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Investor PresentationFebruary, 2011
2
We’re Part of the Lundin GroupWe’re Part of the Lundin Group
Which has a long, successfulWhich has a long, successfulWhich has a long, successfulWhich has a long, successful3
Which has a long, successfulWhich has a long, successfulhistory in Africahistory in AfricaWhich has a long, successfulWhich has a long, successfulhistory in Africahistory in Africa
$2 billion invested in Africa toAfrica to date
The Last Undiscovered “Elephants”The Last Undiscovered “Elephants”
Poor contract terms except KurdistanHigh potential
Deep waterExpensiveBP disaster
Source – Casey Research Report 2010
Deep waterHighly competitiveHigh potential
5
Recent HighlightsRecent Highlights
•Closed Tullow farm-out (S. Omo, 10BB, 10A), 12A/13T expected to close Feb-2011
•Centric shareholders approved takeover – expected to close Feb-2011close Feb 2011
•Forced exercised warrants in Q4-2010, raising $CAD55.8MM
•Resource estimate currently being updated
•Completed seismic program in 10BB and Ogaden, 10A expected to complete Q1-2011
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Why East Africa?Why East Africa?
•One of the last areas on earth where onshore billion barrel accumulations can still be found with good contract terms.
•Ability to assemble massive acreage position of almost 350,000 sq. km. (86MM acres, equivalent to 1400 North Sea bl k )blocks)
•Existence of four distinct petroleum systems, each of which is proven in our blocks and has multi-billion barrel accumulations on trend.
•New discoveries in Uganda has raised industry interest level and will bring much needed infrastructure to the region.region.
Surrounded on all sides by Surrounded on all sides by 7
billions of barrels of oilbillions of barrels of oil
AOI Assets
‐ Ethiopia
‐ Kenya
‐ Puntland (Somalia)
8
Tullow Deal ClosedTullow Deal Closed• Tullow is one of the most successful explorers
in last decade and found the analogous deposit in the Albert Graben of Uganda. Drilled 35 out of 36 successful wells.
• Tullow takes 50% and operatorship in 4 AOI bl k i K d i Ethi i Th illblocks in Kenya and one in Ethiopia. They will pay $10MM past costs and carry AOI for next $23.75MM of their share of costs.
• Tullow have a full operational team, particularly on the drilling side, that AOI would have to build. They also will have a top notch G&G y pteam who know rift basins better than anyone.
• Tullow operates the Uganda export pipeline consortium and we will now have a front row seat at these negotiations.
9
Centric Acquisition Closing Feb, 2011
• Block 10BA is last remaining prospective block in heart of East Africa rift trend
Hydrocarbon fieldsTertiary RiftCretaceousPermian-Triassicfault
• New potential rift trend in Mali
• Fully or partially carried by Tullow and H it
South Omo BlockHeritage
• Pure share deal, Centric shareholders to hold 15% of combined company
Block 10A
CENTRIC Block 10BA
Exploration analogue to Tertiary Rift hosted
Block 7
Block 13T
Block 9
2BBO Lake Albert Oil Field, Uganda
Centric/Heritage Oil25%/75%
CretaceousBlock 11
Block 10BB
Block 12A
Tullow Blocks2BBO Albert Oil Fields
Rift Basin
10
Africa Oil Promotes*Africa Oil Promotes*
Kenya Working Interest Paying InterestMinimumWork Program
Block 10BB 40% 0% 600 km seismic and 1 well
l k k i i d llBlock 10BA 50% 20% 750 km seismic and 1 well
Block 10A 30% 0% 500 km seismic and 1 well
Blocks 12A/13T 50% 50% 1,000 km seismic
Block 9 66.7% 66.7% None
Ethiopia
South Omo 30% 0% 500 km seismic and 1 well
Ogaden 55% 30% 500 km seismic
Adigala 50% 50% None
Somalia
Dharoor/Nuugal 45% 35% 1 Well on each block
Mali
Blocks 7/11 25% 0% 1 well + 1,000 km seismic
*Approximate carries. Based on $ amount and thus subject to spending caps.*Subject to remaining sole‐funding obligations to Range on Nugaal
