Africa Energy, an oil and gas company with exploration assets offshore South Africaand Namibia, announces financial and operating results for the three and six months ended June 30, 2020. 

Garrett Soden, the Company's President and CEO, commented: 
'We are excited to begin the next phase of exploration drilling on Block 11B/12Boffshore South Africa with spud of the Luiperd-1 well this month. Luiperd is the largest prospect in the Paddavissie Fairway and has been de-risked by the nearby Brulpadda discovery and subsequent 3D seismic work.'

OUTLOOK

Africa Energy expects to commence an extremely active and potentially transformational period with spud of the Luiperd-1 well on Block 11B/12B where the Company holds an effective 4.9% interest. The recent $25.0 million financing and farmout of Block 2Bwill allow the Company to participate in several high-impact exploration wells offshore South Africa over the next 12 months. The planned wells are all targeting material prospects with relatively high chances of success.

The Block 11B/12B joint venture operated by Total has embarked on an ambitious exploration program offshore South Africa to follow-up on the large Brulpadda gas condensate and light oil discovery in February 2019. The fully-processed Polarcus 3D dataset confirms the resource potential of the Paddavissie Fairway. The expanded Shearwater 2D seismic survey is complete, and the onboard fast-track processing has identified prospectivity with encouraging seismic indicators across the new Kloofpadda Play Trend to the east. The PGS 3D seismic survey is also complete after being expanded to cover a newly identified potential northern extension to the Luiperd Prospect. The Luiperd-1 well is expected to spud in August 2020and will target a large submarine fan prospect within the same sequence as Brulpadda.

Management looks forward to closing the Block 2B farmouts whereby the Company will be carried through the next exploration well, Gazania-1, expected to spud in the first quarter of 2021. Block 2Bhas significant contingent and prospective resources in shallow water close to shore and includes the A-J1 discovery from 1988 that flowed light sweet crude oil to surface. The Gazania-1 well will target two prospects in a relatively low-risk rift basin oil play up-dip from the discovery.

HIGHLIGHTS

• Africa Energy completed a private placement in February 2020issuing an aggregate of 104,652,174 common shares at a price of SEK 2.30(CAD 0.32)per share for gross proceeds of $25.0 million.
• The Company executed two farmout agreements in February 2020whereby Africa Energy will transfer operatorship and an aggregate 62.5% participating interest in Block 2B offshore South Africa in consideration for $0.5 million in cash plus a carry through the next exploration well. Africa Energy will retain a 27.5% participating interest in Block 2B. Closing of the two farmout agreements is subject to standard conditions, including approval of the South African government.
• Management continues to focus on cost control. For the second quarter of 2020, net cash used in operations was $0.3 million, 55% less than the same period in the prior year.
• At June 30, 2020, the Company had cash of $26.4 million and no debt.
• The Odfjell Deepsea Stavanger semi-submersible rig mobilized from Norway to South Africa in July 2020. The rig is currently in Cape Town, South Africa and is expected to spud the Luiperd-1 well on Block 11B/12Bby the end of August 2020.
• The Block 11B/12B joint venture recently received the fast-track 2D seismic dataset from Shearwater for the 7,033 linear kilometer 2D seismic program completed this year. Initial interpretative work has confirmed the Kloofpadda Play Trend, which consists of several large and encouraging leads.
• The Block 11B/12B joint venture also recently received the fast-track 3D seismic dataset from PGS for the 2,305 square kilometer 3D seismic program completed this year. Initial interpretive work has identified a number of additional leads, including a potential northern extension to the Luiperd Prospect.

EARNINGS TREND AND FINANCIAL POSITION
(Unaudited; US dollars)

Operating expenses decreased by $0.6  $1.0 million for the three and six months ended June 30, 2020, respectively, compared to the same period in 2019 due to efforts made by management to reduce overall corporate costs.

At June 30, 2020, the Company had cash of $26.4 million and working capital of $24.9 million compared to cash of $2.4 millionand working capital of $2.1 million at December 31, 2019. The Company completed a private placement in February 2020 issuing an aggregate of 104,652,174 common shares at a price of SEK 2.30(CAD 0.32) per share for gross proceeds of $25.0 million. In addition, Main Street 1549, an entity owned 49% by Africa Energy and not consolidated in the Company's financial results, held $4.3 million(gross) cash with negative working capital of $11.4 million(gross) at June 30, 2020. Working capital in Main Street 1549 included current liabilities of $5.0 million (gross) to fund Total's and CNRI's portion of the 3D seismic costs and $5.0 million(gross) of Total's and CNRI's portion of the drilling costs for the next exploration well.

KeyFacts Energy: Africa Energy South Africa country profile