Mr. Jeromie Kufflick reports

AFRICA ENERGY ANNOUNCES SECOND QUARTER 2023 RESULTS

Africa Energy Corp. has released financial and operating results for the three and six months ended June 30, 2023.

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 to supply natural gas to customers in Mossel Bay for the conversion of natural gas to power and/or liquid petroleum products. 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. It is encouraged by the 2-D and 3-D seismic data that have identified additional prospectivity in the Paddavissie fairway and to the east, confirming the largely 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 June 30, 2023, the company had $1.3-million (U.S.) in cash.

The financial information in the attached table was selected from the company's unaudited consolidated financial statements for the three and six months ended June 30, 2023, which are available on SEDAR+ and the company's website.

Earnings trend and financial position (unaudited and in U.S. dollars)

The company recorded $1.2-million of operating expenses for the three months ended June 30, 2023, compared with $1.3-million for the same period in 2022. Costs were relatively consistent when compared with the prior period.

The company recorded $3.4-million of operating expenses for the six months ended June 30, 2023, compared with $3.8-million for the same period in 2022. The decrease from the prior period can be mainly attributed to salary and benefit costs, which decreased by $500,000 due to a reduction in annual bonuses paid compared with the same period in 2022.

At June 30, 2023, the company had cash of $1.3-million and a working capital deficiency of $4.0-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, 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, with Deepkloof Ltd. for $2.0-million and with 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 a 15-per-cent annual interest rate if repaid after Oct. 31, 2023. The promissory note has no security and is repayable pro rata at any time before maturity without penalty. The company plans to enter into discussions with the holders of the promissory notes to increase the amount and extend the maturity of the promissory notes.

Next earnings report release

The company plans to report its results for the nine months ended Sept. 30, 2023, on Nov. 15, 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 the TSX Venture Exchange (ticker AFE) and in Stockholm on the Nasdaq First North Growth Market (ticker AEC).

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