2014 Third Quarter Update

On the back of the successful exploration activities in Kenya during 2013, the Company and its partners ramped up its exploration program in Kenya and Ethiopia. Entering the year, the Company and its partners had seven drilling rigs operating in the region. Four Tullow-Africa Oil joint venture rigs are operating in Northern Kenya in Blocks 10BB, 10BA and 13T, one of which is a testing and completions unit. One of these drilling rigs is demobilizing and is being replaced with a higher specification unit. In addition, the Company and its partner had a rig operating in Block 9 in Kenya, but as operations in the block have completed, this rig has been released. In Ethiopia, the Company and its partners in the South Omo Block and Blocks 7/8 had rigs operating in each block. Drilling operations in both blocks have been completed and the rigs released. The Company will have four drilling rigs operating in Kenya through the remainder of 2014.

The Company is nearing the end of a significant exploration and appraisal program in 2014 which will see over 20 wells completed by year end. The program focused on drilling out the remaining prospect inventory in the discovered basin in Northern Kenya, appraising existing discoveries with the aid of the new 3D seismic survey, drilling three new basin opening wells and progressing the development studies towards project sanction in the discovered basin in Northern Kenya. This significant exploration program in 2014 is fully funded.

Tertiary Rift - Kenya

In January, the Company announced further drilling success with its sixth and seventh consecutive discoveries in the discovered basin in Northern Kenya at Amosing-1 and Ewoi-1. Amosing-1 is located 7 kilometers southwest of the Ngamia-1 discovery along the Basin Bounding Fault Play in Block 10BB. Logs indicated 160 to 200 meters of potential net oil pay in good quality sandstone reservoirs. Ewoi-1 is located 4 kilometers to the east of the Etuko-1 discovery in the Basin Flank Play on the eastern side of the discovered basin in Northern Kenya also in Block 10BB. Logs indicated potential net pay of 20 to 80 meters. The main zone of interest tested approximately 50 barrels of oil per day ("bopd") from the lower Lokhone sands, which were relatively thin and of moderate quality. Data from the well indicated that the wellbore may have been located in a downdip position and the potential to drill updip on the structure is being assessed.

In February, the Company announced the results of five well tests conducted on five Lokhone pay intervals at Etuko-1 located on the Basin Flank Play in Block 10BB. Light 36 degree API waxy crude oil was successfully flowed from three zones at a combined average rate of over 550 barrels of oil equivalent per day ("boepd"). In March, the Company announced the results of the Etuko-2 exploration well drilled to test the upper Auwerwer sands overlying the previously announced Etuko discovery. Etuko-2 penetrated a potential significant oil column identified from formation pressure data and oil shows while drilling and in core, with good quality reservoir, however the well flowed only water on drill stem test. The results are considered inconclusive and analysis is underway to consider further options to evaluate this reservoir.

In March, the Company announced the results of the Emong-1 well located in Block 13T (Kenya), 4 kilometers northwest of the Ngamia-1 field discovery. The well encountered oil and gas shows while drilling, however the Auwerwer sandstones that are the primary reservoirs in the Ngamia field were thin and poorly developed in Emong-1 and the well was plugged and abandoned. It is believed that the reservoir was poorly developed due to its proximity to the basin bounding fault and its location within what appears to be a local isolated slumped fault margin. This well, which was aimed at establishing an additional play, has no impact on the potential of the Ngamia oil accumulation.

Also in March, the Company announced the results of a well test on the Ekales-1 discovery drilled in 2013 and located on the Basin Bounding Fault Play between the Ngamia-1 and Twiga South-1 discoveries. Testing operations on the Ekales-1 well confirmed this significant oil discovery. Two drill stem tests were completed and flowed at a combined rate of over 1,000 bopd from a combined 41 meter net pay interval. The upper zone had a very high productivity index of 4.3 stb/d/psi.

In May, the Company drilled a new prospect in the discovered basin in Northern Kenya, the Ekunyuk-1 well, located on the Basin Flank Play on trend with the Etuko and Ewoi discoveries. The well encountered 5 meters of net oil pay and found 150 meters of good quality Lokhone sands, although there was a lack of trap at this level within the well. The quality of Lokhone sands indicates that there is further exploration potential in this area of the basin.

