Africa Energy Reports 2021 Year End Results

Source: 3/24/2022, Location: Africa

Africa Energy Corp., an oil and gas company with exploration assets offshore South Africa and Namibia, announces financial and operating results for the year ended December 31, 2021.

Garrett Soden, the Company's President and CEO, commented: "We have contracted a rig and are excited to drill the Gazania oil exploration well on Block 2B offshore South Africa later this year. Block 2B has the A-J1 oil discovery and is in the prolific Orange Basin near the recent Graff and Venus discoveries. On Block 11B/12B, the joint venture partners continue to pursue a phased development of the Paddavissie Fairway relying on nearby infrastructure and gas demand in Mossel Bay. The current geopolitical and commodity price environment clearly demonstrates the benefits of accelerating South Africa's energy transition with domestic natural gas from Block 11B/12B."

On Block 2B, a drilling rig has been contracted to spud the Gazania-1 well by October 2022. Block 2B is located in the Orange Basin where Total and Shell recently announced the large Venus and Graff oil and gas discoveries across the border offshore Namibia. The block has significant contingent and prospective resources in shallow water close to shore and includes the A-J1 discovery from 1988 that flowed light sweet crude oil to surface. Gazania-1 will target two large prospects seven kilometers up-dip from A-J1.

The Block 11B/12B joint venture partnership is currently performing development studies and preparing a field development plan and an environmental application in order to submit an application for the Production Right by September 2022. The joint venture is contemplating an early production system ("EPS") for a phased development of the Paddavissie Fairway.

The EPS would provide first gas and condensate production from the Luiperd discovery and would accelerate the Block 11B/12B development timeline by utilizing nearby infrastructure on the adjacent block in order to supply gas to customers in Mossel Bay. The EPS would significantly decrease the capital expenditures required to reach first production on Block 11B/12B. The Company expects that a full development of the Paddavissie Fairway would follow the EPS as the gas market expands in South Africa. We are encouraged by the 2D and 3D seismic data that has identified additional prospectivity in the Paddavissie Fairway and to the east, confirming the large exploration upside remaining across the block. The development of Block 11B/12B will have positive implications for the South African economy and will be critical in facilitating the country's energy transition beyond coal with a domestic natural gas supply.

- At December 31, 2021, the Company had $10.9 million in cash and no debt.
- On March 3, 2022, the Block 2B joint venture partners contracted the Island Innovator semi-submersible rig to drill the Gazania-1 oil exploration well. The rig is expected to mobilize in August 2022 in order to spud the well by October 2022.
- The Block 11B/12B1 joint venture is conducting a full prospect analysis from the fully-processed 2D seismic dataset acquired by Shearwater over the eastern part of the block (7,033 linear kilometers). The initial technical analysis has identified multiple prospects and leads some of which have potential direct hydrocarbon indicators within the Kloofpadda Play Trend that is currently being matured for potential future exploration drilling.
- The Block 11B/12B joint venture received the final fully-processed merged 3D data that integrates the PGS and Polarcus surveys over the Paddavissie Fairway in the first quarter of 2021 (2,305 square kilometers from PGS and 570 square kilometers from Polarcus). The improved quality of the final fully-processed 3D volume, resulting in significantly higher resolution, is expected to further reduce exploration risk. The final 3D volume has been integrated with the drilling and testing results to facilitate development studies. The initial technical analysis has identified multiple additional prospects within the greater Paddavissie Fairway with amplitudes conforming to structure that can be incorporated into any future development scheme.

The Company recorded $21.6 million of operating income for the year ended December 31, 2021, compared to $4.4 million of operating expense for the same period in 2020 due to a $27.1 million non-cash gain on revaluation of the financial asset in the fourth quarter of 2021. The non-cash gain on revaluation of the financial asset relates to the Company's investment in Block 11B/12B and is due to increases in the base assumptions for commodity prices.

At December 31, 2021, the Company had cash of $10.9 million and working capital of $9.5 million compared to cash of $19.6 million and working capital of $18.2 million at December 31, 2020. The decrease in cash and working capital can be attributed to cash-based operating expenditures and investments in Main Street 1549 required to fund Block 11B/12B expenditures.

The Company plans to report results for the three months ended March 31, 2022, on May 13, 2022.

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