Mr. Roger Tucker reports

AFRICA OIL ANNOUNCES SECOND QUARTER 2023 RESULTS

Africa Oil Corp. has released its operating and interim condensed consolidated financial results for the three and six months ended June 30, 2023. All amounts are in United States dollars unless otherwise stated.

Highlights

• OML 130 licence renewed for a period of 20 years, enabling the refinancing of Prime's debt to $1,050.0-million ($750.0-million drawn at the end of Q2 2023) and the increase of the company's undrawn corporate facility to $200.0-million.
• Prime distributed a dividend of $125.0-million or $62.5-million net to the company's 50-per-cent shareholding.
• The high-impact Venus appraisal campaign continued with the operator completing the drilling and completion of the Venus-1A appraisal well using the Tungsten Explorer drillship. Tungsten Explorer has commenced the drilling of the Nara-1X exploration well to test the westerly extension of the Venus oil discovery.
• A second rig, Deepsea Mira, has joined the campaign and is currently on the Venus-1X location to drill a side-track section and perform a drill stem testing (DST) program, before moving to Venus-1A to perform a DST.
• OML 130 drilling campaign continues with two water injection wells completed and put on line to provide reservoir pressure maintenance. The first production well in the infill program is currently being drilled.
• Achieved an average realized oil sales price of $85.3/bbl compared with the average Bloomberg dated Brent price of $78.0/bbl during Q2 2023.
• Cash position of Prime net to the company's 50-per-cent shareholding of $108.8-million and net debt balance of $375.0-million at June 30, 2023; resulting in a Prime net debt position of $266.2-million.
• AOC's cash and cash equivalents at June 30, 2023, of $175.7-million.
• Net income to AOC in Q2 2023 of $106.9-million (Q2 2022 -- $5.7-million). Following OML 130 licence renewal, Prime released $346.0-million of deferred income tax liabilities which has had a positive effect on net income for the quarter.
• The company announced the appointment of Dr. Roger Tucker to succeed Keith Hill as the new president and CEO. Dr. Tucker has now taken over the leadership responsibilities ahead of the previously announced date of Sept. 5, 2023.

Africa Oil president and CEO Roger Tucker commented: "I am delighted to write my first message as the new president and CEO of Africa Oil and to report robust quarterly results for second quarter 2023.

"The leadership transition process has progressed well and the decision was made to bring forward formal handover of the responsibilities by a few weeks, allowing Keith to enjoy his retirement sooner. I thank him for his support and encouragement, and I look forward to continuing working with him as he stays on the board as a non-executive director.

"The decision to join Africa Oil was a compelling one for me given its excellent opportunity set. We have strong financials, quality high netback production, a world-class oil discovery, attractive exploration and development assets, and a successful track record of transformational deal making. These provide us with strategic optionality to take the company through its next phase of development and shareholder value delivery. I will present my business plan with an unwavering focus on shareholder returns during the autumn. In the meantime, I encourage you to reach out to our investor relations if you have any questions."

* Important information: Africa Oil's interest in Prime is accounted for as an investment in joint venture.

The financial information in this table was selected from the company's interim condensed consolidated financial statements for the three and six months ended June 30, 2023, and the company's audited consolidated financial statements for the year ended Dec. 31, 2022. The company's interim condensed consolidated financial statements, notes to the financial statements, management's discussion and analysis for the three and six months ended June 30, 2023, and 2022 and the 2022 report to shareholders and annual information form have been filed on SEDAR+ and are available on the company's website.

In Q2 2023 and H1 2023, the company recognized net income amounting to $106.9-million and $128.8-million respectively (Q2 2022 and H1 2022 -- $5.7-million and $51.3-million respectively).

In Q2 2023 and H1 2023, included in the company's share of income from equity investments is income from its 50-per-cent investment in Prime of $212.7-million and $250.2-million respectively (Q2 2022 and H1 2022 -- $14.4-million and $65.4-million respectively).

The figures used in the explanations for movements period on period herien are based on Prime's gross balances per the interim condensed consolidated financial statements.

Prime revenues decreased by $79.7-million in Q2 2023 compared with Q2 2022, mainly from a decrease in PPT revenue of $86.4-million as Prime exhausted its investment tax credit pool in 2022 as Prime started to pay PPT in cash on OML 130 compared with an adjustment on entitlement by the operator in 2022. Prime also recorded a decrease in cost of sales of $67.1-million, mainly driven by an underlift movement during Q2 2023 of $1.9-million compared with an overlift movement in Q2 2022 of $85.9-million. This resulted in a slightly lower gross profit in Q2 2023 compared with Q2 2022.

In addition, there was a decrease of $29.2-million in other operating income, primarily consisting of investment tax credits which can be offset against PPT, a decrease in finance costs of $23.6-million and a tax income in Q2 2023 of $302.2-million compared with a tax charge of $113.4-million in Q2 2022.

Prime renewed the OML 130 licence resulting in OML 130 operating under the terms of the new Petroleum Industry Act as from June 1, 2023. Under these terms, OML 130 is subject to a 30-per-cent Corporate Income Tax regime compared with the previous 50-per-cent PPT regime which resulted in the partial release of $346.0-million of deferred income tax liabilities during the period. These factors explain the higher profit in the period of $396.6-million in Q2 2023 compared with Q2 2022.

