 shares were issued for gross proceeds of $125 million.

The Company incurred $79.1 million of intangible exploration expenditures in Kenya for the three months ended March 31, 2015. The majority of drilling expenditures related to the Company’s portion of drilling costs regarding an exploration well at Engomo (Block 10BA) and an extensive appraisal program in the South Lokichar Basin. The majority of development study spend relates to progressing towards project sanction for the South Lokichar Basin. A $1.8 million reduction of intangible exploration expenditures in Ethiopia for the three months ended March 31, 2015 was the result of adjustments made to previously accrued drilling expenditures. PSA and G&A related costs include personnel and office running costs, local community development expenditures, land surface fees, annual rental fees and other PSA fees.


In light of the current and forecast short term oil price environment, the Company has worked closely with Tullow to focus the 2015 work program and budget on advancing the discovered basin development in Blocks 10BB and 13T (Kenya) by undertaking activities aimed at increasing resource certainty and progressing development studies with the intent of submitting a FDP around the end of 2015. The 2015 work program will include multiple appraisal and exploration wells in the discovered basin, EWT’s in the

Amosing and Ngamia fields and reservoir and engineering studies (including extensive core analysis). In addition, the Africa Oil – Tullow joint venture will continue to work closely with the Government of Kenya and the Uganda Upstream partners to advance the regional oil export pipeline.

Outside of the South Lokichar Basin, the Africa Oil – Tullow joint venture new basin opening exploration program potentially includes the Cheptuket well in Block 12A (Kenya), a PSC commitment well that needs to be drilled before September 2016. Outside of the Africa Oil – Tullow joint venture blocks, the 2015 work program is focused on the Rift Basin Area Block in Ethiopia where a 2D seismic program of a minimum 400 kilometer land and lake survey has commenced acquisition.

The record date for the Annual General and Special Meeting is April 24, 2015. The full Meeting notice and accompanying management information circular are available under the Company’s profile on SEDAR at

Africa Oil Corp. is a Canadian oil and gas company with assets in Kenya and Ethiopia as well as Puntland (Somalia) through its 41% equity investment in Africa Energy Corp. The Company is listed on the Toronto Stock Exchange and on Nasdaq Stockholm under the symbol “AOI”.

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