Africa Oil 2015 First Quarter Financial and Operating Results and Notice of AGM

VANCOUVER, BRITISH COLUMBIA--(Marketwired - May 14, 2015) - Africa Oil Corp. ("Africa Oil" or the "Company") (TSX:AOI)(OMX:AOI) is pleased to announce its financial and operating results for the three months ended March 31, 2015.

During the first quarter of 2015, seven wells finalized drilling across the South Lokichar Basin and the North Turkana basin in Block 10BA, Kenya. In addition, the Company is continuing its extensive exploration and appraisal program in the South Lokichar Basin in Blocks 10BB and 13T. The extensive appraisal activities in Kenya, including the planned Extended Well Test ("EWT"), along with the development concept studies completed in 2014, will enable a draft Field Development Plan (FDP) to be prepared by end 2015. One drilling rig is currently active in the South Lokichar Basin.

The current ambition of the joint venture partnership is to position the South Lokichar Basin development, and an export pipeline, for possible sanction by the end of 2016, subject to receipt of all necessary permits and approvals. Good progress continues to be made towards development of these oil resources and as part of the ongoing collaboration between the Governments of Kenya and Uganda on the oil export pipeline for the Lake Albert and South Lokichar resources, a joint technical adviser was appointed in late 2014. The independent technical studies being undertaken by the adviser, with extensive support from the Kenya and Uganda upstream partners, are progressing rapidly and should assist in the finalization of the pipeline route.

At March 31, 2015, the Company had cash of $187.4 million and working capital of $53.2 million. During February 2015, the Company completed a brokered private placement issuing an aggregate of 57,020,270 shares at a price of SEK 18.50 per share for gross proceeds of SEK 1,055 million or $125.0 million. A cash commission was paid in the amount of $4.5 million. Subsequent to the first quarter of 2015, the Company entered into an investment agreement relating to a non-brokered private placement wherein 53,623,377 shares will be issued at a price of CAD $2.31 for gross proceeds of CAD $121.6 million (US $100 million). The Company expects the closing to occur by end of May 2015.

The Company has completed the following significant operational activities in, and subsequent to, the first quarter of 2015;

• In January 2015, the Company announced the results of the Ngamia-5 and Ngamia-6 appraisal wells in Block 10BB (Kenya). The Ngamia-5 well is located 500 meters northeast of the Ngamia-1 discovery well in a different fault compartment and encountered 160 to 200 meters net oil pay, which is amongst the highest of all the wells drilled in the basin to date. The Ngamia-6 well is located approximately 800 meters north of the Ngamia-1 well and in the same fault compartment as the Ngamia-5 well and encountered up to 135 meters net oil pay. Both wells have been suspended and one or both will be utilized in an EWT that will commence in the second quarter. Pressure data from the Ngamia-3, 5 and 6 wells demonstrates connectivity between the wells at multiple reservoir horizons, which will be further tested by the EWT.
  
  
• In January 2015, the Company announced the results of the Amosing-3 appraisal well in Block 10BB (Kenya), located one kilometer northwest of the Amosing-1 discovery well. The well encountered up to 140 meters of net oil pay and proved an extension of the field. Pressure data from the Amosing-3 well indicated connectivity in some reservoir horizons encountered in the Amosing-1, 2 & 2A wells.
  
  
• In January 2015, the Company announced the results of the Epir-1 exploration well. The well was drilled to a total depth of 3,057 meters in the North Kerio Basin in Block 10BB (Kenya). The well encountered a 100 meter interval of wet hydrocarbon gas shows with florescence indicating the presence of an active petroleum system. The hydrocarbon shows were encountered primarily in rocks which are not of reservoir quality. The partnership is very encouraged the Epir-1 well has demonstrated a working hydrocarbon system in the Kerio Basin and technical work will now focus on identifying a prospect in the basin where there is a high chance of trapping hydrocarbons in reservoir quality rock.
  
