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Africa Oil Announces Farmouts in the Rift Basin Area and Adigala Blocks in Ethiopia
Africa Oil Corp. (TSX VENTURE:AOI)(OMX:AOI) (“Africa Oil” or the “Company”) is pleased to announce that it has received Ethiopian government approval in respect of two farmout agreements:
Marathon Oil Corporation (NYSE:MRO) (“Marathon Oil”), through its wholly-owned subsidiary Marathon Ethiopia Limited B.V., will acquire a 50% interest in the Rift Basin Area; New Age Ethiopia Limited (“New Age”) will acquire a 40% interest in the Adigala Block.
Under the terms of the Marathon Oil farmout agreement, Marathon Oil will acquire a 50% interest in the Rift Basin Area in Ethiopia. Africa Oil will maintain operatorship of the block, but Marathon Oil has the right to assume operatorship if a commercial discovery is made. In consideration for the assignment of this interest, Marathon Oil will pay Africa Oil an entry payment of $3 million in respect of past costs, and has agreed to fund $15 million of Africa Oil’s working interest share of joint venture expenditures in the Rift Basin Area. Africa Oil and Marathon Oil are pleased to complete the final tranche of the farmout transaction originally announced in July 2012 (press release dated July 23, 2012). Completion of this transaction is anticipated in March 2014. Following completion, Africa Oil and Marathon Oil will each hold a 50% working interest in the Rift Basin Area.
The Rift Basin Area covers 42,519 square kilometres and is on trend and extending to the northeast of the highly prospective blocks in the Tertiary rift valley including the South Omo Block, and Kenyan Blocks 10BA, 10BB, 13T, and 12A. A 1,200 kilometre 2D seismic survey is anticipated to be acquired during the second half of 2014.
Under the terms of the New Age farmout agreement, New Age will acquire an additional 40% working interest in the Adigala Block, in Ethiopia. Following completion, Africa Oil’s interest will be reduced to 10%. In consideration of the assignment New Age will carry Africa Oil’s working interest share of a planned 1,000 kilometre 2D seismic work program in the Adigala Block. Completion of this transaction is anticipated in March 2014.
Keith Hill, Africa Oil’s President and CEO, stated, “We are very pleased to receive government approval to complete these farmout transactions as we continue to actively manage our highly prospective East African acreage portfolio. We look forward to continuing to work with Marathon Oil as a partner given their stature and long history of success in the oil and gas business. We have a very exciting exploration and appraisal program set out for 2014 which will see us complete over 20 wells. Currently we have seven rigs running and after releasing one in mid-year will have at least six rigs running full time through the remainder of the year. Our program has three objectives, to appraise the existing key discoveries, to drill out the remaining prospects in the South Lokichar basin and to open at least one of the four new basins being tested along trend. Additionally, we are pushing hard to move the development studies along with the aim of sanctioning a pipeline development for the South Lokichar basin by the end of 2015 or early 2016. This fully funded program should continue to deliver high potential upside value for shareholders through this year and beyond.”
About Africa Oil
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. Africa Oil’s East African holdings are within a world-class exploration play fairway with a total gross land package in this prolific region in excess of 230,000 square kilometers. The East African Rift Basin system is one of the last of the great rift basins to be explored. Seven new significant discoveries have been announced in the Northern Kenyan basin in which the Company holds a 50% interest along with operator Tullow Oil plc. 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 NASDAQ OMX First North Stockholm is Pareto Securities 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.