Also in May, the Company announced the results of the Twiga-2 appraisal well where the initial wellbore was drilled near the basin bounding fault and encountered some 18 meters of net oil pay within alluvial fan facies, with limited reservoir quality. A decision was made to sidetrack the well away from the fault to explore north of Twiga-1 and some 62 meters of vertical net oil pay was discovered in the Auwerwer formation at Twiga-2A, similar in quality to the initial Twiga-1 discovery. Four flow tests were completed on the Twiga-2A well, achieving production rates between 150 and 3,270 bopd under natural flow with no depletion, the highest oil production rate seen to date in Kenya. With optimized equipment, the maximum flow potential from the best zone could have increased to around 10,000 bopd demonstrating excellent reservoir deliverability.

In June, the Company announced the results of the Ngamia-2 appraisal well, which was drilled 1.7 kilometers from the Ngamia-1 discovery well to test the northwest flank of the field. The well encountered up to 39 meters of net oil pay and 11 meters of net gas pay and appeared to have identified a new fault trap, north of the main Ngamia accumulation.

Also in June, the Company drilled the Agete-2 exploratory appraisal well drilled some 2.2 kilometers southeast of Agete-1. The well intersected water bearing reservoirs at this down-dip location and further appraisal drilling is planned. Additionally in June, the Agete-1 well was tested at 500 bopd.

In August, the Company announced the results of the Etom-1 exploration well located in Block 13T (Kenya), 7 kilometers north of the Agete oil discovery on the Basin Bounding Fault Play. The well encountered between 5 and 20 meters of potential net oil pay sands based on wireline logs in the Auwerwer and Upper Lokhone Formations. Oil was recovered in MDT sample chambers, which appears to be of similar quality as the other discoveries in the basin. There is an additional 400 meters of porous sands in the Auwerwer and Lokhone Formations, which also confirms the extension of thick reservoir sections into the northern portion of the basin. Oil and gas shows were noted throughout drilling of the well confirming the extension of the petroleum system to the northern portion of the discovered basin in Northern Kenya. Based on these positive results, the original 3D seismic survey has been extended to cover the northern portion of this basin where several additional large prospects have been identified by 2D seismic. The well has been suspended for future drill stem testing.

Also in August, the Company drilled the Ngamia-3 and Amosing-2/2A appraisal wells in the discovered basin in Northern Kenya in Block 10BB. The results of these wells appear to confirm the thickness and lateral extent of the Auwerwer sands at both locations and also has extended the known oil column significantly downdip which will extend the proven field areas. The range of thickness of the Auwerwer reservoir quality sands in all six penetrations of these two structures is between 146 and 200 meters, and the sands appear to be consistent over the field areas. The upcoming Extended Well Test ("EWT") programs on both of these fields will be designed to evaluate reservoir connectivity and help constrain estimates of flow rates and recovery factors for field development planning purposes.

In October, the Company announced the results of the Kodos-1 basin opening exploration well drilled in the Kerio Basin in Block 10BB (Kenya). The well encountered hydrocarbon shows, which indicates the presence of an active petroleum system. This is the first well in the Kerio basin, northeast of the discovered basin in Kenya, and it appears to have been drilled in an area of unfavorable reservoir development, near the basin bounding fault. Due to the encouraging hydrocarbon shows, consideration is being given to drilling an additional exploration well in the basin during 2015.

Also in October, the Company announced the results of the Ekosowan-1 exploration well located in Block 10BB, 12 kilometers southeast and updip of the Amosing oil discovery. The well encountered a 900 meter column of near continuous oil shows throughout an interval of tight sands which also appear to be as a result of drilling too close to the basin bounding fault. A downdip appraisal well between the Amosing field and this potential updip sealing location is being planned for 2015.

Also in October, the Company drilled the Ngamia-4 appraisal well located 1.1 kilometers west of the Ngamia-1 discovery. The well encountered up to 120 meters of hydrocarbon pay, of which up to 80 meters was oil. This well has been suspended for use in future appraisal and development activities. Four additional appraisal wells are planned in the Ngamia field area, including the Ngamia-5 well, which is currently drilling.