Prime revenues decreased by $213.8-million in H1 2023 compared with H1 2022, mainly driven by lower liftings despite an increase in the realized oil price to $83.3/bbl in H1 2023 compared with $71.9/bbl in H1 2022 and a decrease in PPT revenue of $114.2-million as Prime exhausted its investment tax credit pool in 2022.

Prime also recorded a decrease in cost of sales of $213.4-million, mainly driven by an underlift movement during H1 2023 of $9.5-million compared with an overlift movement in H1 2022 of $240.6-million partly offset by an increase in DD&A of $46.7-million as Prime has changed the method of depletion on its facilities, including the FPSOs, from straight line to unit of production, to better reflect the consumption of the reserves' economic benefits. This resulted in gross profit in H1 2023 to be in line with gross profit in H1 2022. In addition, there was a decrease of $80.7-million in other operating income, primarily consisting of investment tax credits which can be offset against PPT, and a tax income in H1 2023 of $262.2-million compared with a tax charge of $198.6-million in H1 2022.

2023 management guidance

The 2023 management guidance is unchanged and a summary is presented herein, including significant assumptions in the footnotes, for completeness.

Namibia Orange basin -- Venus oil discovery

During Q2 2023, Tungsten Explorer drilled and completed the Venus-1A appraisal well located in Block 2913B and approximately 13 kilometres to the north of the Venus-1X discovery well. Venus-1A is ready for its DST program to be carried out by the Deepsea Mira rig, which is currently performing the DST work on Venus-1X including the drilling of a side track.

Prior to the end of Q2 2023, Tungsten Explorer mobilized to the location of Nara-1X exploration well, approximately 30 km to the northwest of Venus-1X in Block 2912 and is currently drilling the well with the plan to perform a DST in case of a discovery. There is also a contingent appraisal well subject to a successful outcome from Nara-1X operations. The planned DSTs on all the wells are expected to provide important data for determining the dynamic performance of the reservoir(s) and estimating flowrates that could be achieved by the production wells. Although, at this stage there is no guarantee of an economically viable project.

Impact closed an open offer to its shareholders on April 27, 2023, to raise $95.0-million. The proceeds from the open offer will be used to finance Impact's share of the 2023 drilling and DST campaign.

The company will announce the results of these activities in due course in coordination with its investee company, Impact Oil and Gas, and the operator TotalEnergies. The company has an interest in this program through its 31.0-per-cent shareholding in Impact, which in turn has a 20.0-per-cent WI in PEL 56 and a 18.9-per-cent WI in PEL 91, giving Africa Oil effective interests of 6.2 per cent and 5.9 per cent in these licences respectively.

Prime

The OML 130 drilling campaign that commenced on Feb. 22, 2023, continues with the first two wells, both water injection wells, completed during June, 2023. Water injection will support production from existing oil wells, with the impact expected to be seen during Q3 2023. Drilling commenced on the third well, an oil producer, in early July. The multiwell program is planned for up to nine wells on Egina and Akpo in the licence area during 2023 and 2024.

Acquisition of 4-D monitor seismic surveys are planned for Akpo, Egina and Agbami during H2 2023. The acquisition plan also includes a baseline 4-D seismic survey of the Preowei field. The surveys will all support future drilling decisions across both OML 127 and OML 130.

Full year 2023 production outlook remains within management guidance for both working interest and economic entitlement after Q2 2023 production results. Beyond the aforementioned drilling campaign in OML 130, which will offset production decline, there is a planned maintenance shutdown for the Akpo field taking place during Q4 2023.

Following the 20-year renewal of the OML 130 licence on May 28, 2023, FEED studies are expected to take place through the second half of 2023, which could then facilitate the final investment decision for the Preowei oil discovery development project. Preowei oil field is to the north of Egina FPSO and is a low-risk development opportunity through a satellite subsea tie-back project to the Egina FPSO.

Prime and its OML 127 partners continue working with the Nigerian authorities on the conversion of OML 127 to the PIA terms. This would result in OML 127 being subject to a 30-per-cent corporate income tax regime compared with the current 50-per-cent PPT regime. The company will update the market on the process in due course.

Dividends

The company is pleased to announce that its board of directors has declared the distribution of the company's semi-annual cash dividend of 2.5 cents per common share. This dividend will be payable on Sept. 29, 2023, to shareholders of record at the close of business on Sept. 8, 2023. This dividend qualifies as an eligible dividend for Canadian income tax purposes.

Dividends for shares traded on the Toronto Stock Exchange (TSX) will be paid in Canadian dollars on Sept. 29, 2023; however, all United States and foreign shareholders will receive U.S.-dollar funds. Dividends for shares traded on Nasdaq Stockholm will be paid in Swedish kronor in accordance with Euroclear principles on Oct. 4, 2023.

To execute the payment of the dividend, a temporary administrative cross-border transfer closure will be applied by Euroclear from Sept. 6, 2023, up to and including Sept. 8, 2023, during which period shares of the company cannot be transferred between the TSX and Nasdaq Stockholm. Payment to shareholders who are not residents of Canada will be net of any Canadian withholding taxes that may be applicable.

Management conference call

The company will not host a management results webcast for this period. Please contact investor relations with any questions.

About Africa Oil Corp.

Africa Oil is a Canadian oil and gas company with producing and development assets in deepwater Nigeria and an exploration/appraisal portfolio in west and south of Africa, as well as Guyana. The company is listed on the Toronto Stock Exchange and on Nasdaq Stockholm under the symbol AOI.

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