VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb. 12, 2015) -

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Africa Oil Corp. ("Africa Oil", "AOC" or the "Company") (TSX:AOI)(OMX:AOI) is pleased to announce that it intends to raise US$ 100 million in new equity through a private placement of new common shares and has retained Dundee Securities Europe LLP and Pareto Securities as joint bookrunners (together the "Bookrunners") to advise on and effect the private placement on a reasonable commercial efforts basis at a price per share to be determined through a book-building process (the "Offering").

Operational update and use of proceeds

The net proceeds from the private placement will be used primarily to fund ongoing appraisal and pre-development activities in the South Lokichar Basin where the Company and its partner, Tullow Oil plc ("Tullow") have discovered over 600 million barrels of gross contingent oil resources (best estimate). The Company expects that the net proceeds from the private placement, together with the Company's existing working capital, will be sufficient to perform necessary work and analyses to upgrade its assets in the South Lokichar basin with the intent of submitting a Field Development Plan ("FDP") around the end of 2015.

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 South Lokichar development in Blocks 10BB and 13T (Kenya) by undertaking activities aimed at increasing resource certainty. These activities include:

  • At least four appraisal/exploration wells in the South Lokichar Basin;
  • Extended Well Testing (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 the South Lokichar Basin, the Africa Oil - Tullow joint venture new basin opening exploration program includes the Engomo-1 well currently drilling and potentially the Cheptuket well in Block 12A, a PSC commitment well that needs to be drilled before September 2016.

Given the changing focus of the 2015 work program to appraisal and development studies of the South Lokichar Basin discoveries, the Africa Oil - Tullow partnership has released one of its four drilling rigs and plans to release two additional rigs by the end of the second quarter of 2015. Africa Oil owns a 50% working interest in Kenya Blocks 10BA, 10BB and 13T with Tullow (operator) holding the remaining 50%. Africa Oil owns a 20% working interest in Block 12A Kenya with Tullow acting as Operator.

Outside of the Africa Oil - Tullow joint venture blocks, the work program is focused on the Rift Basin Area Block in Ethiopia where a 2D seismic crew has mobilized to complete a minimum 400 kilometre land and lake survey. Africa Oil is Operator and holds a 50% interest in the Ethiopia Rift Basin Area Block with Marathon Oil Ethiopia Limited B.V., holding the remaining 50%.

With regard to currently ongoing wells, the Engomo-1 well is currently drilling and is expected to complete drilling in March 2015. In addition, two of the appraisal wells currently being drilled on the Ngamia and Ekales structures will test deeper objectives below the primary Auwerwer reservoirs. The Company will announce the results of these wells in due course.

Q4 2014 working capital and impairments

Africa Oil entered the fourth quarter of 2014 with US$273 million in cash and US$149 million of net working capital. The Company anticipates ending 2014 with cash of between US$155 million and US$170 million and net working capital of between US$10 million and US$25 million. The Company is in the process of finalizing its 2014 year end audit and will release its 2014 audited financial statements on February 26, 2015 with a conference call to follow. Accounts payables grew during the fourth quarter of 2014 due to increased operational field activities and costs incurred related to the 2015 work program including the extended well tests in the Amosing and Ngamia fields which have commenced.

The Company, through its 45% ownership interest in Horn Petroleum Corporation, has informed the Government of Puntland (Somalia) that the Company will be downsizing its office in Bosaso, Puntland and will refrain from any operational activity and associated expenditures until the political situation improves. The Company has requested a two year extension to the current exploration period from the Puntland Government to allow time for the ongoing political challenges to be resolved. Accordingly, the Company has elected during the fourth quarter of 2014 to record a non-cash impairment charge related to its assets in Puntland. As at September 30, 2014 intangible exploration assets related to these properties amounted to US$91 million.

The Company has notified its Joint Venture Partners of its decision to withdraw from its 10% working interest in the Adigala Block (Ethiopia). Accordingly, the Company has elected during the fourth quarter of 2014 to record a non-cash impairment charge related to costs associated with this Block. As at September 30, 2014 intangible exploration assets related to these properties amounted to US$6 million.

The Offering - listing and selling restrictions

An application will be made to the Toronto Stock Exchange (the "TSX") for approval of the Offering and the new shares will be admitted to listing on Nasdaq Stockholm following registration of an admittance to trading prospectus with the Swedish Financial Supervisory Authority (Sw. Finansinspektionen). The closing of the Offering is subject to regulatory approval and certain other customary conditions including, but not limited to, the execution of a definitive agency agreement between the Company and the Bookrunners. The closing of the Offering is expected to occur on or about February 23, 2015, or such other dates as the Company and the Bookrunners may agree.

Common shares issued to Canadian residents will be subject to resale restrictions under Canadian securities laws for a period of four months plus one day from the date of the closing of the Offering. Subject to applicable securities laws, common shares issued to residents outside of Canada pursuant to the Offering may not be sold, transferred or otherwise disposed of on the TSX or, except pursuant to an exemption from prospectus requirements under Canadian securities laws, to any person in Canada or otherwise into Canada for a period of four months plus one day from the date of the closing of the Offering.

The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or applicable state securities laws, and may not be offered or sold in the United States absent registration or an exemption from such registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

About Africa Oil Corp.

Africa Oil Corp. is a Canadian oil and gas company with assets in Kenya and Ethiopia as well as Puntland (Somalia) through its 45% equity interest in Horn Petroleum Corporation. The Company is listed on the Toronto Stock Exchange and on Nasdaq 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.

Cautionary Statements regarding Well Test Results

Drill stem tests are commonly based on flow periods of 1 to 5 days and build up periods of 1 to 3 days. Pressure transient analysis has not been carried out on all well tests and the results should therefore be considered as preliminary. Well test results are not necessarily indicative of long-term performance or of ultimate recovery.

ON BEHALF OF THE BOARD

Keith C. Hill, President and CEO

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