Africa Oil has signed a definitive agreement with Platform Resources Inc., a wholly owned subsidiary of Alberta Oilsands Inc., to take an assignment of Platform's 100% interest in Blocks 12A and 13T in Kenya.
The new contract areas are adjacent to the Company's Block 10BB which hosts the Loperot-1 oil discovery (see news release dated January 7, 2010 for resource estimates). Existing gravity data on Blocks 12A and 13T suggests that the proven Lokichar basin and other prospective sub-basins and known strong leads in Block 10BB may extend onto these new blocks.
Subject to Kenyan Government approvals and TSX Venture Exchange approval, Platform's interest in Blocks 12A and 13T will be assigned to Africa Oil in consideration for 2.5 million Africa Oil common shares and 1.5 million Africa Oil share purchase warrants exercisable into one common share at a price of $1.50 per share for a period of two years. The terms of the warrants contain an accelerated exercise clause which is triggered if Africa Oil's common shares trade at over $2 per share for 20 consecutive trading days. If the acceleration clause is exercised by Africa Oil, the warrants will expire on a date that is not less than 180 days from the date of written notice to Platform. Concurrent with the signing of the definitive agreement, Platform has submitted a request for approval from the Kenyan Government.
The Production Sharing Contracts covering Blocks 12A and 13T are dated September, 2008 and have an initial exploration period of 3 years. The initial minimum exploration expenditures are $3.65 million (Block 13T) and $3.6 million (Block 12A). The initial exploration work program includes 500km of 2D seismic or 100 km2 of 3D seismic (or a combination thereof) on each block.
Keith Hill, President and CEO of Africa Oil, commented, "These two new blocks consolidate our land holdings around Block 10BB located within the highly prospective East Africa Rift Trend. The exploration play is an analogue to the giant East African Tertiary rift-hosted Lake Albert oil discovery made by Tullow and Heritage. We are excited to note that some of our key leads and prospects within Block 10BB extend onto our new blocks, which greatly enhances the exploration play. We intend to shoot seismic in the coming months on these new blocks concurrently with our work on Block 10BB. Blocks 13T and 12A comprise an area of over 23,800 km2 which now brings the total gross acreage held by Africa Oil and its partners in East Africa to well over 225,000 km2."
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