  
• In March 2015, the Company provided an update on the Amosing Extended Well Test (EWT) in Block 10BB (Kenya). The Amosing -1 and Amosing -2 wells were completed in five zones with hydraulically controlled completions that permit independent tests of selected intervals without well intervention in preparation for an Extended Well Test (EWT) of the field. Initial rig-less flow testing during clean-up at a combined maximum rate of 5,600 and 6,000 bopd respectively exceeded expectations, demonstrating high quality reservoir sands which flowed 31 to 38 degree API dry oil under natural conditions. Pressure data during the initial clean-up flows shows connectivity between the two completed wells in the upper three zones with further production testing required to test connectivity in the lower two zones. These findings support the static pressure data which indicated connectivity between the Amosing-1, 2, 2A and 3 wells in multiple zones. The Amosing EWT results are expected in the second quarter of this year.
  
  
• In March 2015, the Company announced the results of The Ngamia-7 well in Block 10BB (Kenya). The well was drilled 1.2 kilometers east of the Ngamia-3 well and encountered up to 130 meters of net oil pay identifying a large eastern extension of the field that had been identified from the new 3D seismic survey.
  
  
• In March 2015, the Company announced that the Engomo-1 well was drilled, which was the first test of the North Turkana Basin in Block 10BA, (Kenya). This prospect is to the west of Lake Turkana where numerous naturally occurring oil slicks and seeps have been observed. The Engomo-1 exploration well in Block 10BA was drilled to a total depth of 2,353 meters. The well encountered interbedded siltstones, sandstones and claystones, becoming more tuffaceous and tight until reaching a total depth in basement. No significant oil or gas shows were encountered and the well has been plugged and abandoned. The prevalence of tight facies in the wellbore may be due to the well's close proximity to the basin bounding fault. Future analysis will be focused on understanding how this result impacts the remaining prospectivity in the basin.
  
  
• In April 2015, the Company announced the results of the Ngamia-8 appraisal well in Block 10BB (Kenya), which encountered up to 200 meters of net oil pay in line with pre-drill expectations. The well was positioned in the center of the Ngamia structure and static pressure data indicates the well is in pressure communication with the oil discovered in the neighboring Ngamia-1A, Ngamia- 3, Ngamia-5, Ngamia-6 and Ngamia-7 wells.
  
  
• In April 2015, the Company announced that the Amosing-4 well in Block 10BB (Kenya), located approximately one kilometer southeast of the Amosing-1 well, was drilled to test the southern extent of the field and successfully encountered 27 meters of net oil pay in thick upper reservoir zones proving the significant down-dip extent of the field.
  
  
• In April 2015, the Company announced that the Ekales-2 appraisal well reached a total depth of 4,059 meters and encountered an estimated 60-100 meters of net oil pay in the primary shallower objectives. This highly deviated well was also deepened to test the basin center stratigraphic play where it intersected sandstones with elevated pressures and 50 meters of oil bearing sands; however, operating conditions precluded logging and confirmation of any oil pay in this section. This was the first test of this exploration target and is very positive for the future upside potential of the South Lokichar Basin, above the significant oil resources already discovered.
  
  
• The full fast track processed data set for the 951 square kilometer 3D seismic survey over the series of significant discoveries along the western basin bounding fault in the South Lokichar Basin, is now available and is being interpreted. The 3D seismic indicates significantly improved structural and stratigraphic definition and additional prospectivity not evident on the 2D seismic. The large Amosing North prospect located on the northern flank of Amosing and updip of the Ngamia field has been identified from the 3D seismic and is being assessed as a potential 2015 drilling candidate. The 3D seismic mapping over the Etom area now shows that the Etom -1 discovery well was drilled in a graben between two large prospects, one located to the south and one to the north of the well. Technical work is being progressed so that these prospects are drill ready. In addition, the 3D seismic also reinforces the potential of the intra-Lokhone shale amplitude prospectivity.
  
  
• The partnership has acquired over 1,100 meters of whole core from the wells drilled in the South Lokichar Basin, and an extensive program of detailed core analysis is ongoing that will provide results throughout the year. A key focus of the core program is to better assess oil saturation and to refine the recovery factors of the main reservoir sands. Early core analysis results support the reservoir assumptions used in the contingent resource estimate and are reducing the uncertainty around oil saturations in the reservoir.
  
