VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 03/26/13 -- Africa Oil Corp. (TSX VENTURE: AOI)(NASDAQ OMX: AOI) ("Africa Oil", "the Company" or "AOC") is pleased to announce its financial and operating results for the year ended December 31, 2012.
-- Following the significant light oil discovery at Ngamia-1 exploration well in Block 10BB, the Company and its partner moved the rig 22 kilometers to drill the Twiga South-1 exploration well in Block 13T (Kenya) which is on trend with Ngamia-1. Twiga South-1 successfully encountered 30 meters of net oil pay in three Auwerwer sandstone intervals analogous to Ngamia-1. The Company and its partner performed a DST on five intervals at Twiga South-1. The DST on three Auwerwer sandstone intervals resulted in a cumulative flow rate of 2,812 bopd, constrained by surface equipment. With optimized testing equipment, these flow rates are anticipated to have increased to a cumulative rate of approximately 5,200 bopd. Two deeper tests were also completed on the tight reservoir rock at the bottom of the well, and despite reconfirming the presence of movable oil, both zones produced at sub-commercial flow rates. The well has been suspended as a potential future production well. The rig has now been moved to Ngamia-1 where testing operations on five to six zones have commenced.-- The Ministry of Energy in Kenya has been provided with the Twiga South-1 testing results, which accompanied a formal Notice of Discovery under the terms of the Block 13T PSC. Following this Notice of Discovery, the Ministry of Energy has agreed to the Tullow proposal, as operator of Blocks 10BB and 13T, to carry out a combined exploration and evaluation program over a defined Area of Interest ("AOI") including all of the mapped prospects and leads along the basin bounding fault on the western edge of the Lokichar Basin. The basis of the AOI approach is to adopt a basin-wide approach to concurrently explore and evaluate the area as opposed to undertaking well-by-well appraisals for each discovery well. This basin-wide approach, with regards to the AOI, is mutually agreed to be the most efficient and quickest approach to moving the exploration and evaluation work program forward towards reaching a commercial threshold of reserves required to justify any large scale oil development.-- During December 2012, the Company completed a non-brokered private placement issuing an aggregate of 30 million common shares at a price of CAD$7.75 per common share for gross proceeds of CAD$232.5 million. The Company paid a finder's fee of CAD$8.3 million in cash on the private placement.-- The Company and its operating partners on Block 10A (Kenya) spud the Paipai-1 exploration well in September 2012. Paipai-1 was drilled to a total depth of 4,255 meters. Light hydrocarbons were encountered while drilling a 55 meter thick gross sandstone interval. Attempts to sample the reservoir fluid were unsuccessful and the hydrocarbons encountered while drilling were not recovered to surface. The Company and its partners were unable to test the well at the time due to the unavailability in country of testing equipment capable of handling the higher reservoir pressures encountered at this depth. As a result, the well has been temporarily suspended pending further data evaluation.-- The Company and its partners selected Sabisa-1 as the first drilling location in the South Omo Block (Ethiopia). Sabisa-1 spud in January 2013 and is currently drilling.-- In Puntland (Somalia), the Company, through its 44.6% ownership interest in Horn Petroleum Corporation ("Horn"), completed site restoration at both Shabeel-1 and Shabeel North-1 wells and demobilization from Puntland has been completed. While the Company was disappointed that the first two exploration wells in Puntland did not flow oil, the Company remains highly encouraged that all of the critical elements exist for oil accumulations and based on this encouragement, the Company and its partners have entered into the next exploration period in both the Dharoor Valley and Nugaal Valley PSC's which carry a commitment to drill one exploration well in each block by October 2015.-- The Company completed a farmout transaction with Marathon Oil Corporation ("Marathon") during the fourth quarter of 2012 whereby Marathon acquired a 50% interest in Block 9 (Kenya) and a 15% interest in Block 12A (Kenya). In accordance with the farmout agreement, Marathon paid the Company $32.0 million in consideration of past exploration expenditures, and has agreed to fund the Company's working interest share of future joint venture expenditures on these blocks to a maximum of $25.0 million. The Company has retained a 20% working interest in Block 12A and a 50% working interest in Block 9.-- The Company completed a farmout transaction with New Age (Africa Global Energy) Limited ("New Age") during the fourth quarter of 2012 whereby New Age acquired an additional 25% interest in the Company's Blocks 7 & 8 (Ethiopia), together with operatorship of Blocks 7 & 8 and the Adigala Area (Ethiopia). In accordance with the farmout agreement, New Age paid the Company $1.5 million in consideration of past exploration expenditures. The Company has retained a 30% working interest in Blocks 7/8.-- The Company continues to actively acquire, process and interpret 2D seismic over Blocks 10BA, 10BB, 12A, 13T and South Omo with three seismic crews currently active.-- In first quarter of 2013, the Company executed a PSA for the Rift Basin Area in Ethiopia. Located north of the South Omo Block, the Rift Basin Area covers 42,519 square kilometers. This block is on trend with highly prospective blocks in the Tertiary rift valley including the South Omo Block in Ethiopia, and Kenyan Blocks 10BA, 10BB, 13T, and 12A.-- Africa Oil ended the quarter in a strong financial position with cash of $272.2 million and working capital of $237.7 million as compared to cash of $109.6 million and working capital of $90.2 million at December 31, 2011.