2009 Fourth Quarter Report

Exploration Drilling

In Block 9, Kenya, the CNOOC-operated Bogal-1-1 exploration well was spud on October 28, 2009. The well is currently at a depth of approximately 5,000 meters of the originally planned total depth of approximately 5,500 meters. A comprehensive set of wireline logs has been run to assess the hydrocarbon potential of numerous Cretaceous age sandstones encountered to date. Evaluation of these logs is ongoing. The Company holds a 20% working interest in this Block.

Block 9 covers an area of 27,778 square kilometers in the centre of the Anza Basin. The Anza Basin is a NW-SE trending rift basin along trend with the prolific Mesozoic play of southern Sudan. The basin is over 580 kilometers long and 150 kilometers wide with a potential prospective area in excess of 50,000 square kilometers. The basin is filled in places with more than 6,000 meters of Mesozoic and Cenozoic sediments and locally by Plio-Pleistocene basalts. Bouger and residual gravity anomalies have highlighted several sub-basins separated by intra-basin highs. Historic wells drilled in the block have proven the existence of natural gas and possibly oil.

The Company has completed a comprehensive interpretation of newly acquired 2D seismic data over the Dharoor Block in Puntland (Somalia). Several large prospects have been identified. Africa Oil and its joint

venture partners have agreed to initially drill one prospect in Dharoor. The well is expected to commence drilling before the end of 2010. The Company holds a 65% working interest in this project.

The Company has completed a re-interpretation of the existing 2D seismic data over the Nugaal Block in Puntland (Somalia). Several large prospects have been identified. Africa Oil and its joint venture partners are in discussion regarding drilling plans for 2010-2011. The Company holds a 65% working interest in this project.

Additional drilling activity in the Kenya Blocks and the Ethiopian Blocks will await completion of seismic acquisition, processing, and interpretation.

Seismic Program

In Ethiopia, in the Adigala Block, the Company completed 500 km of 2D seismic acquisition during the fourth quarter of 2009. The data processing has now been completed and interpretation is underway at the Company's technical office in Calgary. The basin prospectivity, at this early stage, appears excellent with a number of large structural leads having been identified from the seismic data. In addition, earlier completed surface geology and sampling has documented the presence of excellent quality source and reservoir along the basin margin. The Company holds a 50% working interest in this Block.

Seismic operations have been initiated in the Company's Ogaden area of Ethiopia. A base camp is under construction and supplies are being mobilized. Local labor has been hired and survey and line clearing crews are actively working. Seismic recording is planned to start during the second quarter of 2010. The Company's plans are to acquire 500 km of 2D data over previously identified leads in order to mature these leads into drillable prospects. The Company holds a 55% working interest in the Ogaden Blocks.

In Block 10BB, Kenya, the tendering process for 600 km of 2D seismic has been completed and it is anticipated the contract will be awarded shortly. The acquisition program is expected to commence before the end of the second quarter of 2010. The Company has reprocessed all available vintage seismic data sharpening the imaging and the amplitude response for use in detecting direct hydrocarbon indicators. The Company held its initial meeting with the local community leaders in March in order to formally introduce the Company and outline the planned work program for 2010. The Company holds a 80% working interest in this Block.

In Block 10A, Kenya, the Company is reprocessing all available vintage seismic data with the objective of improving the imaging of the data acquired in the late 1980s. New play concepts are being developed based on the reprocessed data in combination with vintage drilling data. The Company intends to acquire 750 km of 2D seismic in the Block following the Block 10BB seismic acquisition program. The Company holds a 55% working interest in this Block.

In the Nugaal Block in Puntland, Somalia, AOC acquired more than 4,000 kilometers of existing good quality 2D data which was recorded in the late 1980's. This has enabled the Company to work up an inventory of drilling prospects from which the first exploration well locations will be selected.

During 2008, in the Dharoor Block of Puntland, Somalia, the acquisition of 782 kilometers of good quality 2D seismic (comprised of 15 grid lines) was completed. The Company has combined 555 kilometers of previously acquired data into the seismic database and is currently being mapped to finalize exploration well locations.

The Company is currently planning to commence drilling of one exploration well in the Dharoor Block before the end of 2010.