  
• In the Rift Basin Area Block (Ethiopia), a 2D seismic crew has mobilized and has commenced the acquisition of a minimum of 400 kilometer land and lake survey. Source rock outcrops and oil slicks on the lakes have been identified in the block where there is no existing seismic or wells.
  
  

Keith Hill, President and CEO of Africa Oil, commented, "We continue to be highly encouraged by the appraisal program in the South Lokichar Basin which is above our expectations and confirms our belief that this is a world-class asset. We are working closely with our partners and the Kenyan Government to move the development project forward, particularly the export pipeline, which is the key to unlocking the value of this asset. The 3D seismic has been a great help in imaging new drilling targets in the basin and we plan to drill some high impact wells with the potential to add significant resources in the coming months."

2015 First Quarter Financial Results
Results of Operations
(unaudited)
			Three months				Three months
			ended				ended
			March 31,				March 31,
(thousands)			2015				2014
	Salaries and benefits		$	478			$	458
	Stock-based compensation			3,975				9,552
	Travel			249				309
	Office and general			119				184
	Donation			-				750
	Depreciation			11				17
	Professional fees			154				195
	Stock exchange and filing fees			247				189
	Share of loss from equity investment			92				-
	Gain on loss of control			(4,155	)			-
Operating expenses			$	1,170			$	11,654

Operating expense decreased $10.5 million for the three months ended March 31, 2015 compared to the same period in the prior year. The majority of the decrease can be attributed to a reduction in stock -based compensation and a gain on the loss of control by the Company in regards to its investment in Africa Energy. The decrease in stock-based compensation expense can be mainly attributed to a significant reduction in the fair value of each option granted in the first quarter of 2015 compared to the first quarter of 2014. During the three months ended March 31, 2015, 5,194,000 stock options of AOC were issued to directors, officers and employees at an average exercise price of CAD $2.45 per option versus 5,958,500 stock options of AOC issued at an average price of CAD $8.44 per option during the three months ended March 31, 2014. The Company's investment in Africa Energy changed from a position of control to a position of significant influence during the first quarter of 2015, which requires the Company's investment in Africa Energy to be recorded as an equity investment. The accounting for the equity investment resulted in the recognition of a gain for accounting purposes of $4.2 million. In the first quarter of 2014, the Company made a $0.8 million donation to the Lundin Foundation versus nil in the first quarter of 2015.

Financial income and expense is made up of the following items:

(Thousands of United States Dollars)

(unaudited)

		Three months				Three months
		ended				ended
		March 31,				March 31,
		2015				2014
Fair value adjustment - warrants		$	-			$	(4	)
Interest and other income			130				436
Bank charges			(5	)			(6	)
Foreign exchange loss			(15	)			(116	)
Finance income		$	130			$	436
Finance expense		$	(20	)		$	(126	)

At March 31, 2015, nil warrants were outstanding in the Company. Interest income decreased due to a reduction in cash held as the Company continued its active exploration activities.

Consolidated Balance Sheets

(Thousands United States Dollars)

(unaudited)

				March 31,			December 31,
				2015				2014
ASSETS
Current assets
	Cash and cash equivalents		$	187,391			$	161,162
	Accounts receivable			3,234				1,633
	Due from related party			108				-
	Prepaid expenses			1,176				1,276
				191,909				164,071
Long-term assets
	Restricted cash			2,525				1,250
	Equity investment			6,182				-
	Property and equipment			39				50
	Intangible exploration assets			862,477				785,177
				871,223				786,477
Total assets			$	1,063,132			$	950,548
LIABILITIES AND EQUITY
Current liabilities
	Accounts payable and accrued liabilities		$	138,748			$	153,502
				138,748				153,502
Total liabilities				138,748				153,502
Equity attributable to common shareholders
	Share capital			1,140,647				1,014,772
	Contributed surplus			42,221				39,947
	Deficit			(258,484	)			(257,673	)
Total equity attributable to common shareholders				924,384				797,046
Total liabilities and equity attributable to common shareholders			$	1,063,132			$	950,548

Intangible exploration assets increased during the quarter by $77.3 million as a result of the Company continuing to invest in its oil and gas properties in East Africa. The Company continues to finance its activities primarily through equity and completed a private placement during the quarter in which 57,020,270 shares were issued. The Company is debt free.

