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VANCOUVER, BRITISH COLUMBIA--(Marketwire
- Feb. 4, 2009) - Africa Oil Corp. ("Africa Oil" or "the Company") (TSX
VENTURE:AOI) is pleased to announce that it has signed a Share Purchase
Agreement to acquire a large portfolio of East African oil exploration
projects from Lundin Petroleum AB. The projects are located within a
vastly underexplored region of the rich East African rift basin
petroleum system. The projects acquired include an 85% working interest
in Blocks 2, 6, 7 and 8 and a 50% working interest in the Adigala Block
in Ethiopia plus a 100% interest in Block 10A and a 30% interest in
Block 9 in Kenya. Africa Oil will assume operatorship of these projects
excluding Block 9 in Kenya.
This new acreage is
complementary to and consolidates Africa Oil's existing holdings in what
is considered a truly world-class exploration play fairway. Upon
conclusion of the transaction, the Company's total land package in this
prolific region will be in excess of 200,000 square kilometers - an area
roughly the size of Great Britain. To see attached map, please click on
the following link:
http://media3.marketwire.com/docs/AOI0204.jpg.
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 Heritage/Tullow 1 billion+
barrel Albert Graben 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.
Exploration activity is now starting to pick up in the area, however,
less than 200 wells to date have been drilled over the years in
Ethiopia, Kenya and Somalia's hydrocarbon basins which encompass an area
greater than 2.3 million square kilometers. For scale of reference, the
North Sea basin encompasses 210,000 square kilometers and has seen over
4,600 wells (61 wells drilled before commercial oil). The North Sea
reserve estimates are approximately 50 billion barrels of oil equivalent
and current production is approximately 5.5 million barrels of oil
equivalent per day. The Gulf of Suez has over 3,096 wells drilled within
an area of 26,000 square kilometers. Reserves here are estimated at 8
billion barrels with production currently estimated at 700,000 barrels
of oil per day.
Africa Oil has an aggressive exploration program planned over the next
two years which will include seismic and drilling in both Ethiopia and
Kenya, in addition to the previously announced upcoming drill program in
Puntland, Somalia.
Rick Schmitt, President of Africa Oil, commented, "Through this
transaction, Africa Oil has secured a major East African acreage
position in all key petroleum systems which extend into the area. The
Production Sharing Agreements provide excellent fiscal terms for
exploration and development. The Company has identified numerous large
and robust prospects on seismic and we look forward to the opportunity
of exploring within a truly world class exploration play fairway."
Pursuant to the Share Purchase Agreement, Africa Oil will pay as
consideration to Lundin Petroleum AB approximately US $20 million which
will be funded through a convertible loan from Lundin Petroleum AB
maturing December 31, 2011 and at an interest rate of USD six-month
LIBOR plus 3%. The loan, including any accrued and unpaid interest, will
be convertible, at the option of either Africa Oil or Lundin Petroleum
AB, into shares of Africa Oil on the basis of CAD $0.90 per common
share.
The Company's existing CAD $6 million loan (plus accrued interest) from
a shareholder of the Company will be converted to Units of the Company
on the basis of CAD $1.00 per Unit. Each Unit will comprise one common
share and one-half of a share purchase warrant. Each whole warrant is
exercisable into one common share of Africa Oil at a price of $1.50 per
share over a period of two years. In the event that Africa Oil trades at
or above CAD $2.00 for a period of 30 consecutive days, a forced
exercise provision will come into effect.
Concurrent with the Share Purchase Agreement, Africa Oil has agreed to
sell, on a non-brokered, private placement basis, an aggregate of up to
20 million Units of the Company at a price of CAD $1.00 per Unit for
gross proceeds of CAD $20 million. Each Unit will comprise one common
share and one-half of a share purchase warrant. Each whole warrant is
exercisable into one common share of Africa Oil at a price of $1.50 per
share over a period of two years. In the event that Africa Oil trades at
or above CAD $2.00 for a period of 30 consecutive days, a forced
exercise provision will come into effect. A 5% finder's fee may be
payable on all or a portion of the private placement. Net proceeds of
the private placement will be used towards the planned work programs on
the Company's projects in Ethiopia, Kenya and Somalia, as well as for
general corporate purposes. The private placement is subject to
regulatory approval.
The foregoing transactions are subject to all requisite regulatory and
government approvals, as well as shareholder approval if required.
ON BEHALF OF THE BOARD
Rick Schmitt, President
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.
FOR
FURTHER INFORMATION PLEASE CONTACT:
Africa Oil Corp.
Sophia Shane
Corporate Development
(604) 689-7842
(604) 689-4250 (FAX)
Email:
africaoilcorp@namdo.com
Website:
www.africaoilcorp.com
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