Two rigs are currently operating in the discovered basin in Northern Kenya. The Ngamia-5 appraisal well is currently drilling and the completion and test rig is mobilizing to Amosing to commence completion of the Amosing-1 and Amosing-2A wells in preparation for an Extended Well Test (EWT) on the field. Rigs are also in the process of mobilizing to drill the Epir-1 well in the North Kerio Basin, Block 10BB, and the Engomo-1 prospect in the North Turkana Basin, Block 10BA.

Given the significant volumes discovered and the extensive exploration and appraisal program planned to fully assess the upside potential of the discovered basin in Northern Kenya, the Tullow-Africa Oil joint venture has agreed with the Government of Kenya to commence development and ESIA studies for the upstream facilities. In addition, the partnership is involved in a comprehensive pre-FEED study of the export pipeline. The current ambition of the Government of Kenya and the joint venture partnership is to reach project sanction for development, including an export pipeline, by early 2016. The governments of Kenya, Uganda and Rwanda have signed a Memorandum of Understanding (MoU) and formed a Steering Committee to progress a regional crude oil export pipeline from Uganda through Kenya and are about to appoint an internationally recognized Technical Advisor to advise on the development of the pipeline project. The Kenya upstream partners have also signed a cooperation agreement with the Uganda upstream partners in support of the same objective.

In addition to further exploration and appraisal drilling in the discovered basin in Northern Kenya, the Company and its partners plan to drill six new basin opening wells by mid-2016. Epir-1 (Block 10BB) will test the North Kerio Basin and Engomo-1 (Block 10BA) will test the North Turkana Basin; both wells will spud shortly. In addition, wells are being planned at the North Samaki prospect (Block 10BA) in the North Turkana Basin, the Tausi prospect (Block 13T) in the North Lokichar Basin, the Kerio Valley Basin (Block 12A) and the Turkewll Basin (Block 13T).

The Company and its partners continue to actively acquire and process seismic data in Blocks 12A, 10BA, 10BB and 13T in Kenya. In Block 12A, a 674 kilometer 2D seismic program was completed in the first quarter and the crew has demobilized. In Block 10BB, a 750 kilometer North Kerio Basin 2D seismic program was completed in the first quarter. In Blocks 10BA, 10BB and 13T a 600 kilometer 2D seismic program over the North Lokichar and Turkwell basins is ongoing and will complete in the fourth quarter. In Blocks 10BB and 13T, the acquisition of a 704 square kilometer 3D seismic program over the discoveries and prospects along the Basin Bounding Fault Play in the discovered basin in Northern Kenya has completed. Following the positive results from the Etom-1 well, this 3D seismic program was expanded by a further 274 square kilometers to include Etom and the surrounding structures. This expanded survey is expected to complete during the fourth quarter.

Due to the delays in acquiring the 3D seismic survey in Blocks 10BB and 13T the Government of Kenya has approved a one year extension to the PSC exploration terms for both blocks, and as a result, the final exploration periods will expire in July 2017 and September 2017, respectively.

Cretaceous Anza Rift - Kenya

In May, the Company announced the results of the Sala-1 exploration well (Block 9, Kenya) which tested a large prospect on the northeastern flank of the Cretaceous Anza rift and is up-dip of two wells that had significant hydrocarbon shows. An upper gas bearing interval tested dry gas at a maximum rate of 6 mmcf/d from a 25 meter net pay interval. The interval had net sand of over 125 meters and encountered a gas-water contact, inferring an updip extension. A lower interval tested low rates of dry gas from a 50 meter net pay interval which can also be accessed at the up-dip location. Significant oil shows were also encountered while drilling.

In October, the Company announced the results of the Sala-2 appraisal well, which was drilled updip from the Sala-1 well. Sala-2 failed to find significant hydrocarbons as there appears to be a stratigraphic or structural separation between the two wells. The Company is reviewing additional potential appraisal targets as well as on trend prospects in the block which has proven oil and gas generation.