11
Partnership InterestsPartnership InterestsKenya
Block 10BBTullow (Operator) 50%Africa Oil 40% Lion Energy 10%
Block 10A
Tullow (Operator) 50%Africa Oil 30% EAX (Black Marlin) 20%
Blocks 12A/13TTullow (Operator) 50%Africa Oil 50%
Block 9Africa Oil (Operator) 66.7%Lion Energy 33.3%
Block 10BATullow (Operator) 50%Africa Oil 50%
Ethiopia
South OmoTullow (Operator) 50% Africa Oil 30% White Nile 20%
AdigalaAfrica Oil (Operator) 50%New Age 50%
OgadenAfrica Oil (Operator) 55%New Age 15%EAX (Black Marlin) 30%
MaliH it (O t ) 75%
Blocks 7/11Heritage (Operator) 75%Africa Oil 25%
Somalia
Dh /N l
Africa Oil (Operator) 45%Range Resources 20%
Dharoor/NuugalRange Resources 20%Red Emperor 20%Lion Energy 15%
12
KenyaKenya
Gas discoveryAfrica Oil now operatingAfrica Oil now operating
AOI holds 6 blocks in Kenya*• 4 blocks on Tertiary Rift trend, 2 on Cretaceous Rift trend
• All blocks except Block 9 farmed out to Tullow
*Subject to Centric deal closing
13
Kenya Kenya –– Block 10BBBlock 10BB
Loperot oil discovery in 10BB with many large follow up prospects
Area = 12,638 kmArea = 12,638 km22
NN--Kerio Kerio
13T
many large follow up prospects
AOC holds a 40% carried interest
Analogous to Albert Graben of U d h 1 BBO di d /
Lake Lake TurkanaTurkana
Uganda where 1 BBO discovered w/ 2.5 BBO prospective resources
Ugandan discoveries have spurred plans for pipeline through Kenya
SS--Kerio Kerio
plans for pipeline through Kenya
Seismic program (615 km) completed Oct 28 2010Lokichar Lokichar
10BB
12ALeads with seeps on lake
2010 programRecordedLegacy seismic
Southern Lake Albert Block 10BB – Lake SeepsSurface Geochemical Anomalies
Outboard Nzizi / Mputa (Pelican prospect)
Southern Lake Albert Block 10BB Lake Seeps
Deep basin center vertical migration (episodic) w/smaller seepsp
Basin margins lateral migration w/massive seepage above
’ haccum’s…onsh seeps mapped for decades
Oil Slicks in Southern Lake Albert nearOil Slicks in Southern Lake Albert near Kingfisher and Oil Slicks in Lake
Turkana near Block 10BBTar sample on Chorea Seismic Line
15Lead Chorea
Ch C l L diChorea ComplexMost Likely Prospective Resources = 400 MMBO
Loperot discovery
Kerio NorthKerio North
Kerio North
Kerio North ML Prospect psize – 150 MMBO
Block 10BA
• Multiple slicks interpreted from ASAR satellite data
• Onshore seep documented ~1984;Onshore seep documented 1984; “similar to Lake Albert seeps”
• Total gross P50 prospective resources totaling 2.2 billion barrels (unrisked)*
• P10 – 4.4 billion barrels
• P90 – 0.99 billion barrels
• Identified 27 leads from existing seismic• Identified 27 leads from existing seismic data
*Independent technical report NI 51-101 reserves study by Gustavson A i t bli h d J 2010Associates published January, 2010
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Lake Turkana – Block 10BA 1984 Seismic
19
KenyaKenya--Block 10A Block 10A AOC holds a 30%
carried working interest
Cretaceous rift graben LakeLake
Area = Area = 14,597 14,597 kmkm22
gextending into Kenya from Sudan
3 old wells with up to
Lake Lake TurkanaTurkana
p2000 foot thick columns of residual oil
Late structuring has Block 10ABlock 10A glikely breached drilled traps
Currently shooting y gprospect detail seismic and test line(s) over volcanics
Block 10BBBlock 10BB
Block 9Block 9
Plan to drill 2011 ________ proposed seismic [726+52 km]proposed seismic [726+52 km]________ optional regional [102 km]optional regional [102 km]____ ____ SIP reprocessedSIP reprocessed
________ proposed seismic [726+52 km]proposed seismic [726+52 km]________ optional regional [102 km]optional regional [102 km]____ ____ SIP reprocessedSIP reprocessed
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Paipai Prospect-575 MMBO
Block 10A New Play Concepts Block 10A New Play Concepts
Turtle structure (?)
