Africa Energy to Acquire Additional Interest in South Africa

Block 11B/12B location (Source: Africa Oil)

Africa Energy Corp. announces the signature of definitive agreements to acquire an effective 4.9% interest in the Exploration Right for Block 11B/12B offshore South Africa.

Block 11B/12B is located in the Outeniqua Basin approximately 175 kilometers off the southern coast of South Africa. The block covers an area of approximately 19,000 square kilometers with water depths ranging from 200 to 2,000 meters.

Total E&P South Africa BV ("Total"), a wholly-owned subsidiary of Total SA, is the operator and has a 50% interest in Block 11B/12B. CNR International (South Africa) Limited ("CNRI"), a wholly-owned subsidiary of Canadian Natural Resources Limited, owns the remaining 50%.

Africa Energy holds 49% of the shares in a new special purpose vehicle, Main Street 1549 Proprietary Limited, which has entered into farmout agreements with Total and CNRI separately to acquire 5% from each for an aggregate 10% participating interest in Block 11B/12B (4.9% net to Africa Energy).

Garrett Soden, Africa Energy's President and CEO, commented,
"We are excited to partner with Total and CNRI on Block 11B/12B. This is a unique opportunity for a company of our size to work with majors in what we believe to be the most prospective geology offshore the African continent. Our technical team knows the area well from their previous exploratory work off the southern coast, and we look forward to the proposed exploration well on Block 11B/12B."

Africa Energy paid a deposit of US$0.49 million at signature and will pay an additional US$6.86 million at closing. The Company has agreed to fund a portion of Total's and CNRI's costs for the proposed exploration well to a maximum of US$7.55 million, plus certain contingent payments due at various milestones associated with commercialization of hydrocarbons from Block 11B/12B. The closing, carry and contingent payments will be funded from cash on hand and/or from third party sources.

Closing is subject to standard conditions for a transaction of this type, including approval by the South African government and the TSX Venture Exchange, as required.

AFRICA ENERGY at a glance

Africa Energy Corp. (formerly Horn Petroleum Corporation) is a Canadian oil and gas company with assets in Puntland, Somalia. The Corporation holds a 60% interest and operatorship in the Dharoor and Nugaal blocks encompassing a Jurassic Rift Basin on trend and analogous to the large oil fields in Yemen. Africa Energy entered South Africa in December 2015 following a sale and purchase agreement with Afren plc, a share purchase agreement to acquire all of the shares of Thombo Petroleum and a farm-in agreement with Crown Energy AB.

The Corporation's shares are listed on the TSX Venture Exchange.

SOUTH AFRICA OPERATIONS

Block 2B
On October 21, 2016, the Company closed three transactions resulting in the Company acquiring a 90% participating interest and operatorship in Block 2B offshore the Republic of South Africa. A well drilled in Block 2B by South African state company Soekor in 1988 discovered and tested light oil from a Cretaceous sandstone section confirming that this rift basin is hydrocarbon-bearing. The Company’s technical team has identified numerous prospects and potential drilling locations in Block 2B utilizing the previously acquired 3D seismic.

Block 2B covers 4360km² of the South African Western offshore about 300km north of Cape Town. Water depths over the block are 50m-to-200m and over main area of interest in the block, the A-J rift graben they are 140m-to-160m.

Oil was discovered and tested by Soekor in the A-J1 borehole drilled in 1988. Thick reservoir sandstones were intersected between 2985m and 3350m. The well was tested and flowed 191bbl per day of 360API oil from a 10m sandstone interval at about 3250m. At the time the discovery was considered to be of limited economic significance. However, significant upside potential within six prospect areas at depths of up to 800m shallower than the reservoirs in A-J1 has been identified on the 686km2 of 3-D seismic data that covers the whole of the A-J graben area. Follow-up wells will target this potential.

The A-J graben is typical a rift basin, similar to others in which major oil accumulations have recently been discovered. For example the South Lokichar basin in Kenya. The oil was generated in lacustrine source rocks that are present in the deepest parts of the basin. The oil migrated and accumulated in fluvial and lacustrine sandstone reservoirs around the basin flanks.

There is also significant potential in other rift graben to the north and south of the A-J graben and furthermore potential for significant gas discoveries in the shallower sequences above the rift graben succession over the whole block.

Block 11B/12B
In November 2017, Africa Energy announced the signature of definitive agreements to acquire an effective 4.9% interest in the Exploration Right for Block 11B/12B.

Total E&P South Africa BV ("Total"), a wholly-owned subsidiary of Total SA, is the operator and has a 50% interest in Block 11B/12B. CNR International (South Africa) Limited ("CNRI"), a wholly-owned subsidiary of Canadian Natural Resources Limited, owns the remaining 50%.

Africa Energy holds 49% of the shares in a new special purpose vehicle, Main Street 1549 Proprietary Limited, which has entered into farmout agreements with Total and CNRI separately to acquire 5% from each for an aggregate 10% participating interest in Block 11B/12B (4.9% net to Africa Energy).

Block 11B/12B is located around 175 kilometers off the south coast of South Africa. The block has a gross area of approximately 19,000 km² with water depths ranging from approximately 200 m in the north to 2,000 m in the south. The Lower Cretaceous Post-rift Paddavissie Fairway, in which the Brulpadda Prospect has been identified, is located within the southwest corner of the block.

The first attempt drilling the Brulpadda Prospect in 2014 was suspended prior to reaching target objectives due to issues with the drilling rig which resulted from drilling in the harsh ocean environment. Since the issues encountered on the first attempt to drill Brulpadda-1AX, significant activities have been carried out in view of selecting the best solution to re-enter and drill the Brulppada-1AX well as well as to develop an alternative solution for future drilling in the same environment.  In July of 2017, the Deep Sea Stavanger rig from ODFJELL was contracted to re-enter Brulppada-1AX as early as 2018.

The Brulpadda Prospect is at a water depth of 1,431 m. The exploration well will test the Southern Outeniqua Basin within the Paddavissie Turbidite Fan Complex. It is expected to be drilled to a target depth of approximately 3,500 m. The prospect has been de-risked with seismic and electromagnetic surveys. Four additional prospects have been defined within the fairway. In total, the five prospects have multi-billion barrel resource potential. These prospects have clear amplitude anomalies with excellent structural conformance and flat spots, indicating presence of hydrocarbon.

The Paddavissie Turbidite Play covers an area in excess of 2,000 km² and is a similar play to the much smaller Oryx and Sable Complexes located to the northwest in the adjacent Bredasdorp Basin. These complexes contain stratigraphically and structurally trapped oil and gas within excellent reservoir quality channel sandstones which form feeders to the outboard Paddavissie Fan Systems. Source rocks in the fetch area comprise both mid-Aptian and Hauterivian shales which entered maturity in early Tertiary and are presently within the main stage of oil generation.

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