Mr. Roger Tucker reports

AFRICA OIL ANNOUNCES STRATEGIC FARMOUT OF IMPACT'S NAMIBIAN INTERESTS

Africa Oil Corp. is outlining a significant value-enhancing farmout transaction related to its offshore Namibia interests held through its investee company, Impact Oil and Gas Ltd. On the closing of this transaction, Impact will have a 9.5-per-cent interest in blocks 2912 and 2913B that is fully carried for all joint venture costs, with no cap, through to first commercial production. Impact will also be cash reimbursed on closing for its share of the past costs incurred on the blocks net to the farmout interests, which is estimated to be approximately $99-million (U.S.).

Impact Oil and Gas Namibia Pty. Ltd., a wholly owned subsidiary of Impact, has signed a farmout agreement with TotalEnergies EP Namibia BV, a wholly owned subsidiary of TotalEnergies SE, for a share of Impact's interests in the blocks. This agreement provides Impact with a carry loan over all of Impact's remaining development, appraisal and exploration costs on the blocks from Jan. 1, 2024, until the date on which Impact receives the first sales proceeds from oil production on the blocks.

The carry is repayable to TotalEnergies from a share of Impact's after-tax cash flow and net of all joint venture costs, including capital expenditures, from production on the blocks post the first oil date. During the repayment of the carry, Impact will pool its entitlement barrels with those of TotalEnergies for more regular offtakes and a more-stable cash flow profile, and will also benefit from TotalEnergies' marketing and sales capabilities.

The completion of the transaction will be subject to customary third party approvals from the Namibian authorities and joint venture parties.

The farmout agreement provides Africa Oil with the opportunity to continue its participation in the world-class Venus oil development project with no upfront costs, and to retain further upside in the highly prospective exploration and appraisal activities on the blocks that have the potential to significantly grow the existing discovered resource base.

Africa Oil and Hosken Consolidated Investments Ltd. (HCI), the two largest shareholders in Impact with a combined shareholding of 81 per cent, are fully aligned and support the farmout agreement having worked jointly with Impact's management to advance the negotiations with TotalEnergies.

Africa Oil president and chief executive officer Roger Tucker commented: "The farmout agreement allows Africa Oil to retain a very attractive growth opportunity in a major energy project that is expected to add significant reserves and production to our portfolio from the late 2020s through the 2030s and beyond, without stretching our balance sheet or exposing ourselves to the execution risk on a large-scale deepwater project. It also reinforces our view of TotalEnergies' confidence in the development outlook for the Venus oil discovery and the follow-on prospectivity of the two blocks.

"The successful collaboration of Impact management, the company and Impact's other major shareholder, HCI, has played a pivotal role in navigating the complexities of this transaction, which will enable Impact and its shareholders to retain the upside potential from the ongoing exploration and appraisal campaign on Block 2913B with significant prospects scheduled to be drilled in 2024, with zero capital expenditure to Impact.

"This farmout agreement delivers on Africa Oil's stated objective of focusing on and enhancing the value of its core assets. Also, with the funding secured for Impact's Namibian assets through to first commercial production and no further demand on our balance sheet, we can accelerate the work to consolidate our assets ownership, and to consider other capital allocation options, including shareholder capital returns and other growth opportunities."

Block 2913B (petroleum exploration licence 56) and the Venus discovery

Petroleum exploration licence 56, Block 2913B, is located offshore southern Namibia and covers approximately 8,215 square kilometres in water depths between 2,450 metres and 3,250 m. Impact currently holds a 20-per-cent interest in this block. TotalEnergies, the operator, holds a 40-per-cent interest, QatarEnergy holds a 30-per-cent interest, and NAMCOR (National Petroleum Corporation of Namibia), the Namibian state oil company, holds a 10-per-cent interest. On the closing of the farmout agreement, Impact will hold a 9.5-per-cent interest in this block.

Block 2913B contains the world-class Venus light-oil and associated gas field that was discovered by the Venus-1X well drilled in 2022, which encountered a high-quality, light-oil-bearing sandstone reservoir of Lower Cretaceous age. This well was re-entered, side tracked and tested in the third quarter of 2023, achieving positive test results. These results are being interpreted and incorporated into the development studies for the field.

Further appraisal of the Venus structure was undertaken with the drilling and testing of the Venus-1A appraisal well. A third appraisal well on the Venus structure, Venus-2A, is currently being drilled by the Deepsea Mira rig, and a second rig, Tungsten Explorer, is currently drilling the Mangetti-1X exploration well, targeting a prospect located in the northern part of Block 2913B. Mangetti-1X will then be deepened to appraise the northern area of the Venus structure.

In addition to the continuing drilling operations, a three-dimensional seismic acquisition program over the southern part of Block 2913B is currently under way. This program will cover an area where further follow-on prospectivity bas been identified from existing two-dimensional seismic data sets. These include the Damara and Damara South prospects.

Block 2912 (PEL 91)

Petroleum exploration licence 91, Block 2912, is adjacent and to the west of Block 2913B. It covers an area of approximately 7,884 square kilometres in water depths between 3,000 m and 3,950 m. Impact currently holds an 18.9-per-cent interest in this block. TotalEnergies, the operator, holds a 37.8-per-cent interest, QatarEnergy holds a 28.3-per-cent interest, and NAMCOR, the Namibian state oil company, holds a 15-per-cent interest. On the closing of the farmout agreement, Impact will hold a 9.5-per-cent interest in this block.

Advisers

Evercore acted as sole financial adviser to Africa Oil in relation to this transaction.

Management presentation

Senior management will host a presentation on the farmout agreement today, Wednesday Jan. 10, 2024, at 9 a.m. ET.

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 western and southern Africa, as well as Guyana.

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