Africa Oil Corp.

Africa Oil Corp.

November 29, 2010 08:30 ET

Africa Oil to Acquire Centric Energy Adding Highly Prospective Blocks to Its Existing Africa Portfolio

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 29, 2010) - Africa Oil Corp. (TSX VENTURE:AOI)(OMX:AOI) ("Africa Oil" or "the Company") is pleased to announce that it has signed a definitive agreement to acquire all of the issued and outstanding common shares of Centric Energy Corp. (TSX VENTURE:CTE) ("Centric"), a publicly traded oil and gas company listed on the TSX Venture Exchange. Pursuant to the agreement, Africa Oil will acquire, by way of a plan of arrangement, all of the issued and outstanding shares of Centric in consideration for 0.3077 Africa Oil shares (and $0.0001) for each common share of Centric.

Centric's primary asset is Block 10BA in Kenya which is strategically located within the oil rich East African Tertiary Rift System between Africa Oil's Block 10BB and its South Omo Block, where Africa Oil is currently operating (see attached map). This trend hosts the recent discoveries in the Albert Graben in Uganda where up to 2 billion barrels of oil have been discovered by Tullow. In addition, Centric also has a carried 25% interest in Block 7 and Block 11, both located in the Republic of Mali and operated by Heritage Oil Corporation. 

About Block 10BA

Block 10BA is highly under-explored, with only sparse seismic data acquired in 1991. It covers 16,205 square kilometers and is directly north of the Loperot oil discovery drilled by Shell Exploration (Kenya) in 1992, within Africa Oil's Block 10BB. The planned acquisition of new seismic data onshore and offshore is expected to considerably improve the understanding of the hydrocarbon potential of this Block.

Centric and Tullow have executed a definitive farm-in and joint operating agreement whereby Tullow will earn a 50% participating interest and operatorship in Block 10BA by funding 80% of the first $30 million of expenditures under the Block 10BA Production Sharing Agreement and reimbursing approximately $750,000 in past costs. The closing of the farm-in is conditional upon satisfactory resolution of a Kenyan court proceeding concerning a judicial review application filed against the Kenyan Ministry of Energy expected on December 16, 2010.

An independent assessment of the prospective resources of Block 10BA has been completed by Gustavson & Associates under a Resources Evaluation Report prepared in accordance with National Instrument 51-101 – Standards for Disclosure for Oil and Gas Activities*. This report calculates prospective resources (defined below) for 25 Centric leads and prospects in the Block. The total of the prospective resources ranges from a low case (P90) of 955 million barrels of oil up to a high case (P10) of 4,379 million barrels of oil, with a best estimate (P50) of 2,188 million barrels of oil.

About Blocks 7 and 11, Republic of Mali

The Company holds a 25% interest in two exploration licenses in Mali where its costs are fully carried by Heritage Oil Corporation under the terms of a farmout agreement through the primary seismic program and the first exploration well. The area of the licenses totals approximately 73,000 square kilometers and is part of the Cretaceous-age Central Africa Rift Trend which contains significant oil accumulations in Chad, Sudan and Niger. The basin has been sparsely explored with only 600 kilometers of older vintage seismic data, the most recent shot in 1974, and one exploration well, drilled in 1976. A nearby water well had significant shows of oil and gas demonstrating an active petroleum system. The acquisition of at least 1000 kilometers of new seismic data and the drilling of one exploration well is planned for 2011.

Keith Hill, Africa Oil's President and Chief Executive Officer, commented, "The acquisition of Centric allows Africa Oil to consolidate its interests in the Tertiary-age East African rift basin in Kenya and Ethiopia. We will also be adding an interesting new play area in Mali which, although frontier, has many of the characteristics of the rift basins we are exploring in East Africa. The partnership agreements with Tullow and Heritage allow the Company to explore these basins with experienced rift basin operators at significantly reduced costs. Combining the Africa Oil and Centric portfolio of oil and gas interests provides our shareholders with multiple identified prospects and leads, geographically and geologically diversified across four African countries and five under-explored petroleum systems."

A meeting of Centric shareholders to approve the transaction is planned to be held in February 2011 and the transaction is expected to close by no later than March 15, 2011. Lockup agreements have been signed with 42.78% of the Centric shareholders including the Board of Directors. The transaction is subject to certain conditions precedent including completion, by each of Africa Oil and Centric, of their previously announced farmout agreements with Tullow, TSX Venture Exchange, Kenyan and Mali Government, and court approvals and any requisite third-party consents and right of first refusal waivers.

*The January 1, 2010, report entitled "Resource Evaluation Report, Centric Energy Corporation, Kenya Block 10BA" is filed on SEDAR under the Company's profile. Prospective resources are defined as "those quantities of oil and gas estimated on a given date to be potentially recoverable from undiscovered accumulations. They are technically viable and economic to recover." Note that the estimated prospective resources could be oil or gas and that the estimate does not include consideration for the risk of failure in exploring for these resources. There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.

Africa Oil Corp. is a Canadian oil and gas company with assets in Kenya, Ethiopia and Puntland (Somalia). Africa Oil's East African holdings are in what is considered a truly world-class exploration play fairway. The Company's total gross land package in this prolific region is approaching 250,000 square kilometers - an area roughly the size of Great Britain. The East African Rift Basin system is one of the last of the great rift basins to be explored. New discoveries have been announced on all sides of Africa Oil's virtually unexplored land position including the major Tullow Albert Graben oil discovery in neighbouring Uganda. Similar to the Albert Graben play model, Africa Oil's concessions have older wells, a legacy database, and host numerous oil seeps indicating a proven petroleum system. Good quality existing seismic show robust leads and prospects throughout Africa Oil's project areas. The Company is listed on the TSX Venture Exchange and on First North at NASDAQ OMX-Stockholm under the symbol "AOI".


Keith Hill, President and CEO

Africa Oil's Certified Advisor on First North is E. Öhman J:or Fondkommission AB.

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