AOC Exploration Strategy:
Find & drill structural traps which have maintained
structural integrity through T ti dj t t
Paipai Prospect ML PR: 575 MMBO
Tertiary readjustments
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Kenya – Blocks 12A / 13TKenya – Blocks 12A / 13T
AOC holds 50% ground floor interest
Protection acreage along Tertiary rift trend south of 10BB
Highly underexplored with no seismic or wells drilled
Plan Full Tensor Gravity (FTG), geochem and seismic
Miocene Source Rock in OutcropGood to excellent, Type I; 3% TOC
National parks/game reserves
Digital Elevation Model
22
Kenya – Block 9Kenya – Block 9AOC 20% interestAssessing options
Bogal‐1 Summary (5,085m TD):‐ Cretaceous SS are gas‐bearing‐ 91 m net gas pay‐ Best estimate for total gas ~3 TCF (gross)
Challenges:‐ Commercial flow rates‐Monetizing dry gas
Kenya’s Need for GasKen a’s energKenya’s energy consumption growing by 8% annually 0.25
Kenya Primary Energy Consumption, 1980-2008
yCurrently, 68% of Kenya’s primary energy needs come from the
0.2
ion
BTU
)
needs come from the burning of firewoodPeak load power from 0.1
0.15
sum
ed (Q
uadr
ill
pnatural gas needed to supplement hydroelectricity and
0.05
0.1
Ener
gy C
on
hydroelectricity and geothermal power 0
Year
EthiopiaEthiopia
• AOI holds blocks in 3 different trends ‐ in Tertiary yRift (South Omo) Karoo Rift (Ogaden) and Jurassic rift (Adigala)(Adigala)
• Exploration activity in area increasing but remains
i l d l dextensively under explored
• Proven petroleum systems
• Significant nearbySignificant nearby discoveries and shows
• Seismic acquisition l dcompleted
Area = Area = 29,465 29,465 kmkm22Ethiopia - South OmoEthiopia - South Omo
AOC holds 30% interest
P t ti lProtection acreage along Tertiary rift trend north of Lake Turkana
Hi hl d l dOmoOmo
National National ParkPark
MagoMagoNational National
ParkPark
Highly underexplored with no seismic or wells drilled
Pl F ll T G itPlan Full Tensor Gravity, geochem and seismic
Sudan
KenyaKenya
Lake Turkana
26
Ethiopia - AdigalaEthiopia - Adigala Area = 27,193 kmArea = 27,193 km22
AOC h ld 50% i20
AOC holds 50% interest
Field work confirms source, seal and reservoir
12
13
14
15
16
17
18
19
20
Oil extracted from source rock matches oil extracted from outcropping dolomites
5
6
7
8
9
10
11
12
Program length = 523 kmProgram length = 523 km
Seismic acquired in 2009 is poor quality
Additi l t t i i li
0m
1
2
3
4
Jurassic Source RockTOCs: 2‐3.86%
Additional test seismic line and other G&G work
No outstanding work it t
Ng Unconf w/ near surface volcanics
MK Ss obj
West East
commitments UJ SR
Near Top Karoo?
