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Africa Oil Third Quarter of 2014 Financial and Operating Results

VANCOUVER, BRITISH COLUMBIA — (Marketwired) — 11/12/14 — Africa Oil Corp. (“Africa Oil” or the “Company”) (TSX: AOI)(OMX: AOI) is pleased to provide third quarter 2014 financial results and an update on its operations in Kenya and Ethiopia.

The Company announced details of an updated independent assessment of the Company–s contingent resources for the discovered basin in Northern Kenya in Blocks 10BB and 13T in September. The effective date of this assessment was July 31, 2014, and it was carried out in accordance with the standards established by the Canadian Securities Administrators in National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities. The assessment confirmed that the discovered basin in Northern Kenya contains gross 2C contingent resources of 616 million barrels of oil, an increase of 67% over the assessment conducted in September 2013 and gross 3C contingent resources of 1.29 billion barrels of oil an increase of 52% over the prior assessment. Please refer to the Company–s press release dated September 16, 2014 for details of the contingent resources by field.

Entering the year, the Company and its partners had seven drilling rigs operating in the region. Four Tullow-Africa Oil joint venture rigs are operating in Northern Kenya in Blocks 10BB, 10BA and 13T, one of which is a testing and completions unit. One of these drilling rigs is demobilizing and is being replaced with a higher specification unit. In addition, the Company and its partner had a rig operating in Block 9 in Kenya, but as operations in the block have completed, this rig has been released. In Ethiopia, the Company and its partners in the South Omo Block and Blocks 7/8 had rigs operating in each block. Drilling operations in both blocks have been completed and the rigs released. The Company will have four drilling rigs operating in Kenya through the remainder of 2014.

Two rigs are currently operating in the discovered basin in Northern Kenya. The Ngamia-5 appraisal well is currently drilling and the completion and test rig is mobilizing to Amosing to commence completion of the Amosing-1 and Amosing-2A wells in preparation for an Extended Well Test (EWT) on the field. Rigs are also in the process of mobilizing to drill the Epir-1 well in the North Kerio Basin, Block 10BB, and the Engomo-1 prospect in the North Turkana Basin, Block 10BA.

In addition to further exploration and appraisal drilling in the discovered basin in Northern Kenya, the Company and its partners plan to drill six new basin opening wells by mid-2016. Epir-1 (Block 10BB) will test the North Kerio Basin and Engomo-1 (Block 10BA) will test the North Turkana Basin; both wells will spud shortly. In addition, wells are being planned at the North Samaki prospect (Block 10BA) in the North Turkana Basin, the Tausi prospect (Block 13T) in the North Lokichar Basin, the Kerio Valley Basin (Block 12A) and the Turkewll Basin (Block 13T).

The Company is nearing the end of a significant exploration and appraisal program in 2014 which will see over 20 wells completed by year end. The program focused on drilling out the remaining prospect inventory in the discovered basin in Northern Kenya, appraising existing discoveries with the aid of the new 3D seismic survey, drilling three new basin opening wells and progressing the development studies towards project sanction in the discovered basin in Northern Kenya. This significant exploration program in 2014 is fully funded. Africa Oil ended the quarter with cash of $273.6 million and working capital of $149.1 million.

The Company has completed the following significant exploration activities and transactions in, and subsequent to, the third quarter of 2014;

Keith Hill, President and CEO of Africa Oil, commented, “We are looking forward to the results of three new basin opening wells to be drilled in late 2014 and early 2015 which have the potential to unlock significant value in terms of new prospects and resources. The ongoing drilling in the discovered basin in Northern Kenya has been quite helpful in understanding the distribution of the best reservoir facies and will no doubt be enhanced by the ongoing 3D seismic survey which is to be completed by the end of 2014. We remain very bullish in not only the existing discoveries but in the remaining prospects in the discovered basin in Northern Kenya. Our goal is to open up at least one new basin and to move a significant number of barrels from prospective to contingent resources by the end of 2014 and into 2015 as we move the field development program forward.”

Operating expenses increased $1.4 million for the three months ended September 30, 2014 compared to the same period in the prior year. The majority of the increase can be attributed to additional impairment charges relating to Blocks 7/8 in Ethiopia and a $0.5 million donation to the Lundin Foundation in the third quarter of 2014. The Company has written off an additional $0.5 million of exploration expenditures in the quarter related to Blocks 7/8 in Ethiopia bringing the total Blocks 7/8 impairment charges to $31.3 million.

Operating expenses increased $39.0 million for the nine months ended September 30, 2014 compared to the same period in the prior year. The Company has written off $31.3 million of previously capitalized Blocks 7/8 exploration expenditures in Ethiopia. The $4.9 million increase in stock-based compensation is mainly the result of an increase in the fair value of each stock option granted in the first nine months of 2014 compared to those granted in the first nine months of 2013. The increase in the fair market value is primarily attributable to the exercise price being higher for the options granted in the first nine months of 2014 compared to those granted in the first nine months of 2013, which under the Black -Scholes option pricing model results in an increase in the cost of each option granted. The Company made $2.0 million and $0.1 million of donations to the Lundin Foundation in the first nine months of 2014 and 2013, respectively, resulting in a $1.9 million increase in operating expenses. Stock exchange and filing fees increased $0.7 million as a result of costs associated with the graduation to the TSX in Canada and Nasdaq Stockholm.

