Afren Acquires Stake in Niger Delta Field

Afren plc has entered into a farm-in agreement with Independent Energy Limited (IEL) for an interest in the Ofa Field, located onshore the Northern Niger Delta.

Afren and IEL, an indigenous oil and gas company and the operator, will jointly develop Ofa under the Nigerian government's marginal field program. Ofa is an undeveloped oil field in OML 30. A recent independent assessment by Gaffney, Cline & Associates estimates mean Stock Tank Oil Initially in Place ("STOIIP") of up to 150 mmbbls. The field is covered by good-quality 3D seismic data and consists of up to eight oil-bearing reservoir intervals in the Agbada Formation between 6,670 and 7,280 feet. It is located close to existing infrastructure and within 15km of a number of Shell producing fields, including Afiesere, Eriemu, Kokori, Oweh, Olomoro and Ogini.

The field was initially discovered by Shell (Ofa-1) and subsequently appraised by the Ofa-2 well:

--The Ofa-1 exploratory well was drilled as a vertical well on the crest of a roll-over anticline structure to a total depth of 10,000 feet.
--Shell initially reported oil in three reservoir levels and the well was suspended as a discovery.
--The Ofa-2 appraisal well was drilled directionally on the southern flank of the structure at a distance of 3km south of Ofa-1 and encountered gas and condensate.

The forward work program includes a well test scheduled for Summer 2007. The test involves re-entry of the Ofa-1 discovery and will test four out of the eight identified oil-bearing zones. In addition, several cased hole logs will be run to confirm and update contacts in two key reservoirs, with the potential to add additional volumes. During the test, relevant reservoir parameters and crude samples will be collected for further analysis to optimize the development of the field. All the necessary contracts for the well test are in place and mobilization to site is expected shortly.

The Farm-In Agreement signed between Afren and IEL defines the commercial terms under which Afren will participate with IEL in the development of Ofa, and is subject to requisite approvals. Under this agreement, Afren will be responsible for paying all costs for the development of the field, and will recover the costs from 80 percent of net field revenues. Following cost recovery Afren and IEL will share production revenue equally.

Osman Shahenshah, Chief Executive of Afren, commented:

"I am delighted to have formed another important partnership with a well established indigenous company. Participation in the development of the Ofa Field, a material near-term project with the potential to expand our current production target of 15,000 to 20,000 bopd in 2008, is a significant addition to the portfolio and is consistent with Afren's business model of partnering with indigenous companies in near-term production opportunities, with low cost development options."