Africa Oil Corp.
TSX VENTURE : AOI
OMX : AOI

Africa Oil Corp.

February 22, 2011 08:30 ET

Africa Oil Exploration Program Update

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 22, 2011) - Africa Oil Corp. (TSX VENTURE:AOI)(OMX:AOI) ("Africa Oil" or "the Company") is pleased to provide an update on the Company's planned 2011 exploration activities and capital budget.

It is anticipated that 2011 will be a pivotal year in the Company's progression with three exploration wells planned to spud during the year, over 4,000km of two dimensional seismic ("2D seismic") to be acquired and an extensive Full Tensor Gravity ("FTG") program planned to aid in assessing the overall prospectivity of the Tertiary and Cretaceous Rifts. The Company's Board of Directors has approved a $43 million (net) capital budget ($163 million gross exploration expenditures). Given the success of the Company's recent farmout efforts and financings, the Company has adequate working capital to fund its entire 2011 work program and anticipates significant excess working capital entering 2012.

Tertiary Rift (South Omo (Ethiopia), Blocks 10BB, 10BA, 12A, 13T (Kenya))

In addition to ongoing continuous geological and geophysical field work and geochemical studies, an aggressive exploration campaign will continue through 2011 focused on three main activities: FTG, 2D seismic and exploratory drilling.

To date, farmout transactions have closed which provide Tullow Oil plc. ("Tullow") with a 50% working interest and operatorship of the South Omo Block and Block 10BB in the Tertiary rift. Africa Oil is expected to complete the acquisition of Centric Energy Corp. before the end of February, 2011, acquiring a 50% interest in Block 10BA, which is also operated by Tullow. The farmout transaction on 12A and 13T, providing Tullow with a 50% working interest and operatorship of these blocks is expected to also close before the end of February, 2011.

FTG surveys will be undertaken on all Tertiary rift blocks, utilizing two FTG crews, to assess the overall prospectivity of the Tertiary rift play. FTG is an airborne, high resolution gravity mapping tool which has been successfully utilized in the Lake Albert area of Uganda by Tullow, where gross discovered resources are over 2 billion barrels of oil. This technology will be utilized to provide basement image faulting, reduce uncertainty surrounding the structural configuration of the Blocks and to delineate structures to narrow the focus for subsequent 2D seismic surveys.

2D seismic operations are planned to commence during Q2 2011 and continue through the year on the Tertiary rift blocks. Details of the 2D seismic programs are as follows:

Block Planned Program Commencing
Gross km Net km
South Omo 1,000 500 Q2 2011
10BA 1,300 650 Q3 2011
12A 500 250 Q4 2011
13T 500 250 Q4 2011

Exploratory drilling is expected to commence in Block 10BB during Q3 2011 with one well planned for the year. Current activities are focused on interpreting the 610km of 2D seismic data which was acquired during 2010, integrating this data with the legacy seismic data on the Block and finalizing the prospect and lead inventory. Environmental impact assessments have been completed over four potential drill sites and Government permits have been issued. The prospect and lead inventory which will be generated during 2011 will be carried forward into 2012 where exploratory drilling operations are expected to continue.

The Company signed a definitive agreement with the Government of Ethiopia to jointly study in conjunction with the Ministry of Mines the 42,519 sq km Rift Valley Block in December 2010. The Block is located north of the Company's South Omo Block and encompasses the remainder of the Tertiary age East Africa Rift Trend in Ethiopia. The Company initiated a block-wide airborne high resolution gravity and magnetic survey on February 12, 2011. In addition, the Company has utilized a specialized satellite imagery technique to observe natural oil seepage on several of the rift valley lakes within the new block. A team will be mobilized in early March to ground truth and sample the oil slicks. AOC holds exclusive rights to negotiate a production sharing agreement for all or part of the Rift Valley block after the 18 months expire. The Company holds 100% interest in the Rift Valley Block.

Jurassic Rift (Dharoor and Nugaal Blocks (Puntland, Somalia))

Exploration activities in Puntland are focused on drilling the first exploration well in Somalia in over 20 years. The Company plans to spud the first well in the Dharoor Block during Q3 2011. Activities are currently focused on the identification and contracting of drilling and drilling support contractors willing to operate in Puntland on commercially acceptable terms. A second well in the Dharoor Block is planned to commence following completion of the first exploration well.

