african oil

Africa Oil Closes Acquisition of Major East African Oil Exploration Portfolio
Wed. April 29, 2009; Posted: 09:07 AM

VANCOUVER, BRITISH COLUMBIA, Apr 29, 2009 (Marketwire via COMTEX) -- LNDNF | Quote | Chart | News | PowerRating -- Africa Oil Corp. (TSX VENTURE:AOI) ("Africa Oil" or "the Company") is pleased to report that it has completed the previously announced acquisition of a large portfolio of East African oil exploration projects from Lundin Petroleum AB ("Lundin Petroleum"). The projects are located within a vastly underexplored region of the rich East African rift basin petroleum system. The projects acquired include an 85% working interest in Blocks 2, 6, 7 and 8 and a 50% working interest in the Adigala Block in Ethiopia plus a 100% interest in Block 10A and a 30% interest in Block 9 in Kenya. Africa Oil will assume operatorship of these projects, excluding Block 9 in Kenya.



The new acreage acquired is complementary to and consolidates Africa Oil's existing holdings in what is considered a truly world-class exploration play fairway. The Company's total land package in this prolific region is in excess of 200,000 square kilometers - an area roughly the size of Great Britain.

The East African Rift Basin system is one of the last of the great rift basins to be explored. New discoveries have been announced on all sides of Africa Oil's virtually unexplored land position including the major Heritage/Tullow Albert Graben oil discovery in neighbouring Uganda. Similar to the Albert Graben play model, Africa Oil's concessions have older wells, a legacy database, and host numerous oil seeps indicating a proven petroleum system. Good quality existing seismic show robust leads and prospects throughout Africa Oil's project areas.

Africa Oil has an aggressive exploration program planned over the next two years which will include seismic and drilling in both Ethiopia and Kenya, in addition to the previously announced drill program in Puntland, Somalia.

Rick Schmitt, President of Africa Oil, commented, "This transaction launches Africa Oil as a major participant in the East African play fairway. We look forward to commencing our exploration on this exciting acreage."

Pursuant to the Share Purchase Agreement, Africa Oil has paid as consideration to Lundin Petroleum approximately US $23.7 million which is being funded through a convertible loan from Lundin Petroleum maturing December 31, 2011 and at an interest rate of USD six-month LIBOR plus 3%. The loan, including any accrued and unpaid interest, will be convertible, at the option of either Africa Oil or Lundin Petroleum AB, into shares of Africa Oil on the basis of CAD $0.90 per common share.

In addition, the Company's existing CAD $6 million loan (plus accrued interest) from a shareholder of the Company will be converted to Units of the Company on the basis of CAD $0.95 per Unit. Each Unit comprises one common share and one share purchase warrant. Each warrant is exercisable into one common share of Africa Oil at a price of $1.50 per share over a period of two years. In the event that Africa Oil trades at or above CAD $2.00 for a period of 20 consecutive days, a forced exercise provision will come into effect.

As previously announced, the Company has also completed the sale, on a non-brokered, private placement basis, of 35,734,228 Subscription Receipts of the Company at a price of CAD $0.95 per Subscription Receipt for gross proceeds of CAD $33,947,516. A second tranche, comprising approximately 1.6 million Subscription Receipts for gross proceeds of approximately CAD $1,520,000 is expected to close on or before April 30, 2009. Each subscription receipt entitles the holder to receive one Unit of the Company without further payment. One unit comprises one common share plus one share purchase warrant exercisable at Cdn $1.50 per share for a period of three years. In the event that Africa Oil trades at or above Cdn $2.00 for a period of 20 consecutive days, a forced exercise provision will come into effect. A 5% finder's fee is payable on a portion of the private placement. The net proceeds of the private placement will be used to finance the operations of the portfolio of East African oil exploration projects acquired from Lundin Petroleum as well as for general working capital purposes. The underlying common shares of the Subscription Receipts are subject to a four month hold period from the date of closing.

ON BEHALF OF THE BOARD

Rick Schmitt, President

SOURCE: Africa Oil Corp.

Africa Oil Corp.
Sophia Shane
Corporate Development
(604) 689-7842
(604) 689-4250 (FAX)
[email protected]
www.africaoilcorp.com

For full details for AOIFF click here.