Africa Oil Corp. - Ethiopia - Overview

Overview

The Company has four projects in Ethiopia consisting of blocks 7 & 8 in the Ogaden Basin Area of eastern Ethiopia, the Adigala Block is close to the border with Somalia and Djibouti, the South Omo Block which lies in the Omo Rift Valley of south-western Ethiopia and the Rift Basin Area located north of the Company's South Omo Block.

The Ogaden Basin Area blocks are relatively underexplored with limited well and seismic data to constrain the petroleum system proved by the Calub and Hilala fields to the east. The Adigala block is a wildcat opportunity with no wells in the area. An analogue petroleum system is predicted based on nearby outcrop data and field surveys. The South Omo Block Area is within the Tertiary age East African Rift, just north of Lake Turkana, Kenya and within the same petroleum system as the Company's Kenya Block 10BB and Tullow's Uganda discoveries.

Block Summaries

Country	Blocks	Gross Acreage (km²)	WI
Ethiopia	Block 7 & 8	21,767	30%
	Adigala	27,193	50%
	South Omo	22,088	30%
	Rift Basin Area	42,519	50%

Map of Ethiopia Operation

Blocks 7/8 are located in the Ogaden Basin Area. The Ogaden Basin Area is a major sedimentary basin, which has developed in association with a rift system during the Palaeozoic and Mesozoic. Basin sag dominated in the Triassic in the western and central Ogaden Basin Area region, and extensional stresses were intermittently significant throughout. Since the Late Cretaceous, there have been periods of compression and structuration arising from the broader plate tectonic framework. The tectonic and sedimentary history has resulted in sedimentary sequences of up to 10 km thick.

The sedimentary succession is broadly divisible into two megasequences; the lower comprises mainly continental clastics of Permian to earliest Jurassic age. The upper mega-sequence is dominated by shallow water carbonates along with some evaporites. The principal oil source is the Late Jurassic Uarandab Formation, which is a high class mature oil source rock with Type II kerogen. TOC values of up to 9.48% and high HI's of to 829 mgHC/ gTOC have been reported. The location of the kitchen is very well placed for generation and migration into the reservoir rocks in the licenses.

Seal is not considered a risk in this area. The shales between the Hamanlei Formation and Adigrat Formation seal the Adigrat reservoir. The evaporites of the Middle Hamanlei Formation seal the carbonate reservoirs of the Middle Hamanlei Formation, and the shales and micrites of the Uarandab Formation seal the Upper Hamanlei Formation. Three wells were drilled in the 1970's (all by Tenneco) within what is now part of the Africa Oil license area. The El Kuran-1 well, drilled by Tenneco in 1972 (TD 3,360m, 10,462ft) in Block 8 on a 66 km2 structural closure, encountered extensive oil shows throughout the Jurassic section and 200 gallons of oil was recovered from the Upper Hamanlei. Gas was found in deeper intervals. The nearby El Kuran-2 appraisal well (TD 2,015m/6,610ft2015m, 1972) apparently did not penetrate the full sedimentary section, but oil stained core was recorded in Jurassic intervals. Bodle-1 (TD 3,911m/12,831ft 1974) appears to have been drilled off the crest of a subtle structure and was plugged and abandoned with no shows. With only three wells drilled on the sparse seismic, and indications proving the existence of an oil (and gas) system, the acreage presents an interesting opportunity for further exploration.

Ogaden Basin Activity
Click to enlarge

The Adigala block Area lies in the north of Ethiopia within the East African Rift Valley System, in the Afar Depression. Regional geophysical data tends to suggest a sedimentary basin on-trend with the Jurassic Basins of Somalia. New isostatic residual shows two (probable Jurassic) basins in the Adigala concession. Cretaceous reservoirs and potential Jurassic source intervals are exposed at the surface in the uplifted highlands to the south and east of the Adigala Area. Oil seeps in the surrounding areas also indicate the presence of a working oil prone system in the region. One Jurassic outcrop represents an exhumed oil accumulation with Jurassic dolomites oil saturated and bleeding live oil which was recovered for laboratory analysis. The subsurface prospectivity of Adigala remains unknown.

South Omo lies in the Omo Rift Valley of south-western Ethiopia. The block spans 30,688 square kilometres and is within the Tertiary age East African Rift, just north of Lake Turkana, Kenya and within the same petroleum system as the Company's Kenya Block 10BB and Tullow's Uganda discoveries.

Rift Basin Area is located north of the Company's South Omo Block and includes the extension of the Tertiary-age East Africa Rift Trend in Ethiopia. The new license is on trend with highly prospective blocks in the Tertiary rift valley including the South Omo Block, and Kenyan Blocks 10BA, 10BB, 13T, and 12A. During the joint study period, the Company completed an airborne high resolution gravity and magnetic survey over the block. In addition, satellite-imaged natural oil slicks were ground truthed, which indicate the presence of an active petroleum system in parts of the block. The Company plans to complete a Full Tensor Gravity Gradiometry survey and exhaustive environmental/social impact assessment over the block during 2013.