AFR.L Regulatory News (AFR)

Afren plc (AFR LN)

First Hydrocarbon Nigeria completes the acquisition of a 45% interest in OML 26 from the SPDC Joint Venture

Secures up to US$280 million syndicated debt facilities

London, 1 December 2011 - First Hydrocarbon Nigeria Limited ("FHN") has announced that it has completed the acquisition of a 45% interest in OML 26 from the Shell Petroleum Development Company of Nigeria Ltd ("SPDC"), Total E&P Nigeria Ltd ("Total") and Nigeria Agip Oil Company ("Agip"), together the "SPDC Joint Venture". FHN has also announced that it has reached completion on financing facilities totalling US$280 million enabling it to fully fund the acquisition cost and it's share of future capital requirements associated with the initial development of the block.

Afren plc ("Afren" or the "Company") holds a 45% shareholding in FHN.

FHN has today announced the completion of its acquisition of a 45% interest in OML 26 from SPDC, Total and Agip. The announcement follows the agreement signed in October 2010 and the receipt of all necessary Government and customary approvals.

FHN will partner with Nigerian Petroleum Development Company ("NPDC"), the oil and gas exploration and production subsidiary of Nigerian National Petroleum Company ("NNPC"), in the re-development of the block. The partnership follows and builds upon the Strategic Alliance established between FHN's Technical Service Partner, Afren plc, and NPDC in November 2009.

Highlights

u OML 26 includes two producing fields and three proved undeveloped assets with significant exploration upside

u Estimated maximum investment of US$187.5 million by FHN (acquisition cost of US$147.5 million and estimated US$40 million net capex requirement for phased full field development of Ogini and Isoko fields)

u Independently certified gross recoverable 2P reserves and contingent resources of 184 mmbbls at the producing Ogini and Isoko fields

u Estimated 144 mmboe of gross contingent resources at the undeveloped Aboh, Ovo and Ozoro fields

u Significant exploration potential identified with gross prospective resources estimated at 615 mmboe

u Current combined gross production of circa 6,000 bopd at Ogini and Isoko; phased work programme, including facilities upgrade, to increase production to 40,000 bopd within four years

u FHN and Afren will continue to acquire and develop substantial oil and gas assets in Nigeria

A landmark transaction predominantly financed by Nigerian institutions

u FHN has secured up to US$230 million of senior secured reserves based debt from Nigerian institutions including FCMB, Stanbic and Skye Bank; and a US$50 million debt facility from the African focused Kingdom Zephyr's PAIP II Fund

u FHN's acquisition cost and its share of future capex fully funded through existing cash resources and new facilities secured (no cash acquisition and capex cost to Afren)

u US$130 million acquisition facility previously arranged by Afren is not required by FHN and will not be utilised

OML 26 overview

The OML 26 portfolio of assets onshore Nigeria holds two producing and three proven but undeveloped fields. Independently certified gross recoverable 2P reserves and contingent resources attributed to the currently producing Ogini and Isoko fields are 184 mmbbls, with a further 144 mmboe estimated gross contingent resources at the undeveloped Aboh, Ovo and Ozoro fields. Significant additional exploration potential has also been identified on OML 26, with an estimated 615 mmboe gross unrisked prospective resources defined across multiple prospects that will continue to be worked up in parallel to and integrated with the development plans. The Ogini and Isoko fields are producing approximately 6,000 bopd today from a limited number of currently active drainage points, with several wells currently shut in, and significant potential for further redevelopment. Under the proposed development plan, initial work will be focused on certain "quick-win" opportunities including low-cost workovers of existing wells and re-activation of gas lift. Once implemented, these initial measures are expected to increase gross field production by around 50 per cent on current levels. The partners would then seek to mobilise a land rig to the field location in order to commence the drilling of new development wells and undertake de-bottlenecking work of surface facilities. The proposed forward work programme (including facilities upgrade) is expected to increase production to more than 40,000 bopd through a phased development process over the next four years and ultimately take production to 50,000 bopd.

Osman Shahenshah, Chief Executive of Afren, commented:

"Afren's support of First Hydrocarbon Nigeria's acquisition of a 45% stake in OML 26 is another important milestone in our long-term commitment to the indigenous oil and gas sector in Nigeria. This builds on the established technical and operational track record, gained through the successful Okoro and Ebok greenfield developments, together with its indigenous partners AMNI and Oriental. This acquisition is a strong endorsement of Afren's long term strategy, of working with indigenous companies to reactivate fallow assets held by the major international oil companies in Nigeria, and further builds on our unique position in sub Saharan Africa's largest oil and gas province. Importantly the acquisition is highly accretive to Afren shareholders, with all funding associated with the transaction arranged by FHN".

About Afren

Afren is an independent upstream oil and gas exploration and production company listed on the main market of the London Stock Exchange and constituent of the Financial Times Stock Exchange Index of the leading 250 UK listed companies. Afren has a portfolio of 31 assets across 12 countries spanning the full cycle E&P value chain. Afren is currently producing from its assets offshore Nigeria and Côte d'Ivoire and holds further interests in the Kurdistan region of Iraq, Ghana, Nigeria, Côte d'Ivoire, Congo Brazzaville, the Joint Development Zone of Nigeria - São Tomé & Príncipe, Kenya, Ethiopia, Madagascar, Seychelles, Tanzania and South Africa. For more information please refer to www.afren.com

About First Hydrocarbon Nigeria

First Hydrocarbon Nigeria (FHN) was established in June 2009 in direct response to the Nigerian government's policy to increase indigenous participation in the Nigerian upstream oil and gas sector and is committed to deepening indigenous involvement in the sector at all levels. FHN has a strong and growing portfolio of assets in Nigeria and has put in place a world class Nigerian senior management team with a proven track record of securing local and international financing for oil and gas assets in Nigeria and of developing assets from exploration, through to appraisal, development and production quickly. The management team are guided by an influential and experienced Board of Directors and supported by a proven technical partner in Afren plc; who have had significant experience and success assisting indigenous companies in Nigeria. For more information please refer to www.fhnigeria.com