Consolidated Statement of Cash Flows
(Thousands United States Dollars)
(unaudited)
For the three months ended					March 31,				March 31,
					2015				2014
Cash flow s provided by (used in):
Operations:
	Net loss and comprehensive loss for the period			$	(1,060	)		$	(11,344	)
	Items not affecting cash:
		Stock-based compensation			3,975				9,552
		Depreciation			11				17
		Gain on loss of control			(4,155	)			-
		Share of loss from equity investment			92				-
		Fair value adjustment - warrants			-				4
		Unrealized foreign exchange loss			15				117
		Changes in non-cash operating working capital			(977	)			(731	)
					(2,099	)			(2,385	)
Investing:
	Property and equipment expenditures				-				(8	)
	Intangible exploration expenditures				(77,300	)			(92,426	)
	Farmout proceeds				-				13,207
	Equity investment				(1,000	)			-
	Reduction of cash from change of control				(254	)			-
	Changes in non-cash investing working capital				(16,002	)			21,553
					(94,556	)			(57,674	)
Financing:
	Common shares issued				124,174				1,750
	Deposit of cash for bank guarantee				(1,275	)			(450	)
					122,899				1,300
Effect of exchange rate changes on cash and cash equivalents denominated in foreign currency					(15	)			(117	)
Increase (decrease) in cash and cash equivalents					26,229				(58,876	)
Cash and cash equivalents, beginning of period				$	161,162			$	493,209
Cash and cash equivalents, end of period				$	187,391			$	434,333
	Supplementary information:
		Interest paid			Nil				Nil
		Income taxes paid			Nil				Nil

Investing activities related to the Company's oil and gas activities in East Africa accounted for majority of the cash consumption of the Company. Cash inflows during the quarter are primarily related to the private placement in which 57,020,270 shares were issued for gross proceeds of $125 million.

The following table breaks down the material components of intangible exploration expenditures for the three months ended March 31, 2015 and 2014:

For the three months ended		March 31, 2015													March 31, 2014
(thousands)		Kenya			Ethiopia				Puntland			Total			Kenya			Ethiopia			Puntland			Total
Drilling and completion		$	60,602		$	(2,177	)		$	-		$	58,425		$	59,945		$	11,230		$	76		$	71,251
Development studies			2,150			-				-			2,150			-			-			-			-
Exploration surveys and studies			4,568			18				-			4,586			8,925			939			14			9,878
PSA and G&A related			11,809			330				-			12,139			8,416			2,353			528			11,297
Total		$	79,129		$	(1,829	)		$	-		$	77,300		$	77,286		$	14,522		$	618		$	92,426

The Company incurred $79.1 million of intangible exploration expenditures in Kenya for the three months ended March 31, 2015. The majority of drilling expenditures related to the Company's portion of drilling costs regarding an exploration well at Engomo (Block 10BA) and an extensive appraisal program in the South Lokichar Basin. The majority of development study spend relates to progressing towards project sanction for the South Lokichar Basin. A $1.8 million reduction of intangible exploration expenditures in Ethiopia for the three months ended March 31, 2015 was the result of adjustments made to previously accrued drilling expenditures. PSA and G&A related costs include personnel and office running costs, local community development expenditures, land surface fees, annual rental fees and other PSA fees.

