AFRICA OIL ANNOUNCES SIGNIFICANT INCREASE IN RESOURCE

September 16, 2014 (AOI-TSX, AOI-NASDAQ OMX Stockholm) … Africa Oil Corp. (“Africa Oil”, “AOC” or the “Company”) is pleased to announce that an independent assessment of the Company’s Contingent Resources in the South Lokichar Basin located in Blocks 10BB and 13T in Kenya has been completed by Gaffney, Cline & Associates (“Gaffney Cline” or “GCA”). 

Total 2C gross contingent resources increased 67% to 616 million barrels of oil and total 3C gross contingent resources increased 52% to 1.29 billion barrels of oil in the oil fields discovered to date in the South Lokichar basin. The Prospective Resource estimates outside of the field areas in the South Lokichar Basin have not been updated and it is planned to do a comprehensive update of all resources on all properties at year end.

Given the number of discoveries in the South Lokichar Basin, the following two tables have been prepared for the convenience of readers by Africa Oil.  Readers should refer to the tables attached to this News Release, which have been prepared by GCA, detailing the low (1C), best (2C) and high (3C) Contingent Resources estimates in greater detail.

Notes:

1. “Gross Contingent Resources” are 100% of the volumes estimated to be recoverable from the field in the event that it is developed.
2. Net Contingent Resources in this table are AOC’s Working Interest fraction of the Gross Field Contingent Resources; they do not represent AOC’s actual Net Entitlement under the terms of the PSC that governs the asset, which would be lower.
3. The volumes reported here are “unrisked” in the sense that no adjustment has been made for the risk that the field may not be developed in the form envisaged or may not be developed at all (i.e. no “Chance of Development” factor has been applied).

Notes:

1. Gross Contingent Resources are 100% of the volumes estimated to be recoverable from the field in the event that it is developed.
2. Net Contingent Resources in this table are AOC’s Working Interest fraction of the Gross Field Contingent Resources; they do not represent AOC’s actual Net Entitlement under the terms of the PSC that governs the asset, which would be lower.
3. The volumes reported here are “unrisked” in the sense that no adjustment has been made for the risk that the field may not be developed in the form envisaged or may not be developed at all (i.e. no “Chance of Development” factor has been applied).

The independent assessment was carried out in accordance with the standards established by the Canadian Securities Administrators in National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.  The effective date of the report is July 31, 2014.

In addition, the Company is pleased to announce that two key exploration wells have commenced drilling, the Kodos-1 well which is a basin opening well in the Central Kerio Basin and the Ekosowan-1 well, which is a large prospect on the “string of pearls” trend on the western basin bounding fault in the South Lokichar Basin directly south of the Amosing and Ngamia significant discoveries. These wells are expected to be completed by year end.

Keith Hill, Africa Oil’s President and Chief Executive Officer, commented: “Gaffney Cline’s independent assessment confirms a significant increase in Contingent Resources for the South Lokichar Basin in Northern Kenya. Based on the drilling and testing program over the past year our best estimate is now that the Company’s discoveries in the South Lokichar Basin contain gross Contingent Resources of 616 million barrels of oil (2C estimate), an increase of 67% on previous estimates, and may contain as much as 1291 million barrels of gross oil Contingent Resources (3C estimate), an increase of 52%.  This level of resources exceeds the threshold for development and we are targeting development sanction at the end of 2015/early 2016.  We continue to aggressively explore and appraise the basin with three rigs operating and are currently acquiring a large 3D seismic survey in the west and north of the basin.  The key factors to address to increase these resources over the next year will be related to recovery factors and reservoir connectivity and the early appraisal results at Ngamia and Amosing provide encouragement on the lateral continuity of the Auwerwer sands.  The upcoming extended well tests at Ngamia and Amosing and the ongoing appraisal and core analysis programs will provide additional data to support this understanding.  We also have an exciting exploration portfolio on trend with the South Lokichar Basin and will have drilled six new basins by the end of 2015.  We are confident that our early successes will be repeated in at least one additional new basin.”

Africa Oil’s holdings in the South Lokichar Basin comprise non-operated 50% working interests in Blocks 10BB and 13T in Kenya.  The South Lokichar Basin contains eight hydrocarbon discoveries in various stages of appraisal and numerous prospects and leads, that have proven and productive analogs.  Since the effective date (July 31, 2013) of Gaffney Cline’s previous evaluation of the contingent and prospective resources for the South Lokichar Basin, highlights of the Company’s exploration and appraisal activities for this basin include:

• Drilling and production testing the Ekales-1 well in Block 13T resulting in an additional oil discovery and demonstrating high quality Auwerwer sands containing light waxy sweet crude.

