Mr. Roger Tucker reports

AFRICA OIL ANNOUNCES THIRD QUARTER 2023 RESULTS

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

Highlights

• Successfully completed Venus-1X drill stem testing (DST) program after flowing oil at positive rates, supporting the Venus commercial development case, and as confirmed by the operator's public statements that there will be an oil development on Venus.
• The Tungsten Explorer drilling rig has spudded the Mangetti-1X exploration well in the northern part of Block 2913B with the results expected by early next year.
• AOC participated in a $40.0-million equity placement by Impact after the period-end, investing $13.0-million with the proceeds to finance Impact's continuing activities for the remainder of 2023.
• Prime distributed a dividend of $125.0-million, $62.5-million net to the company's 50-per-cent shareholding.
• In Q3 2023 OML 127 was voluntarily converted to operate under the new Petroleum Industry Act from March 1, 2023, and is now subject to 30-per-cent corporate income tax regime compared with the previous 50-per-cent petroleum profit tax regime.
• OML 130 drilling campaign continues with two water injection wells and one production well on the Egina oil field having been successfully completed and put on line.
• Q3 2023 average daily WI production rate of 20,300 boepd (barrel of oil equivalent per day) was approximately 4 per cent higher than Q2 2023 average of 19,500 boepd.
• Achieved an average realized oil sales price of $84.5/bbl compared with the average Bloomberg dated Brent price of $81.5/bbl for the offtake dates in July and August.
• Prime's cash position of $118.9-million and debt balance of $375.0-million resulting in a Prime net debt position of $256.1-million, in each case net to the company's 50-per-cent shareholding at Sept. 30, 2023.
• AOC's cash and cash equivalents at Sept. 30, 2023, of $201.5-million.

Africa Oil president and chief executive officer, Roger Tucker, commented: "Third quarter 2023 was a positive period for the company with notable achievements for our two main assets offshore Namibia and Nigeria. The Venus-1X testing program achieved positive flow rates for the world-class Venus light oil discovery offshore Namibia, and I am encouraged to note the public statements by the operator, TotalEnergies, that there will be a development on the Venus field.

"I am pleased to confirm the conversion of OML 127 to Nigeria's new Petroleum Industry Act regime, that reduces the effective tax rate for the Agbami field. Our Nigerian assets continue to perform well and we received a dividend for $62.5-million during the period. We also saw the first quarterly increase in the average daily production since the second quarter 2021, as the Egina infill drilling program offset the field's production decline.

"We have a strong balance sheet and liquidity position, high netback production, and unique transformational catalysts in our portfolio. We are focused on optimizing our business structure and delivering on our organic growth opportunities. I look forward to updating you in due course as we make progress on several fronts towards delivering the next phase of value creation."

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

In Q3 2023 and first nine months of 2023, the company recognized net operating income amounting to $47.1-million and $175.9-million respectively (Q3 2022 and first nine months of 2022 -- $70.5-million and $121.8-million respectively).

In Q3 2023 and first nine month of 2023, included in the company's share of income from equity investments is income from its 50-per-cent investment in Prime of $57.1-million and $307.3-million respectively (Q3 2022 and first nine months of 2022 -- $78.3-million and $143.7-million respectively).

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

Prime revenues decreased by $125.7-million in Q3 2023 compared with Q3 2022, mainly from a decrease in oil revenue of $76.1-million driven by lower liftings. Prime also recorded an increase in cost of sales of $131.7-million, primarily driven by an underlift movement during Q3 2023 of $29.8-million compared with an underlift movement in Q3 2022 of $147.0-million. This resulted in a decrease in gross profit to $151.0-million in Q3 2023 from $408.4-million in Q3 2022. There was a tax charge in Q3 2023 of $5.1-million compared with $224.0-million in Q3 2022.

In Q3 2023 Prime voluntary converted the OML 127 licence to operate under the new Petroleum Industry Act from March 1, 2023, with all key conditions precedent fulfilled during the three months ended Sept. 30, 2023. Under these terms, OML 127 is subject to a 30-per-cent corporate income tax regime compared with the previous 50-per-cent PPT regime which resulted in the release of $62.0-million of deferred income tax liabilities during the period for OML 127. These factors explain the lower profit in the period of $42.5-million in Q3 2023 compared with Q3 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

The company believes that its most impactful catalysts for the remainder of 2023 are the appraisal and exploration results from Block 2913B (PEL 56), located offshore Namibia and operated by TotalEnergies. These include flow test results from the Venus-1A appraisal well and the outcome of the Mangetti-1X exploration well.

At the date of this announcement, AOC has an interest in this program through its 31.1-per-cent shareholding in Impact, which in turn has a 20.0-per-cent WI in PEL 56, giving Africa Oil effective interest of 6.2 per cent in the licence.

During Q3 2023, Deepsea Mira rig performed the DST program for Venus-1X well with positive results achieved, which support the case for a commercial development of the Venus field as confirmed by the operator's public statements that there will be an oil development on Venus. The results for Venus-1X are being incorporated in the development studies and are expected to be confirmed by the Venus-1A DST program, currently being carried out by Deepsea Mira.

During Q3 2023, the Tungsten Explorer rig drilled the Nara-1X exploration well in Block 2912, approximately 30 kilometres to the northwest of Venus-1X. The formation was encountered on prognosis and a thick interval was drilled with oil and gas shows. This outcome confirms the presence of a working petroleum system at the Nara-1X location, a considerable distance from Venus-1X and Venus-1A locations. A full wireline logging program was completed, and a core taken; however, the well was not flow tested as the interval drilled was deemed non-commercial and was plugged and abandoned. The joint venture is continuing to evaluate the results of Nara-1X.

Impact closed a private placement with certain existing shareholders on Oct. 31, 2023, to raise $40.0-million. The proceeds from this placement, together with existing cash reserves, is intended to finance Impact's participating share of costs for the remainder of 2023, which include the continuing appraisal of the Venus discovery, drilling of the Mangetti-1X exploration well and further 3-D seismic acquisition for the southern part of Block 2913B to cover the Damara and South Damara structures that have been identified on 2-D seismic.

Prime

The OML 130 drilling campaign that commenced on Feb. 22, 2023, continues with the three wells, two water injectors and one production well, successfully drilled and completed on Egina. The infill drilling has offset production declines with the first quarterly increase in the average daily production since second quarter 2021.

The drilling rig is currently drilling the first of three wells on Akpo West field. The wells will be tied into the Akpo FPSO. 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 late 2023 through early 2024. The acquisition plan also includes a baseline 4-D seismic survey of the Preowei field. The surveys will 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 Q3 2023 production results. Beyond the aforementioned drilling campaign on Egina and Akpo, which will offset production decline, there is a planned maintenance shutdown for the Akpo field taking place during Q1 2024, this was previously planned for 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 fourth quarter of 2023, which could 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 development opportunity via a satellite subsea tie-back project to the Egina FPSO.

Management conference call

Senior management will hold a conference call to discuss the results on Thursday, Nov. 16, 2023, at 9 a.m. ET/2 p.m. GMT/3 p.m. CET.

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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