Cretaceous Rift (Blocks 10A and 9 (Kenya))

The farmout transaction, providing Tullow with a 50% interest and operatorship of Block 10A, closed in January, 2011. Block 10A exploration activities are focused on the completion and interpretation of the 794km 2D seismic survey (320km net), which commenced during Q4 2010, finalization of the prospect inventory which will lead to the drilling of one exploration well on the Block, scheduled to spud in Q4 2011.

In Block 9, operated by the Company, exploration activities are focused on a planned 750km (gross) (500km net) 2D seismic survey focused on the oil prone Kaisut sub-basin. In addition, the Company plans to investigate gas commercialization alternatives in East Africa, in anticipation of performing extended well tests on the potentially significant gas discovery that resulted from drilling the Bogal 1-1 well in 2010. As of December 31, 2010, the Company has assumed operatorship of Block 9 and increased its working interest to 66.67%.

Permian-Triassic (Ogaden Blocks 2&6 7&8 (Ethiopia))

The Company operates two production sharing agreements, Blocks 2/6 and 7/8 in the Ogaden Basin of southeastern Ethiopia. Seismic operations were completed without any security or significant safety issues in December of 2010. The new data has been integrated with existing seismic to generate a series of new prospect maps. The Company continues to focus efforts on the large El Kuran prospect in the Blocks 7/8 license. The feature was de-risked in 1972 with two wells drilled by Tenneco; both wells recovered small amounts of light oil from Jurassic reservoirs near 5000 feet. The Company plans to drill one well on the El Kuran prospect in late 2011 or early 2012 in an attempt to establish commercial oil reserves. The Company holds 55% interest in both Blocks 2/6 and 7/8 licenses.

Cretaceous – Central Africa Rift Trend (Blocks 7 and 11 (Mali))

Africa Oil is expected to complete the acquisition of Centric Energy Corp. before the end of February, 2011, obtaining a 25% interest in Block 7 and 11, which are operated by Heritage Oil Corporation ("Heritage"). Heritage is currently in advanced discussions with 2D seismic subcontractors with the goal of acquiring reconnaissance seismic during 2011. The Company's share of seismic expenditures and the drilling of one exploration well will be carried by Heritage.

Africa Oil President and CEO Keith Hill commented, "The next 18 months will be pivotal for Africa Oil Corp. as we evaluate our large inventory of high potential prospects in the East Africa Rift trend. The Company is well financed, has a well diversified exploration portfolio and reputable joint venture partners. We are looking forward to the commencement of continuous drilling in 2011."

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 greater than 350,000 square kilometers. 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".

FORWARD-LOOKING STATEMENTS

Certain statements made and information contained herein constitute "forward-looking information" (within the meaning of applicable Canadian securities legislation). Such statements and information (together, "forward looking statements") relate to future events or the Company's future performance, business prospects or opportunities. Forward-looking statements include, but are not limited to, statements with respect to estimates of reserves and or resources, future production levels, future capital expenditures and their allocation to exploration and development activities, future drilling and other exploration and development activities, ultimate recovery of reserves or resources and dates by which certain areas will be explored, developed or reach expected operating capacity, that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.

All statements other than statements of historical fact may be forward-looking statements. Statements concerning proven and probable reserves and resource estimates may also be deemed to constitute forward-looking statements and reflect conclusions that are based on certain assumptions that the reserves and resources can be economically exploited. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "seek", "anticipate", "plan", "continue", "estimate", "expect, "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions) are not statements of historical fact and may be "forward-looking statements". Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. The Company does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by applicable laws. These forward-looking statements involve risks and uncertainties relating to, among other things, changes in oil prices, results of exploration and development activities, uninsured risks, regulatory changes, defects in title, availability of materials and equipment, timeliness of government or other regulatory approvals, actual performance of facilities, availability of financing on reasonable terms, availability of third party service providers, equipment and processes relative to specifications and expectations and unanticipated environmental impacts on operations. Actual results may differ materially from those expressed or implied by such forward-looking statements.

ON BEHALF OF THE BOARD

Keith C. Hill, President and CEO

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

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

Contact Information