VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 17, 2011) - Africa Oil Corp. or "the Company" (TSX VENTURE: AOI) (OMX: AOI) is pleased to announce that Africa Oil, together with Range Resource Ltd. and Lion Energy Corp., its joint venture partners, has entered into amending agreements with the Government of Puntland, represented by the Puntland Petroleum and Mineral Agency, in respect of the production sharing agreements ("PSAs") for the Dharoor Valley Exploration Area and the Nugaal Valley Exploration Area. Under the PSAs, as amended, the First Exploration Agreement has been extended for a further 12 months, from January 17, 2011 to January 17, 2012.
Under the amended PSAs Africa Oil is obligated to spud a minimum of one exploratory well in the Dharoor Valley Exploration Area by July 27, 2011. A second exploratory well is required to be spudded in the Nugaal Valley Exploration Area or, at the option of Africa Oil, in the Dharoor Valley Exploration Area, by September 27, 2011.
In addition, the proposed farmout to Red Emperor of a 20% interest in each of the PSAs, previously announced on June 15, 2010, has been approved by the Government. Under the Red Emperor farmout Red Emperor is committed to pay a disproportionate share of the costs related to Africa Oil's drilling commitments in the First Exploration Period.
Keith Hill, President and CEO of Africa Oil commented on these developments as follows: "We look forward to the upcoming wells in the rift basins of Puntland which we believe could hold similar potential to the geologically related basins in Yemen which contain more than 6 billion barrels of discovered reserves. We appreciate the cooperation and efforts from the government in granting this extension and are in advanced negotiations with a drilling contractor to meet these obligations. We also would like to welcome our new partner Red Emperor to the joint venture."
Africa Oil Corp. is a Canadian oil and gas company with assets in Kenya, Ethiopia and Puntland (Somalia). Africa Oil's East African holdings are in what is considered a truly world-class exploration play fairway. The Company's total gross land package in this prolific region is approaching 350,000 square kilometers. 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 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. The Company is listed on the TSX Venture Exchange and on First North at NASDAQ OMX-Stockholm under the symbol "AOI".
ON BEHALF OF THE BOARD
Keith C. Hill, President and CEO
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