Afren Owned Firm Buys Nigeria Oil Block OML 26

First Hydrocarbon Nigeria Limited ("FHN") has announced that it has completed the acquisition of a 45% interest in OML 26 from the Shell Petroleum Development Company of Nigeria Ltd ("SPDC"), Total E&P Nigeria Ltd ("Total") and Nigeria Agip Oil Company ("Agip"), together the "SPDC Joint Venture". FHN has also announced that it has reached completion on financing facilities totalling US$280 million enabling it to fully fund the acquisition cost and it's share of future capital requirements associated with the initial development of the block. Afren plc ("Afren" or the "Company") holds a 45% shareholding in FHN.

The announcement follows the agreement signed in October 2010 and the receipt of all necessary Government and customary approvals. FHN will partner with Nigerian Petroleum Development Company ("NPDC"), the oil and gas exploration and production subsidiary of Nigerian National Petroleum Company ("NNPC"), in the re-development of the block. The partnership follows and builds upon the Strategic Alliance established between FHN's Technical Service Partner, Afren plc, and NPDC in November 2009.

Highlights
u OML 26 includes two producing fields and three proved undeveloped assets with significant exploration upside.

u Estimated maximum investment of US$187.5 million by FHN (acquisition cost of US$147.5 million and estimated US$40 million net capex requirement for phased full field development of Ogini and Isoko fields).

u Independently certified gross recoverable 2P reserves and contingent resources of 184 mmbbls at the producing Ogini and Isoko fields.

u Estimated 144 mmboe of gross contingent resources at the undeveloped Aboh, Ovo and Ozoro fields.

u Significant exploration potential identified with gross prospective resources estimated at 615 mmboe.

u Current combined gross production of circa 6,000 bopd at Ogini and Isoko; phased work programme, including facilities upgrade, to increase production to 40,000 bopd within four years.

u FHN and Afren will continue to acquire and develop substantial oil and gas assets in Nigeria.

A landmark transaction predominantly financed by Nigerian institutions

u FHN has secured up to US$230 million of senior secured reserves based debt from Nigerian institutions including FCMB, Stanbic and Skye Bank; and a US$50 million debt facility from the African focused Kingdom Zephyr's PAIP II Fund.

u FHN's acquisition cost and its share of future capex fully funded through existing cash resources and new facilities secured (no cash acquisition and capex cost to Afren).

u US$130 million acquisition facility previously arranged by Afren is not required by FHN and will not be utilised.

Osman Shahenshah, Chief Executive of Afren, commented:
"Afren's support of First Hydrocarbon Nigeria's acquisition of a 45% stake in OML 26 is another important milestone in our long-term commitment to the indigenous oil and gas sector in Nigeria. This builds on the established technical and operational track record, gained through the successful Okoro and Ebok greenfield developments, together with its indigenous partners AMNI and Oriental. This acquisition is a strong endorsement of Afren's long term strategy, of working with indigenous companies to reactivate fallow assets held by the major international oil companies in Nigeria, and further builds on our unique position in sub Saharan Africa's largest oil and gas province. Importantly the acquisition is highly accretive to Afren shareholders, with all funding associated with the transaction arranged by FHN".