Africa Oil Corp. TSX VENTURE : AOIOMX :...

Africa Oil Corp.

TSX VENTURE : AOI
OMX : AOI
http://www.marketwire.com/press-release/africa-oil-q2-2011-financial-and-operating-results-tsx-venture-aoi-1553983.htm


August 25, 2011 17:29 ET
Africa Oil Q2 2011 Financial and Operating Results
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 25, 2011) - Africa Oil Corp. (TSX VENTURE:AOI)(OMX:AOI) ("Africa Oil", "the Company" or "AOC") is pleased to announce its financial and operating results for the three and six months ended June 30, 2011.
Highlights and accomplishments during the second quarter of 2011 included:
Africa Oil ended the quarter in a strong financial position with cash of $109.1 million and working capital of $96.7 million as compared to cash of $76.1 million and working capital of $70.6 million at December 31, 2010. The Company's liquidity and capital resource position improved since year end primarily as the result of payments received upon the completion of farmout transactions and the acquisition of Lion Energy.

Africa Oil has more than sufficient funds to meet its currently planned work program. During the six months ended June 30, 2011, the Company expended $11.0 million of the 2011 Board of Directors approved $43 million in capital expenditures.

Effective June 20, 2011, the Company completed the acquisition of all of the issued and outstanding common shares of Lion Energy Corp. ("Lion"), a publicly traded oil and gas company listed on the TSX Venture Exchange. Pursuant to the agreement with Lion, AOC acquired, by way of a plan of arrangement, all of the issued and outstanding shares of Lion in consideration for 14,962,447 AOC shares, net of 2,500,000 AOC shares Lion owned at the date of acquisition. The Company also issued 287,250 stock options which expire between 30 and 90 days from the effective date of the transaction and 2,289,000 share purchase warrants that expired unexercised on June 29, 2011. The value of consideration issued, net of AOC shares acquired, was valued at $21.7 million. Lion is a joint venture partner of AOC in Kenya and Puntland (Somalia), and held the following working interests; 33.3% in Block 9 (Kenya), 10% in Block 10BB (Kenya), and 15% in each of Dharoor Valley and Nugaal Valley (Puntland). In addition to the above properties, Lion had net working capital of $20.1 million at closing, excluding the value of the AOC shares held by Lion.

Subsequent to the end of the second quarter, the Company entered into a Share Exchange Agreement (the "Agreement") aimed at creating a new Puntland focused oil exploration company. The new company will be created as a result of the transfer of AOC's interest in its oil and gas properties in Puntland Somalia to Denovo Capital Corp. ("Denovo"). Denovo intends to change its name to Horn Petroleum Corporation ("Horn Petroleum").

Under the terms of the Agreement, AOC will transfer to Denovo all of the issued and outstanding shares of its subsidiary holding companies (the "Puntland Subsidiaries") which hold participating interests in the Dharoor Valley and Nugaal Valley Production Sharing Agreements in Puntland (Somalia) (the "Puntland PSAs"). AOC will receive, in consideration of the transfer, 27,777,778 common shares of Denovo. As a result of the Transaction, the Puntland Subsidiaries will become wholly owned subsidiaries of Denovo (the "Transaction").

Africa Oil currently holds a 60% participating interest in the Puntland PSAs. It is anticipated that the entire 60% participating interest will be transferred to Denovo.

Denovo has completed a private placement of CAD$41 million comprised of 45,535,195 subscription receipts of Denovo sold at a post-consolidation price of CAD$0.90 per subscription receipt. Each subscription receipt will be exercised, upon completion of the transaction, into a unit of Denovo, comprised of one common share and one share purchase warrant (a "Denovo Warrant"). Each Denovo Warrant will entitle the holder to acquire an additional Denovo share