Consolidated Statement of Equity
(Thousands United States Dollars)
(unaudited)
For the three months ended			March 31,				March 31,
			2015				2014
Share capital:
	Balance, beginning of period		$	1,014,772			$	1,007,414
	Private placement, net			120,329				-
	Exercise of options			5,546				2,539
	Balance, end of period			1,140,647				1,009,953
Contributed surplus:
	Balance, beginning of period		$	39,947			$	24,396
	Stock based compensation			3,975				9,552
	Exercise of options			(1,701	)			(789	)
	Balance, end of period			42,221				33,159
Deficit:
	Balance, beginning of period		$	(257,673	)		$	(150,736	)
	Net loss and comprehensive loss attributable to common shareholders			(811	)			(11,138	)
	Balance, end of period			(258,484	)			(161,874	)
	Total equity attributable to common shareholders			924,384				881,238
Non-controlling interest:
	Balance, beginning of period		$	-			$	48,773
	Net loss and comprehensive loss attributable to non-controlling interest			(249	)			(206	)
	Derecognition of non-controlling interest on loss of control			249				-
	Balance, end of period			-				48,567
	Total equity		$	924,384			$	929,805

The Company's unaudited consolidated financial statements, notes to the financial statements, management's discussion and analysis for the three months ended March 31, 2015 and 2014, and the 2014 Annual Information Form have been filed on SEDAR (www.sedar.com) and are available on the Company's website (www.africaoilcorp.com).

Outlook

In light of the current and forecast short term oil price environment, the Company has worked closely with Tullow to focus the 2015 work program and budget on advancing the discovered basin development in Blocks 10BB and 13T (Kenya) by undertaking activities aimed at increasing resource certainty and progressing development studies with the intent of submitting a FDP around the end of 2015. The 2015 work program will include multiple appraisal and exploration wells in the discovered basin, EWT's in the

Amosing and Ngamia fields and reservoir and engineering studies (including extensive core analysis). In addition, the Africa Oil - Tullow joint venture will continue to work closely with the Government of Kenya and the Uganda Upstream partners to advance the regional oil export pipeline.

Outside of the South Lokichar Basin, the Africa Oil - Tullow joint venture new basin opening exploration program potentially includes the Cheptuket well in Block 12A (Kenya), a PSC commitment well that needs to be drilled before September 2016. Outside of the Africa Oil - Tullow joint venture blocks, the 2015 work program is focused on the Rift Basin Area Block in Ethiopia where a 2D seismic program of a minimum 400 kilometer land and lake survey has commenced acquisition.

The Company also announces that the 2015 Annual General and Special Meeting (the "Meeting") of the shareholders of Africa Oil will be held at t he Four Seasons Hotel, 650 Howe Street, Vancouver, British Columbia, on Thursday, June 11, 2015 at the hour of 10:00 a.m. (Pacific Time) for the following purposes:

• To receive the consolidated audited financial statements of the Corporation for the year ended December 31, 2014, together with the report of the auditors thereon;
• To fix the number of directors at five (5);
• To elect directors to hold office until the next Annual General Meeting of the Corporation;
• To appoint PricewaterhouseCoopers, LLP as auditor of the Corporation to hold office until the next Annual General Meeting, at a remuneration to be fixed by the directors of the Corporation;
• To consider and, if thought fit, approve an ordinary resolution ratifying and confirming the Corporation's 10% Rolling Stock Option Plan, as amended, and as more particularly described in the accompanying management information circular;
• To consider amendments to or variations of any matter identified in this Notice of Meeting; and
• To transact such other business as may properly be brought before the meeting.

The record date for the Annual General and Special Meeting is April 24, 2015. The full Meeting notice and accompanying management information circular are available under the Company's profile on SEDAR at www.sedar.com.

Africa Oil Corp. is a Canadian oil and gas company with assets in Kenya and Ethiopia as well as Puntland (Somalia) through its 41% equity investment in Africa Energy Corp. The Company is listed on the Toronto Stock Exchange and on Nasdaq Stockholm under the symbol "AOI".

FORWARD LOOKING INFORMATION

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.

ON BEHALF OF THE BOARD

Keith C. Hill, President and CEO

The information in this release is subject to the disclosure requirements of Africa Oil under the Swedish Securities Market Act and/or the Swedish Financial Instruments Trading Act. This information was publicly communicated on May 14, 2015 at 2:00 p.m. Pacific Time.