2010 Second Quarter Report

Seismic Program

In Block 10BB, Kenya, seismic acquisition is in progress, with over 120km of 2D seismic recorded out of an anticipated 600km program. It is anticipated that the Block 10BB seismic program will be completed during the third 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. A surface geochemical survey is scheduled to commence during the third quarter of 2010 aimed at detecting oil and gas seepage from identified prospects and leads on the Block. Drilling is expected to be initiated in the first quarter of 2011. The Company holds an 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.

Seismic acquisition is in progress in the Company's Ogaden area of Ethiopia. It is anticipated that the 500 km 2D seismic acquisition program will be completed during the fourth quarter of 2010. The seismic program is aimed at previously identified leads in order to mature these leads into drillable prospects. The Company holds a 55% working interest in the Ogaden Blocks.

In Ethiopia, in the Adigala Block, the Company has completed interpretation of the 500 km of 2D seismic that was acquired during 2009. Additional geological and geophysical work is being contemplated, potentially including basin modeling, field geology and additional seismic data acquisition. 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.

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.

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.

Exploration Drilling

In Block 9, Kenya, the CNOOC-operated Bogal-1 exploration well was spud on October 28, 2009. The well reached a total depth of 5,085 meters. Gas shows and petrophysical analysis of wireline logs indicated multiple gas pay zones totaling approximately 91 meters in Lower Cretaceous sandstones. Preliminary testing on two potential gas pay zones has been completed, with only minimal flow of gas from each zone. Analysis of the test results indicates that neither test was in communication with the extensive fracture network proven by the abundant fluid losses during drilling and the Formation Micro Imaging (FMI) log. The well has been plugged pending further analysis of the test results to determine the feasibility of an additional testing program, which might include fracture and acid stimulation, due to potential wellbore damage during drilling. The Company holds a 20% working interest in this Block which contains a number of excellent oil and gas prone prospects.

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 are in discussion regarding drilling plans for 2010-2011 and continue to seek drilling contractors willing to operate in Puntland (Somalia) on commercially acceptable terms. 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.