Mr. Rob Nicolella reports

AFRICA ENERGY ANNOUNCES THIRD QUARTER 2023 RESULTS

Africa Energy Corp. has released its financial and operating results for the three and nine months ended Sept. 30, 2023.

Rob Nicolella, chief executive officer of Africa Energy, said, "We are encouraged by the focus within the government of South Africa to resolve the current energy crisis and the requirement for natural gas to play a critical role in the energy transition."

On March 6, 2023, the President of South Africa created a new role, appointing Dr. Kgosientsho Ramokgopa as Minister of Electricity in an effort to deal with the electricity crisis in South Africa. On Oct. 26, 2023, the National Assembly issued a draft of the upstream petroleum resources development bill highlighting the importance of national energy security and the role of gas in the energy transition in its objectives. As part of South Africa's commitment to the Paris climate agreement, it must diversify energy mix, reducing its reliance on aging coal-fired power plants. In an effort to fulfill this commitment, the Department of Mineral Resources and Energy announced that a new gas master plan is being designed to balance demand and supply of natural gas until 2050 as the country transitions its energy mix accordingly and provides the country with reliable base load generation capacity. It is expected that the gas master plan will be released by the end 2023. In addition, the government of South Africa has committed to the unbundling of the government-owned electricity supplier into separate entities -- transmission, generation and distribution -- creating an entity focused on expansion of the electricity grid, which is critical to allow future tie-in of potential gas-to-power projects.

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 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. The company 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 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.

Highlights:

• On Nov. 7, 2023, the company executed an amendment to its promissory note, increasing the total amount available under the promissory note to $8.3-million (U.S.) from $5.0-million (U.S.), with an extended maturity date of March 31, 2025.
• 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 Sept. 30, 2023, the company had $900,000 (U.S.) in cash.

(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.

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

Earnings trend and financial position

(unaudited; in U.S. dollars)

The company recorded $700,000 of operating expenses for the three months ended Sept. 30, 2023, compared with $1.2-million for the same period in 2022. Costs decreased in substantially all categories due to cost-cutting measures undertaken in 2023.

The company recorded $4.1-million of operating expenses for the nine months ended Sept. 30, 2023, compared with $5.0-million for the same period in 2022. Costs decreased in substantially all categories due to cost-cutting measures undertaken in 2023.

At Sept. 30, 2023, the company had cash of $900,000 and a working capital deficiency of $4.4-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. 19, 2023, with Africa Oil Corp. for $2.0-million, Deepkloof Ltd. for $2.0-million and Lorito Holdings S.a.r.l. for $1.0-million. The maturity date of the promissory note was Jan. 31, 2024, at an annual interest rate of 10 per cent if repaid by Oct. 31, 2023, or an annual interest rate of 15 per cent if repaid after Oct. 31, 2023. The promissory note has no security and is repayable pro rata any time before maturity without penalty. On Nov. 7, 2023, the company executed amendments to the promissory note, increasing the total amount available under the promissory note to $8.3-million, from $5.0-million, with an annual interest rate of 15 per cent and a maturity date of March 31, 2025.

Next earnings report release

The company plans to release its results for the year ended Dec. 31, 2023, on March 27, 2024.

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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