OML 115

 *Share of Profit Oil after recovery of costs

Background
OML 115 is located in the translational structural setting of the prolific offshore eastern Niger Delta (South East Nigeria), surrounding the Afren - Oriental operated Ebok and Okwok development area and close to the giant Zafiro Complex. The southern portion of the Okwok structure (Okwok South) extends into OML 115 and significant additional prospectivity has been defined within the channelized Qua Iboe system. Afren estimates gross unrisked resource potential of 270 mmbbls based on prospectivity defined to date.

Following the farm-in to develop the nearby Ebok Field with Oriental in March 2008, Afren had entered into a collaborative agreement with Oriental to pursue other assets in the region. Afren subsequently farmed-in to the Okwok field in August 2009. In January 2010, Afren announced a Joint Venture Agreement with Oriental and Energy Equity Resources (‘EER’) to participate in the exploration, appraisal and development of OML 115. This represents another important milestone within the collaboration agreement. OML 115 benefits from the Nigerian Royalty Tax Fiscal terms.

Terms
Under the terms of the farm-in agreement with EER, Afren as Technical Advisor will acquire a 32.5 per cent. legal interest. The effective economic interest of between 77 and 100 per cent. reverts to between 81.25 and 65 per cent. (post cost recovery associated with the initial exploration work programme).

Following cost recovery by both Afren and EER, Afren’s effective economic interest will revert to between 32.5 and 40.625 per cent. of field revenues. Afren has undertaken to fund the drilling of one exploration well, after which Afren and EER will jointly fund costs pro-rata (81.25 per cent. and 18.75 per cent. respectively).

Forward work programme
The near-term work programme consists of detailed sub-surface technical studies to determine an optimum exploration or appraisal well location; and an exploration well targeted for H2 2010.