At September 30, 2014, nil warrants were outstanding in AOC and Horn. In June 2014, all of the remaining 9,546,248 Horn warrants expired unexercised. The Company recorded a $0.001 million gain on the revaluation of warrants for the nine months ended September 30, 2014 as the Horn warrants expired unexercised.

Foreign exchange gains and losses are primarily related to changes in the value of the Canadian dollar in comparison to the US dollar. Historically, the Company has recorded foreign exchange gains when the Canadian dollar has strengthened versus the US dollar, and has recorded losses when the Canadian dollar has weakened versus the US dollar.

The increase in total assets from December 2013 to September 2014 is primarily attributable to intangible exploration expenditures incurred during the quarter in Kenya, Ethiopia and Puntland (Somalia).

The decrease in cash for the nine months ended September 30, 2014 is mainly the result of cash-based operating expenses and intangible exploration expenditures, offset partially by proceeds received on the Rift Basin Area farmout.

The Company–s consolidated financial statements, notes to the financial statements, management–s discussion and analysis for the three and nine months ended September 30, 2014 and the 2013 Annual Information Form have been filed on SEDAR () and are available on the Company–s website ().

Outlook

The Company expects to have four drilling rigs operating through the remainder of 2014, one of which is currently being utilized as testing and completion rig. The near term focus of exploration is to continue drilling out the remaining prospect inventory in the discovered basin in Northern Kenya, appraising existing and future discoveries with the aid of the new 3D seismic survey, drilling three additional new basin opening wells and progressing the development studies towards project sanction in the discovered basin in Northern Kenya.

Given the significant volumes discovered and the extensive exploration and appraisal program planned to fully assess the upside potential of the discovered basin in Northern Kenya, the Tullow-Africa Oil joint venture has agreed with the Government of Kenya to commence development and ESIA studies for the upstream facilities. In addition, the partnership is involved in a comprehensive pre-FEED study of the export pipeline. The current ambition of the Government of Kenya and the joint venture partnership is to reach project sanction for development, including an export pipeline, by early 2016. The governments of Kenya, Uganda and Rwanda have signed a Memorandum of Understanding (MoU) and formed a Steering Committee to progress a regional crude oil export pipeline from Uganda through Kenya and are about to appoint an internationally recognized Technical Advisor to advise on the development of the pipeline project. The Kenya upstream partners have also signed a cooperation agreement with the Uganda upstream partners in support of the same objective.

Africa Oil Corp. is a Canadian oil and gas company with assets in Kenya and Ethiopia as well as Puntland (Somalia) through its 45% equity interest in Horn Petroleum Corporation. Africa Oil–s East African holdings are in within a world-class exploration play fairway with a total gross land package in this prolific region in excess of 215,000 square kilometers. The East African Rift Basin system is one of the last of the great rift basins to be explored. Seven new significant discoveries have been announced in the discovered basin in Northern Kenya in which the Company holds a 50% interest along with operator Tullow Oil plc. Good quality existing seismic show robust leads and prospects throughout Africa Oil–s project areas. The Company is listed on the TSX and Nasdaq Stockholm under the symbol “AOI”.

FORWARD LOOKING INFORMATION

Certain statements made and information contained herein constitute “forward-looking information” (within the meaning of applicable Canadian securities legislation). Such statements and information (together, “forward looking statements”) relate to future events or the Company–s future performance, business prospects or opportunities. Forward-looking statements include, but are not limited to, statements with respect to estimates of reserves and or resources, future production levels, future capital expenditures and their allocation to exploration and development activities, future drilling and other exploration and development activities, ultimate recovery of reserves or resources and dates by which certain areas will be explored, developed or reach expected operating capacity, that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.

All statements other than statements of historical fact may be forward-looking statements. Statements concerning proven and probable reserves and resource estimates may also be deemed to constitute forward-looking statements and reflect conclusions that are based on certain assumptions that the reserves and resources can be economically exploited. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions) are not statements of historical fact and may be “forward-looking statements”. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. The Company does not intend, and does not assume any obligation, to update these forward- looking statements, except as required by applicable laws. These forward-looking statements involve risks and uncertainties relating to, among other things, changes in oil prices, results of exploration and development activities, uninsured risks, regulatory changes, defects in title, availability of materials and equipment, timeliness of government or other regulatory approvals, actual performance of facilities, availability of financing on reasonable terms, availability of third party service providers, equipment and processes relative to specifications and expectations and unanticipated environmental impacts on operations. Actual results may differ materially from those expressed or implied by such forward-looking statements.

ON BEHALF OF THE BOARD

Keith C. Hill, President and CEO

Africa Oil–s Certified Advisor on Nasdaq Stockholm is Pareto Securities AB.

Contacts:
Africa Oil Corp.
Sophia Shane
Corporate Development
(604) 689-7842
africaoilcorp.com

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