AFR.L Regulatory News (AFR)

Afren plc (AFR LN)

Interim Management Statement

London, 17 May 2010 - Afren plc ("Afren" or the "Company"), issues the following Interim Management Statement, in respect of the period 1 January 2010 to 14 May 2010, in accordance with the reporting requirements of the EU Transparency Directive. Information contained within this release is un-audited and is subject to further review.

Highlights

u Stable production base - 21,000 boepd net production in Q1 2010

u Ebok development on track with first oil expected in October 2010

u Ebok Deep exploration well underway

u Key E&A wells at Okwok and OML 115 scheduled in H2 2010

u Infill drilling at the Okoro field expected to add incremental gross rates of between 3,000 bopd to 5,000 bopd over the second half of the year

u Independently certified net 2P and 2C reserves and resource base of 113 mmboe and net prospective upside of 1,054 mmboe

u Strengthened balance sheet

Net production

Net production at the Company's assets during the first quarter of 2010 was:

Production at the Okoro field in Nigeria has continued to exceed pre-development expectations, with better than expected reservoir performance and aquifer support being the main reasons. Crude oil exports continue to run smoothly via the nearby Ima terminal, where the increased storage capacity (in excess of 1 mmbbls) provides a benefit through the sale of increased parcel sizes and improved shipping and sales economics.

Gross Okoro production over the period was 18,500 bopd. Two infill targets have been identified at Okoro, and are expected to add incremental gross production rates of between 3,000 bopd to 5,000 bopd during the second half of the year.

Production in Côte d'Ivoire over the first quarter was impacted due to maintenance work involving the low pressure compressor on the Gulftide production platform and turbo expander at the Lion Gas Plant. Following completion of necessary work, gas production at CI-11 was restored to a gross rate of 30 mmcfd in April 2010. The Lion Gas Plant also received significantly reduced third party inlet volumes over the period as a result of work on the gas compression systems at the CNR operated Espoir and Baobab facilities.

At CI-11, a major mapping and seismic re-interpretation exercise has been undertaken applying current understanding of regional Upper Cretaceous depositional systems. The final results of this study will assist in defining plans to access and produce incremental oil and gas reserves.

Development

Phase 1

The Ebok Phase 1 development commenced in December 2009 and is on schedule. The wellhead support structure (WSS) was installed at the field in March 2010, and the Transocean Adriatic lX jack up drilling rig is on location drilling ahead. The initial development phase consists of six horizontal production wells and one water injection well in the central Fault Block 1 and Fault Block 2 areas of the field and will deliver an initial rate of 15,000 bopd in October 2010.

In January, production, processing and storage facilities for the Ebok development were contracted. The Prem Prachi tanker is owned by Mercator, a major Indian shipping company, and is being converted into a floating storage offloading vessel (FSO). The vessel has been designed with a storage capacity of 1.2 million barrels and will be spread-moored near a mobile offshore production unit (MOPU). The selected pre-existing MOPU will have an initial oil production capacity of 50,000 bopd, water injection capacity of 25,000 bwpd and gas lift/injection capacity of 15 mmcfd and will also incorporate 2 x 3.5 MW gas turbine power generators, being fully compliant with DPR approved process design. The unit will process the total well fluids, producing stabilised crude for storage in the FSO with subsequent regular offtake by tanker. The FSO and MOPU will be leased to the Ebok development over an initial seven year period at a rate of US$98,092 per day, with an option to extend.

Refurbishment and integration work on the MOPU is underway and the scope of work includes refurbishment to full ABS class requirements and the installation of production processing and accommodation modules. The FSO is undergoing conversion work in the Yulian shipyard in China. The scope of work includes the installation of new dual-fuel boilers and a DPR approved fiscal metering package. All work remains on schedule for October production start up.

Opting for the MOPU and FSO development configuration has provided an estimated total cost saving of over US$50 million in upfront costs and day rate charges compared to alternative FPSO solutions that were considered. Additionally, the selected configuration offers the most flexibility to efficiently and cost-effectively increase processing and storage capacity if required in the future.

The subsequent development Phase 2, targeting the West Fault Block, will incorporate the installation of an additional dedicated wellhead platform (WHP) and six development wells tied back to the central Ebok MOPU and FSO facilities, and is expected to deliver a further 20,000 bopd by end 2010.

Second drilling rig contracted

In March, a rig contract was signed for the GSF High Island Vll jack up drilling unit to undertake planned drilling across the Company's assets offshore shallow water south east Nigeria. The contract is for a duration of up to 210 days and was agreed at a day rate of US$84,000.

With the Transocean Adriatic lX rig already under contract and drilling ahead at Ebok, the introduction of a second rig provides the necessary resources and flexibility to complete Afren and its partners planned 2010 work programme.

Exploration and appraisal

In January 2010, the Company announced the acquisition of an interest in OML 115. The block surrounds the Ebok and Okwok discoveries, where Afren sees the extension of the same D Series reservoirs that have proved to be oil bearing at both Ebok and Okwok, with additional potential also identified in the deeper Qua Iboe, Isonga and Biafra intervals that are also present at Ebok and Okwok.

One appraisal well is planned in H2 2010 on the Okwok discovery to confirm and define commercial development requirements of the field. An exploration well on OML 115 will also be drilled in H2 2010. The Ebok Deep exploration well is currently drilling ahead below 8,000 ft.

A high impact exploration well is also planned at OPL 310. The block is located offshore south west Nigeria, adjacent to the significant and rececently declared commercial Chevron operated Aje discovery. Multiple prospects have been identified within the equivalent Upper Cretaceous intervals that have demonstrated substantial hydrocarbon potential along the West African Transform Margin in Ghana and Côte d'Ivoire. NSAI has independently estimated gross prospective resources of 521 mmboe, an increase of 192 mmboe on its previous estimate. An electro-magnetic survey is currently underway on the block with operations proceeding smoothly.

Financial position

In March 2010, a debt facility agreement for up to US$450 million was secured against the Ebok field reserves. The up to US$450 million of reserves based lending (RBL) debt has a maturity of a maximum of five years, is repayable semi-annually and has a margin of between 4% to 5.5% over LIBOR. The Facility will be available for development funding of the Ebok/Okwok/OML 115 area, offshore south east Nigeria. Projected capital expenditure for 2010 is US$430 million. The Company's overall financial position remains strong. Net debt/(cash) at 31 March 2010 was (US$30 million).

Outlook

Afren has an established base of production, a significant near term development that is expected to augment existing production by 35,000 bopd by the end of 2010 and a material reserves and resource base that has been independently certified by Netherland, Sewell & Associates Inc. 2010 is the Company's most active year to date in terms of drilling and development activity, with an expected 19 operated wells to be drilled. The Company has a high impact exploration and appraisal drilling campaign throughout the year that has the potential to substantially increase the reserves base. In line with Afren's stated strategy, the Company also continues to seek and evaluate acquisition opportunities providing further scope to grow the reserves base.

Ends.

Notes to Editors

Afren is an African focused independent oil and gas exploration and production company listed on the main market of the London Stock Exchange. Afren is currently producing from its assets offshore Nigeria and Côte d'Ivoire, with a significant appraisal and development project due onstream in 2010 from Nigeria. Afren has operated exploration interests in Ghana, Côte d'Ivoire and Nigeria, with minority exploration interests in Congo Brazzaville and the Joint Development Zone of Nigeria - São Tomé & Príncipe. For further information please refer to www.afren.com.