• Drilling the Agete-1 and 2 wells and production testing Agete-1 in Block 13T resulting in an additional oil discovery with high quality Auwerwer sands containing light waxy sweet crude.

• Drilling the Amosing-1, 2 and 2A wells in Block 10BB resulting in an additional oil discovery in high quality Auwerwer sands with further reservoirs developed in the Lokhone formation.  The Amosing-2 and 2A appraisal wells suggest reservoir and pressure continuity between the wells which will be determined by the upcoming extended well test.

• Drilling and production testing the Ewoi-1 well in Block 10BB resulting in an additional oil discovery in the lower quality Lokhone sandstones developed on the eastern flank of the basin.

• Production testing the Etuko-1 discovery in Block 10BB further demonstrated the production potential of sands within the Lokhone shale source rock.  Etuko-2A was drilled to test oil shows seen while drilling the Auwerwer reservoir at Etuko-1, the results of the well are considered inconclusive and analysis is underway to consider further options to evaluate this reservoir.

• Drilling the Emong-1 well in Block 13T which encountered oil and gas shows in poorly developed reservoirs at the Auwerwer target interval.  It is believed that the reservoir was poorly developed due to its proximity to the basin bounding fault and its location within what appears to be a local isolated slumped fault margin.

• Drilling the Ekunyuk-1 well in Block 10BB on the eastern flank play which encountered a small zone of non-commercial oil pay within thick good quality Lokhone sands. The quality of Lokhone sands indicates that there is further exploration potential in this area of the basin.

• Drilling the Twiga-2 appraisal wells in Block 13T located near the basin bounding fault encountered relatively thin net oil pay within an alluvial fan facies, with limited reservoir quality.  The Twiga-2A sidetrack was drilled to the northeast away from the fault and encountered similar high quality Auwerwer formations to the Twiga-1 discovery.  Production testing of Twiga-2A is ongoing.

• Drilling the Ngamia-2 appraisal well in Block 10BB confirmed the thickness and lateral extent of the Auwerwer sands and identified a new fault trap, north of the main Ngamia accumulation.  Drilling the Ngamia-3 appraisal well in Block 10BB further confirmed the thickness and lateral extent of the Auwerwer sands over the Ngamia structure and also extended the known oil column significantly downdip from the Ngamia-1A discovery well.

• Drilling the Etom-1 well in Block 13T resulted in an additional oil discovery within high quality Auwerwer sands along the western basin bounding fault play.  The well results were announced after the effective date for the Gaffney Cline resource assessment and are therefore still carried in prospective resources.

• To date ten exploration wells have been drilled in the basin resulting in eight oil discoveries, an 80% success rate.

• Acquisition of a 704 square kilometer 3D seismic survey is approximately 90% complete over the discoveries and prospects along the western basin bounding fault and fast track processed results over the Ekosowan prospect and Amosing discovery were utilized in this updated resource assessment.  In addition, a further 100 kilometers of 2D seismic was acquired in the basin.

• Acquisition of 890 meters of whole core in wells at Agete, Amosing Ekales, Etuko, Ngamia and Twiga to aid in reservoir understanding.

• All production tests indicate similar quality light waxy sweet crudes.

The Company continues to aggressively explore and appraise the South Lokichar Basin.  Two drilling rigs and a completion/test rig are currently operating in the basin and are planned to continue through 2015.  The Ngamia-4 appraisal well and the Ekosowan-1 exploration well are currently drilling and production testing is ongoing at Twiga-2A. 

Commitment has been made to expand the 3D seismic survey to cover an additional 247 square kilometers over the Etom area and the full survey is expected to be complete by around end first quarter 2015.  Consideration is also been given to expanding the survey over the eastern flank play.  It is expected that the results of the 3D seismic survey will lead to better subsurface understanding and identify additional prospectivity.  Due to the delays in acquiring the 3D seismic survey the Government has recently approved a one year extension to the PSC exploration term for both blocks 10BB and 13T, which means the final exploration periods will expire in July 2017 and September 2017, respectively. 

