Afren Inks Deal to Develop Okoro & Setu Fields Offshore Nigeria

Afren has signed a Financing and Production Sharing and Technical Services Agreement with Amni International Petroleum Development Company Limited for participation in the development of the Okoro Field and Setu Field, offshore Nigeria.

Okoro and Setu are undeveloped oil and gas fields located in Oil Mining Lease 112 ("OML 112") in shallow water offshore Nigeria, which were originally awarded to Amni in 1993 as part of the Nigerian government's indigenous licensing program. The fields have combined estimated recoverable reserves of 30 to 60 mmbbls and are expected to flow in excess of 15,000 bopd when full combined production is achieved. Appraisal and development drilling will commence in Q3 2006, facilities will be installed to tie-in to the existing local infrastructure and first production is due to commence in 2008.

Under the terms of the Agreement, Afren will finance the development and appraisal program. This will be part financed through the facility outlined below. On production, Afren will recover these costs, from over 90 percent of the barrels produced net of operating costs and royalties. Following cost recovery Afren and Amni will share the production.

Okoro Field

Two wells were drilled on Okoro in the 1970s. The first well discovered oil in two sands and the follow-up appraisal well confirmed the presence of both reservoir sands. The field is covered by good quality 3D seismic data which was acquired by Mobil Corporation.

It is anticipated that an appraisal well will be drilled on Okoro in Q3 2006 with up to five development wells to be drilled in 2007 and facilities installed, ahead of the commencement of production in 2008.

Setu Field

Amni drilled a well on Setu in 2002 which discovered oil across five reservoir sands. All the zones were tested and flowed at rates between 1,500 bopd and 3,500 bopd. The field is covered by good quality 3D seismic data which was acquired by Shell.

It is expected that a further appraisal well will be drilled in Setu in 2007 and in 2008 two development wells will be drilled and facilities installed ahead of production starting up in 2009.

Afren also has reached terms regarding financing for the development of the Okoro and Setu fields. The financing is subject to final documentation and customary diligence.

As part of our ongoing review of Nigerian operations and activities, Afren has decided to concentrate its future activity in the Niger Delta on the Okoro and Setu Fields in OML 112, and on the Ogedeh Field in OML 90. Afren, in conjunction with Bicta Management Services Ltd, expects to drill an appraisal well on the Ogedeh Field in the third quarter of 2006. Thereafter, the Seadrill-7 Drilling Rig will drill an appraisal well on the Okoru Field in OML 112. After negotiations with Sogenal on the Akepo discovery in OML 90, the parties did not reach agreement on terms for the development of the field, and Afren will not proceed with the planned development of that asset.

Brian O'Cathain, Chief Executive of Afren commented:
"We are delighted to announce another partnership with a well established indigenous company in the development of proven undeveloped fields offshore Nigeria, which follows the announcement on 30th May regarding the Obo-1 discovery on Block 1 of the Nigeria Sao Tome and Príncipe Joint Development Zone. This important transaction significantly upgrades Afren's near term development and production opportunities. We are on track for early production in 2007 and our target of 15,000 to 20,000 bopd of production in 2008.

The proceeds from the financing facility announced today will help ensure the successful execution of our near term development opportunities."

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