2017 First Quarter Update

Tertiary Rift - Kenya

During the fourth quarter of 2016, exploration and appraisal drilling activities recommenced in the South Lokichar Basin (Blocks 10BB and 13T, Tertiary Rift, Kenya). Following the drilling of the successful Erut-1 (Block 13T) exploration well in January 2017, which extended the proven oil limits to the northernmost end of the South Lokichar basin, the Amosing-6 and Ngamia-10 appraisal wells in Block 10BB have now been drilled.

The Erut-1 well discovered a gross oil interval of 55 meters with 25 meters of net oil pay at a depth of 700 meters. The overall oil column for the field is between 100 and 125 meters. The well drilled a structural trap at the northern limit of the South Lokichar Basin, 10 kilometers north of the Etom-2 well and shares important characteristics. Fluid samples and wireline logging indicate the presence of oil, demonstrating oil migration to the northern limit of the South Lokichar Basin and has de-risked multiple prospects in the area.

The Amosing-6 was drilled near the basin bounding fault and encountered 35 metres of net gas and oil pay and Ngamia-10 was drilled in an untested fault compartment and encountered 65 metres of net oil pay. The data from these appraisal wells will be incorporated into the ongoing field development planning activities.

Following the completion of the Ngamia-10 well, the rig was moved to the previously drilled Etom-2 well to prepare the well for a Drill Stem Test. The rig is currently drilling the fourth well of this campaign, the Emekuya exploration well, which will target the north-eastern flank of the Etom Complex.

The Block 10BB and 13T Joint Venture partners have decided to extend the current exploration and appraisal campaign by a further three wells. The additional wells will explore further the Greater Etom complex, test an undrilled fault block adjacent to the Ekales field and drill the Ngamia-11 well which will be used for an extended water flood pilot test in conjunction with the Early Oil Pilot Scheme (EOPS).

Water injection testing on the Amosing-2A, Amosing-3, and Ngamia-5 wells has been successfully concluded, achieving good water injection rates and proving the feasibility of water injection for the development of these fields. This success has enabled the Ngamia-11 water flood pilot to be incorporated into the EOPS activities which, along with the dynamic data collected from previous tests, will be used to finalise reservoir characteristics for the Field Development Plan.

Africa Oil Corp. has a 25% working interest in Blocks 10BB and 13T with Tullow Oil plc (50% and Operator) and Maersk Olie og Gas A/S (25%) holding the remaining interests.

Field Development

In addition to the drilling and operational activities to support the South Lokichar Final Investment Decision for the Kenya Full Field Development by the end of 2018, engineering studies and contracting activities are underway in preparation for the start of Front End Engineering Design (FEED), which is expected in the second half of 2017. In parallel to the upstream development work, the Kenya Joint Venture (Blocks 10BB and 13T) and the Government of Kenya continue to progress the export pipeline commercial and finance studies and preparations are under way for the Environmental Social Impact Assessment and FEED which are also planned for the second half of 2017. The Kenya crude export pipeline is expected to run from South Lokichar to the Kenyan port of Lamu.

The Early Oil Pilot Scheme (EOPS) Agreement between the Kenya Joint Venture and the Government of Kenya was signed on 14 March 2017 allowing all EOPS upstream contracts to be awarded. The first stage of the EOPS will be the evacuation of the stored crude oil, which was produced during extended well testing in 2015, to Mombasa by road. This will be followed by EOPS production of 2,000 bopd in the fourth quarter of 2017. The EOPS will provide important information which will assist in full field development planning

Cretaceous Anza Rift - Kenya

In Block 9, the Company continues to assess the results of its 2014 drilling program. The Government of Kenya has granted an eighteen-month extension to the second additional exploration period, which will now expire in June 2017.

Tertiary Rift - Ethiopia

During the third quarter of 2015 in the Rift Basin Area Block, a 2D seismic program was completed, which consisted of approximately 600 kilometers of land and lake seismic. Source rock outcrops and oil slicks on the lakes have been identified in the block where there was previously no existing seismic or wells. The Government of Ethiopia has granted an additional twelve month extension to the initial exploration period, which will now expire in February 2018.


Court Proceedings

The Company has, for a number of years, been a party to two separate court proceedings in Kenya which had been initiated by Interstate Petroleum Ltd. ("IPL"), and certain parties related to IPL, as Applicants. Both proceedings, Judicial Review Number 30 of 2010 and Judicial Review Number 1 of 2012, involved a dispute concerning the administrative process that led to the issuance of exploration permits in respect of, amongst others, Blocks 10BA, 10BB, 12A and 13T. The primary Respondents to those proceedings included the Minister and the Ministry of Energy and Petroleum, Republic of Kenya. The Company and certain of its affiliates were named as Interested Parties.

In December 2014, the Company filed its record of appeal in respect of a High Court decision in Judicial Review Number 1 of 2012. That decision had allowed the Applicants to institute certain proceedings which the Company maintained had previously been adjudicated and settled in the determination of Judicial Review Number 30 of 2010. On July 29, 2016 the Kenyan Court of Appeal ruled in favor of the Company allowing the Company's appeal and setting aside the previous Court decision which had allowed the Applicants to institute the proceedings.

Costs were awarded to the Company by the Court of Appeal and the Company is pursuing those awards. The Company is also pursuing winding-up proceedings against IPL. These proceedings would cause IPL to be wound-up or "dissolved", which would terminate any further action in respect of the judicial review proceedings commenced by it.