The anchor for a development of the South Lokichar Basin will be the series of high quality Auwerwer reservoir discoveries made along the western basin bounding fault at Amosing, Ngamia, Ekales, Twiga and Agete.  The appraisal program is focused on increasing the subsurface certainty through multiple appraisal wells, extended well tests at Amosing and Ngamia and special core analysis.  The wide distribution between 1C, 2C and 3C contingent resources is in part driven by the assumed recovery factor range for the Auwerwer reservoir of P90 – 16%, P50 – 26% and P10 – 36% which is a function of uncertainty over reservoir distribution and connectivity.    The ongoing appraisal program is aimed at both narrowing uncertainty around contingent resources and confirming the Company’s expectation of a recovery factor at the upper end of the current range.

The South Lokichar Basin exceeds threshold oil volumes for undertaking development studies and development planning is being fast tracked.  It is anticipated that a Field Development Plan will be submitted to Government in the second half of 2015 and project sanction, including an export pipeline, is being targeted at the end of 2015/early 2016.  This will be the catalyst for booking reserves for the basin.

Please refer to the tables below detailing the Company’s Contingent Resources by discovery as provided by Gaffney Cline & Associates, effective July 31, 2014.

Conference Call

A conference call will held to discuss the resource update on September 16, 2014 at 11:00 ET, 4:00 p.m. UK time, or 5:00 p.m. Swedish time. 

Please call in 10 minutes before the conference starts and stay on the line (an operator will be available to assist you).

Call-in number for the conference call (North America): +1 416-340-2216 Call-in number for the conference call (North America Toll Free): +1 866-223-7781 Call-in number for the conference call (Europe): + 800-6578-9898

A replay of the telephone conference will be available approximately one hour after the completion of the conference call until September 23, 2014.

Replay number in North America: +1 905 694 9451 North America (Toll Free) is: +1 800 408 3053

The pass code for the replay is: 9087224

About Africa Oil Corp.

Africa Oil Corp. is a Canadian oil and gas company with assets in Kenya and Ethiopia as well as Puntland (Somalia) through its 45% equity interest in Horn Petroleum Corporation. Africa Oil's East African holdings are within a world-class exploration play fairway with a total gross land package in this prolific region in excess of 215,000 square kilometers. The East African Rift Basin system is one of the last of the great rift basins to be explored. The Company is listed on the Toronto Stock Exchange and on NASDAQ OMX-Stockholm under the symbol "AOI".

Forward Looking Statements

Certain statements made and information contained herein constitute "forward-looking information" (within the meaning of applicable Canadian securities legislation). Such statements and information (together, "forward looking statements") relate to future events or the Company's future performance, business prospects or opportunities. Forward-looking statements include, but are not limited to, statements with respect to estimates of reserves and or resources, future production levels, future capital expenditures and their allocation to exploration and development activities, future drilling and other exploration and development activities, ultimate recovery of reserves or resources and dates by which certain areas will be explored, developed or reach expected operating capacity, that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.

All statements other than statements of historical fact may be forward-looking statements. Statements concerning proven and probable reserves and resource estimates may also be deemed to constitute forward-looking statements and reflect conclusions that are based on certain assumptions that the reserves and resources can be economically exploited. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "seek", "anticipate", "plan", "continue", "estimate", "expect, "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions) are not statements of historical fact and may be "forward-looking statements". Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. The Company does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by applicable laws. These forward-looking statements involve risks and uncertainties relating to, among other things, changes in oil prices, results of exploration and development activities, uninsured risks, regulatory changes, defects in title, availability of materials and equipment, timeliness of government or other regulatory approvals, actual performance of facilities, availability of financing on reasonable terms, availability of third party service providers, equipment and processes relative to specifications and expectations and unanticipated environmental impacts on operations. Actual results may differ materially from those expressed or implied by such forward-looking statements.

Cautionary Statements regarding Well Test Results

Drill stem tests are commonly based on flow periods of 1 to 5 days and build up periods of 1 to 3 days. Pressure transient analysis has not been carried out on all well tests and the results should therefore be considered as preliminary. Well test results are not necessarily indicative of long-term performance or of ultimate recovery.

ON BEHALF OF THE BOARD

“Keith C. Hill”

President and CEO

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For complete release see attached file.

         For further information, please contact:          Sophia Shane, Corporate Development (604) 689-7842.