Tertiary Rift - Ethiopia

At the South Omo Block in Ethiopia, the Company completed drilling of the Shimela-1 exploration well in May to test a new basin in the Tertiary trend, the Chew Bahir Basin, located on the eastern side of the block. The Shilmela-1 exploration well encountered water bearing reservoirs and volcanics with trace gas shows. In July, the Company completed drilling of the Gardim-1 exploration well on the eastern flank of the Chew Bahir Basin. The Gardim-1 well intersected lacustrine and volcanic formations, similar to those found in the Shimela-1 well, again minor intervals encountered gas shows. Drilling operations are being demobilized while these results are integrated into the regional basin model. Seismic interpretation continues on independent prospectivity elsewhere in the South Omo Block and the next phase of the Ethiopia exploration campaign are expected to target these prospects.

The Company, as operator, and its partner are currently mobilizing a seismic crew to acquire a minimum 400 kilometer 2D seismic program over the Rift Basin Area commencing in the fourth quarter. The Rift Basin Area is located north of the South Omo Block and is on trend with highly prospective blocks in the Tertiary rift valley including the South Omo Block in Ethiopia, and Kenyan Blocks 10BA, 10BB, 13T, and 12A. The Company completed the acquisition of a 36,500 line kilometer Full Tensor Gradiometry ("FTG") survey in October 2013. The Company has completed an exhaustive environmental and social impact assessment over the block in preparation for a 400 to 1,200 kilometer 2D seismic program, which will commence in the fourth quarter.

Ogaden Blocks 7/8 - Ethiopia

Additionally in Ethiopia, the Company and its partners completed the drilling of the El Kuran-3 appraisal well on Block 8 in the first half of the year. Although the El Kuran-3 well demonstrated some oil and gas potential, the Company did not consider it warranted further evaluation due to concerns over reservoir quality and commerciality. Consequently, the Company has informed the Ethiopian Government and its partners that it intends to withdraw from Blocks 7 and 8.

Adigala Block - Ethiopia

As part of work obligations for the second exploration period which expired July 2013, the Company and its partners incorporated newly acquired FTG data with seismic data to improve the subsurface interpretation of the block. The Company and its partners also integrated results of recent surface geological studies and reprocessed data acquired in 2009 with the goal of improving the data quality. The parties to the block agreed to enter the final exploration period under the PSC, which expires in July 2015 and carries a 500 kilometer 2D seismic work commitment. The Company and its partners have committed to a 1,000 kilometer 2D seismic program which is underway. The Company has farmed down its interest in the Adigala Block to 10%.

Puntland (Somalia)

Based on encouraging results of the two wells drilled in 2012 on the Dharoor Valley block, the Company committed to enter the next exploration period in each block. This exploration period ending October 17, 2015 carries a commitment to drill one exploration well in each block.

There have been some significant political changes in both Somalia and the Regional State of Puntland over the last couple of years that are shaping the climate in which the Company operates. At the Federal level, the new Somali Government took power in August 2012 as the first permanent central government in the country since 1991. While internationally recognized and supported, it is still fragile and faces many challenges both politically and security wise. In January 2014, a new President of Puntland was voted in and the transfer of power took place peacefully. Management is working closely with him and his emerging new government to take forward a range of key issues that impact our operations.

Key amongst these are the legitimacy of oil concession contracts issued by former and present central Somali governments and the Regional States (Puntland and Somaliland), many of which cover overlapping territory; and the border dispute between Somalia (including Puntland) and Somaliland (which overlaps a proportion of our Nugaal block).

The Company continues to assess the operating environment in each block from logistical, community and security perspectives. These assessments will provide critical information required to plan operations in the Company's exploration areas.

A decision to move ahead with exploration activities will not be made until adequate resolution of the currently political and operational issues is achieved. Once satisfied, the Company will consider a seismic acquisition campaign in the Dharoor Valley area which will include a regional seismic reconnaissance grid in the previously unexplored eastern portion of the basin as well as prospect specific seismic to delineate a drilling candidate in the western portion of the basin where an active petroleum system was confirmed by the most recent drilling at the Shabeel-1 and Shabeel North-1 locations. The Company has also identified a suitable location to drill an exploration well in the Nugaal Valley block.

Horn is actively pursuing new venture opportunities across the African continent.