Afren Secures $200M Debt Facility for Okoro Setu Project

Afren plc on Wednesday announced the signing of a fully underwritten US$200 million debt facility to finance the development of the Okoro Setu project, in addition to an equity investment by the Mandated Lead Arranger and a Lead Syndicate Bank.

BNP Paribas--as Mandated Lead Arranger ("MLA")--has executed and underwritten a US$200 million debt facility agreement and, together with Standard Bank Plc, BNP Paribas has subscribed to a US$15 million equity investment in the Company.

US$200 million Debt Facility

Afren has secured a US$200 million, 5-year Senior Secured Revolving Reducing Credit Facility (the "Facility"), which will primarily be used to finance the development of the Okoro Setu Project (the "Project"), which Afren and its JV partner Amni International Petroleum Development Company ("AMNI") successfully appraised in Q3 2006. The Facility is fully underwritten by BNP Paribas as Mandated Lead Arranger and has been secured against the Okoro Setu Project reserves. As part of the financing due diligence process, an independent assessment of the reserves of the Project has been completed by Netherland, Sewell and Associates, Inc ("NSAI"). BNP Paribas is currently syndicating the Facility among a group of international banks.

Equity Investment

As a further demonstration of confidence in Afren and the Okoro Setu Project, BNP Paribas and Standard Bank are investing US$5 million and US$10 million equity, respectively, in the Company. Subscription Agreements were entered into on 20 March 2007 for 13,523,711 shares ranking pari passu in all respects with all other issued Ordinary Shares in the capital of the Company at 57.0 pence. Application for admission has been made for the shares, which is expected to be effective on 26 March 2007. Following the equity investment, the Company's outstanding issued share capital will be 205,063,207 shares.

Okoro Setu Project update

Afren announced the Production Sharing and Technical Services Agreement with AMNI in June 2006 to appraise and develop the Okoro and Setu oil discoveries located in OML 112 in the shallow waters of the eastern Niger Delta.

Within six months of announcing the agreement, Afren as Technical Service Provider, successfully drilled two appraisal wells, Okoro-3 and Okoro-3ST between September and December 2006. The wells were drilled on time and on budget. The successful results of the appraisal program fulfilled all pre-drill objectives and have significantly delineated the development.

The independent reserves audit completed by NSAI - prior to any reservoir modelling studies - estimates 1P oil reserves of 25 mmbbls for the Okoro and Setu Fields and a 2P reserve level of 32 mmbbls.

The Field Development Plan for the initial development of the Okoro Field, which was recently submitted to the Department of Petroleum Resources in Nigeria is expected to be approved shortly. Development drilling will commence in Q3 2007 using Global Santa Fe's Adriatic VI drilling unit. In the base case scenario, up to 6 deviated/horizontal gravel packed oil production wells will be drilled from a single field location and supported by a minimum facilities well head platform. Oil will be transported by pipeline to a leased Floating Production Storage and Offloading vessel ("FPSO"), moored 1 km south of the field, for processing. Afren is in advanced stage discussions to secure the FPSO, which will be contracted for an initial five-year term. The unit will process the total well fluids, producing stabilised crude for storage in the FPSO, with subsequent regular offtake by tanker. Associated gas produced will be utilized as fuel for the vessel's power generation and as lift gas to assist well productivity.

The drilling and completion sequence will be optimized so that production will be built up progressively. Target for first oil is on schedule with peak production expected to reach 15,000 to 20,000 bopd by early 2008, when all the planned production wells are completed. Most major contracts and materials purchase orders are in place to support this overall target for first oil.

Osman Shahenshah, Chief Executive of Afren, commented:

"I am very pleased to announce that Afren has secured a fully underwritten US$200 million debt facility from BNP Paribas for the development of the Okoro Setu Project. Of particular significance is the fact that the Banks are supporting Afren on both the debt and equity elements of the capital structure, which is a clear sign of confidence in Afren. Securing the fully underwritten debt facility is an important milestone in Afren's next phase of growth and the Company is on target for 15,000 – 20,000 bopd by early 2008."

Olivier Serra, Managing Director of BNP Paribas' Reserve Based Lending Group, commented:

"This Financing represents BNP Paribas' largest reserve based lending facility for an independent oil company entered into for the development of an asset that is not producing and marks a significant achievement for Afren. This together with the bank's equity investment underscores our confidence in Afren and the Okoro Setu Project.

"Afren has the asset base and set-up to become one of the leaders of the next generation of Africa-oriented independent oil and gas companies. Its team of talented and experienced managers and board members is well respected and highly regarded in the oil and gas industry, and throughout the African continent."

Erik Jorgensen, Director and Head of Standard Bank's Oil & Gas Team, commented:

"We are delighted to be involved with Afren, a company which we view as a key independent oil and gas player in the Gulf of Guinea."