Mr. Jeromie Kufflick reports

AFRICA ENERGY ANNOUNCES CORPORATE UPDATE AND FIRST QUARTER 2023 RESULTS

Africa Energy Corp. has provided a corporate update and has released its financial and its operating results for the three months ended March 31, 2023.

Corporate update

Africa Energy's chairman of the board, William Lundin, will step down from the board at the annual general meeting (AGM) on June 22, 2023, in order to comply with industry corporate governance guidelines regarding the maximum number of non-executive director appointments per individual. Garrett Soden will replace Mr. Lundin as interim chairman and remain president and chief executive officer. Jan Maier, the company's vice-president of exploration, will retire on June 30, 2023.

Mr. Lundin commented: "On behalf of the Lundin family, the board of directors and management, I would like to thank all of the Africa Energy shareholders for their patience and continued commitment to the company. Africa Energy has exposure to a world-class asset in Block 11B/12B that will play an important role in South Africa's energy transition. We firmly believe that this prolific hydrocarbons fairway will be developed within the decade, and it should be productive for multiple generations after coming on stream. Despite today's announcement about my departure from the board, I want to reiterate the Lundin family's support for Africa Energy and its future funding requirements as a shareholder of the company. The Lundin family does not have any intention of exiting the energy industry, rather we remain extremely bullish on the petroleum sector going forward. The incoming chair, Garrett Soden, knows the company, industry and local politics well, and he will continue to represent the board of directors and our key stakeholders with a high degree of professionalism and integrity as we advance Block 11B/12B into the development phase."

Mr. Soden commented: "On behalf of the board, I would like to thank William and the Lundin family for their continued support of Africa Energy. I would also like to thank Jan for leading our technical team since helping start the company in 2015. Jan played a key role in identifying and securing the Block 11B/12B opportunity, which resulted in the large Brulpadda and Luiperd discoveries, the first deepwater oil and gas discoveries in South Africa. We expect the operator, TotalEnergies, to finalize the development concept and gas offtake terms this year before receiving the production right approval in early 2024. Of course, when the development timeline and economics are confirmed, we will look to monetize our investment in the best way possible. In the meantime, we are reducing costs significantly in order to conserve cash."

Outlook

The Block 11B/12B (1) joint venture has applied for the production right and is contemplating an early production system (EPS) for a phased development of the Paddavissie Fairway. The EPS would provide first gas and condensate production from the Luiperd discovery and would accelerate the Block 11B/12B development timeline by utilizing nearby infrastructure on the adjacent block in order to supply natural gas to customers in Mossel Bay. The EPS would significantly decrease the capital expenditures required to reach first production on Block 11B/12B. The company expects that a full development of the Paddavissie Fairway would follow the EPS as the gas market expands in South Africa. The company is encouraged by the 2-D and 3-D seismic data that has identified additional prospectivity in the Paddavissie Fairway and to the east, confirming the large exploration upside remaining across the block. The development of Block 11B/12B will have positive implications for the South African economy and will be critical in facilitating the country's energy transition beyond coal with a domestic natural gas supply.

(1) Africa Energy owns 49 per cent of the common shares and 100 per cent of the Class B shares of Main Street 1549 Pty. Ltd., which has a 10-per-cent participating interest in the exploration right for Block 11B/12B offshore South Africa.

Highlights

• On May 10, 2023, the company notified the joint venture partners on Block 2B of its intention to withdraw from future Block 2B operations.
• At March 31, 2023, the company had $2.7-million (U.S.) in cash.

The financial information in this table was selected from the company's unaudited consolidated financial statements for the three months ended March 31, 2023, which are available on SEDAR and the company's website.

Earnings trend and financial position

(unaudited; United States dollars)

The company recorded $2.2-million of operating expenses for the three months ended March 31, 2023, compared with $2.5-million for the same period in 2022. Salary and benefit costs decreased by $500,000 due to a reduction in annual bonuses paid compared with the same period in 2022. During the three months ended March 31, 2023, the company incurred $300,000 of operating costs relating to Block 2B.

At March 31, 2023, the company had cash of $2.7-million and a working capital deficiency of $3.1-million compared with cash of $6.8-million and working capital of $3.9-million at Dec. 31, 2022. The reduction in cash and working capital since Dec. 31, 2022, can be mainly attributed to cash-based operating expenditures and investments in Main Street 1549 Pty. Ltd., the company that holds the direct interest in Block 11B/12B. In addition, Africa Energy entered into a promissory note agreement on Dec. 23, 2023, with Africa Oil Corp. for $2.0-million, Deepkloof Ltd. for $2.0-million and Lorito Holdings Sarl for $1.0-million. The maturity date of the promissory note is Jan. 31, 2024, at a 10-per-cent annual interest rate if repaid by Oct. 31, 2023, or 15-per-cent annual interest rate if repaid after Oct. 31, 2023. The promissory note has no security and is repayable pro rata any time before maturity without penalty.

Next earnings report release

The company plans to report its results for the six months ended June 30, 2023, on Aug. 11, 2023.

About Africa Energy Corp.

Africa Energy is a Canadian oil and gas exploration company focused on South Africa. The company is listed in Toronto on TSX Venture Exchange (ticker AFE) and in Stockholm on Nasdaq First North Growth Market (ticker AEC). Africa Energy is part of the Lundin Group of Companies.

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