Adigala seismic line ADI‐06‐09.mig.8
27
Ethiopia - Ogaden BlocksEthiopia - Ogaden BlocksAcquiring seismic over existing leads. Blocks 6 & 7
complete, finishing Block 8 in December
Light oil recovered from Jurassic in both El Kuran wellsPlan to drill one well in 2012 depending on seismicPlan to drill one well in 2012 depending on seismic
Program length = 500 km shallow SR
Adigrat TWT Deep gas discovery?!
5km
Deep SR
28
Puntland
Oil IndicationsOil seeps and shows in wells
• Concessions located in Puntland, a
Oil Indications
,more stable and semi-autonomous region of Somalia
• Direct analog to Yemen discoveriesDirect analog to Yemen discoveries with numerous shows and seeps
• Currently attempting to procure rig t t d t bl tcontractor under acceptable terms
• Obtained one year contract extension to January, 2012y,
Puntland-Dharoor & NugaalPuntland-Dharoor & Nugaall d dFarmout completed to Red Emperor to
take 20% for paying 30% of first wells
Remapping Dharoor prospects for final pp g p pprospect selection
Currently attempting to procure rig contractor under acceptable termscontractor under acceptable terms
29
30
Mali Blocks 7 and 11
• 25% in Blocks 7 and 11
• Farmed-out 75% interest to Heritage Oilg
• 18 mm acres in Central African rift system
• Oil shows in nearby water well
A l ift b i i l d th A d• Analogous rift basins include the Agademblock, Niger, reported 350 mm barrels in place
31
Community Development
CD j t t h
CD projects include:• School rehabilitationCD projects must have:
• Religious neutrality• Sustainability• Local content
• School rehabilitation• Bursary Fund• Farm tools• Birkahs (water storage)• Local content
• Potential for capacity building• High Impact relative to cost• Political neutrality
Birkahs (water storage)• Human health posts• Medicines for livestock• Support for hospitalsPolitical neutrality pp p• Solar lights/cookers
32
Cash PositionCash Position
• Assumes closing Tullow farmout and Lion Amending Agreement2 6 2 3
Cash Available: $88.2 MM Cash (end of 2010) g g
• Past Costs are subject to Tullow audit (post-closing matter)
• Additional CAD$9 7MM of warrant
7.3 2.6 2.3 )
Tullow/Lion past costs
Additional CAD$9.7MM of warrant proceeds potentially receivable (expiring May-2012)
76.1 Tullow estimated completion costs
Warrants proceedsproceeds receivable
33
Share CapitalShare Capital
• Includes:– Lion Amending Agreement
consideration: 2 5MM8 0 26 4
Fully Diluted: 209.2MM Issued & Outstanding (31-Dec-10)Li A di consideration: 2.5MM
shares– Assumed Conversion of
Lundin Loan @ FX: 1.00 $CAD0 90/ h
135.8
30.2
6.38.0 26.4 Lion Amending
AgreementCentric Acquisition ***
Options $CAD0.90/share• Warrants:
– 1.5MM have been force exercised
2.5
Options
Warrants
Lundin Convertible exercised– 6.5MM will remain
outstanding (CAD$1.50 exercise, expire May-2012)2012)
World class potential in fourWorld class potential in four
34
World class potential in four separate petroleum systemsWorld class potential in four separate petroleum systems
Summary of Unrisked and Undiscovered Oil Prospective Resources
Geographic Region License Gross Best Estimate (MMBbl)
AOC Working I t t (%)
Net Best Estimate (MMBbl)g p g (MMBbl) Interest (%) (MMBbl)
Puntland (Somalia) Nogal Block 3,102 45 1,396
Puntland (Somalia) Dharoor Block 1,451 45 653
Kenya Block 10BB 1,737 40 695
Kenya Block 9 1,028 66.7 686
Kenya Block 10A 250 30 75Kenya Block 10A 250 30 75
Kenya Block 10BA* 2200 50 1100
Ethiopia Block 2&6 7&8 964 55 530
The above summary table was prepared by the Company for the convenience of readers. Please refer to the Company’s press release dated January 7, 2010 for details of the prospective resources by prospect and lead, including the geologic chance of success.
There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that the discovery will be commercially viable to produce any portion of the resources.
10,732 5,135
Net Prospective Resources are stated herein in terms of AOC’s net Working Interest (WI) in the properties and, due to the very immature nature of these Prospective Resources, have not been computed as net entitlement volumes under the PSA. In this regard these volumes stated herein will exceed the volumes which will arise to AOC under the terms of the PSA.
*Independent technical report NI 51-101 reserves study by Gustavson Associates published January, 2010
35
Size of the Prize
ProspectiveResources Net Best Estimate
Indicative Risk Factor
Risked Potential Prospective Resources
Potential Value ($MM)
(MMbbl) (MMbbl)
20% 1,027 4,396
5 135 10% 514 2 200
• Recently completed East African sale transaction:
5,135 10% 514 2,200
1% 51 218
y p•Heritage sale of interest in Uganda Lake Albert (Blocks 1 & 3A) to Tullow•355 MMboe mean working interest contingent resource sold•$1.5 billion transaction value$4 23/boe
The above summary table was prepared by the Company for the convenience of readers. Please refer to the Company’s press release dated January 7, 2010 for details of the prospective resources by prospect and lead, including the geologic chance of success.
There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that the discovery will be commercially viable to produce any portion of the resources
•$4.23/boe
commercially viable to produce any portion of the resources.
Net Prospective Resources are stated herein in terms of AOC’s net Working Interest (WI) in the properties and, due to the very immature nature of these Prospective Resources, have not been computed as net entitlement volumes under the PSA. In this regard thesevolumes stated herein will exceed the volumes which will arise to AOC under the terms of the PSA. The net best estimate has beenadjusted to reflect changes to working interests due to recently announced or completed farmout transactions.
36
A history of value creationA history of value creation
Company 2002 Present Notes
Tanganyika $0.55 / share $31.50 / share Sold to Sinopec g y $ /$13.5 million MC
$ /$1.9 billion MC
p2008
Valkyries $0.45 / share$4 million MC
$16.00 / share$750 million MC
Sold to Lundin Petroleum 2006$4 million MC $750 million MC Petroleum 2006
Lundin Petroleum U $0.41 / shareU $101 million MC
U $10.94 / shareU $3.2 billion MC+ E t i ff
Active
+ Enquest spin off US $1.7 billion MC
BlackPearl $0.25 / share$
$8.50/ share$
Active
Market cap growth from $131.7 million to $6.6 billion
$2.1 million $2.4 billion
Shamaran $0.28 (2003)/ share$11.1 million
$1.14 / share$710 million
Active
Market cap growth from $131.7 million to $6.6 billion
Average return on investment 2,900%
37
Summary and Conclusions Summary and Conclusions
• Africa Oil now has the largest acreage position in East Africa on four highly prospective rift basin trends – one of the few places left on earth for billion barrel fields onshore with goodplaces left on earth for billion barrel fields onshore with good fiscal terms
• As a result of recent fund raising and Tullow deal, Africa Oil is now in a very strong financial position
• Tullow partnership will add technical, operational and development expertise as well as synergy with regional i li t j tpipeline export project
• Seismic programs well advanced on highest potential blocksSeismic programs well advanced on highest potential blocks with continuous drilling campaigns commencing in 2011
38
AOI has a strong management teamAOI has a strong management teamKeith Hill, President and CEOMr. Hill has over 25 years experience in the oil industry including international new venture management and senior exploration positions at Occidental Petroleum and Shell Oil Company. His education includes a Master of Science degree in Geology and Bachelor of Science degree in Geophysics from Michigan State University as well as an MBA from the University of St. Thomas in Houston. Prior to his involvement with Africa Oil, Mr. Hill was President and CEO of Valkyries where he led the company through rapid growth and ultimately a highly successful $700 million takeover by Lundin Petroleum. In addition, Mr. Hill was one of the founding directors of Tanganyika Oil which was recently the subject of a $2 billion takeover by Sinopec International Petroleum.
Ian Gibbs, CFOIan Gibbs is a Canadian Chartered Accountant and a graduate of the University of Calgary where he obtained a bachelor of commerce degree. Ian Gibbs has held a variety of prominent positions within the Lundin Group of Companies; most recently as CFO of Tanganyika Oil Company Ltd. where he played a pivotal role in the recent $2 billion acquisition by Sinopec International Petroleum . Prior to Tanganyika, Mr. Gibbs was CFO of Valkyries Petroleum Corp which was the subject of a $700 million takeover.
James Phillips, VP ExplorationBefore joining Africa Oil, Mr. Phillips was Vice President Exploration‐Africa and Middle East for Lundin Petroleum AB where he played a pivotal role in securing the majority of Africa Oil’s current portfolio. Mr. Phillips is a graduate of the University of California, Berkeley and San Diego State University where he obtained BS and MS degrees, both in Geology. He has over 25 years of experience in the oil industry including senior positions with Shell Oil company and Occidental including heading up Oxy’s African exploration ventures.
Gary Guidry, DirectorMr. Guidry brings to the Board of Africa Oil Corp. an extensive background and proven track record in international petroleum development and project execution. A Petroleum Engineer by training, he is an Alberta registered Professional Engineer with expertise in diverse environments ranging from deep water West Africa and the Gulf of Mexico South American rainforests to the deserts of theis an Alberta‐registered Professional Engineer with expertise in diverse environments ranging from deep‐water West Africa and the Gulf of Mexico, South American rainforests to the deserts of the Middle East. Most recently, Mr. Guidry was President of Tanganyika Oil Company Ltd. where he led the company from an early stage oil development project in Syria to a $2 billion takeover by Sinopec International Petroleum in late 2008.
Cameron Bailey, DirectorMr. Bailey is a Chartered Financial Analyst with a Bachelor of Commerce degree from the University of Calgary. He has worked in the energy investment business, specifically investment banking for the
h f d f d h d h l bl ff f b f l d l d d d lf ldpast 19 years. He is the founder of, and has organized, the initial public offerings for a number of oil and gas exploration and production, and oilfield services companies.
John Craig, DirectorMr. Craig practices in the area of securities law with a focus on equity financings for both underwriters and issuers, with an emphasis on resource companies, TSX listings, dealings with TSX and OSC for listed public companies, takeover bids and issuer bids and going‐private transactions. Mr. Craig is also involved with international resources in negotiation and drafting of mining, oil and gas concession agreements, joint venture agreements, operating agreements and farm‐in agreements in a variety of countries.
Bryan Benitz, DirectorBryan Benitz brings over 40 years of financial markets expertise and investment banking experience to the Company. He graduated from Fettes College in Edinburgh, Scotland in 1951 and received his early investment banking training at Wisener & Company in Canada.
39
Cautionary StatementsCautionary Statements
• This document contains statements about expected or anticipated future events and financial results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as legal and , j , gpolitical risk, civil unrest, general economic, market and business conditions, the regulatory process and actions, technical issues, new legislation, competitive and general economic factors and conditions, the uncertainties p gresulting from potential delays or changes in plans, the occurrence of unexpected events and management’s capacity to execute and implement its future plans. Actual results may differ materially from those projected by management.
• Resource and reserve references on other companies have been sourced esou ce a d ese e e e e ces o ot e co pa es a e bee sou cedfrom websites and other public information and may not be accurate.