Addax Snags Shallow Water Exploration License in Nigeria

Addax Petroleum Corporation has been awarded a 40% in Oil Prospecting License (OPL) 227, offshore Nigeria. Addax Petroleum's co-participants in the OPL227 license area are Express Petroleum & Gas Company Limited and Petroleum Prospects International Limited (PPI), both of which are indigenous Nigerian oil companies. The OPL227 license area is located in the shallow water offshore of the western Niger Delta Basin, one of the most prolific petroleum basins in the world.

"Addax Petroleum continues to demonstrate its commitment to Nigeria and add to its extensive exploration portfolio with this acquisition," said Commenting, Jean Claude Gandur, President and Chief Executive Officer of Addax Petroleum "Exploration in our core area of Nigeria is a cornerstone to Addax Petroleum's growth strategy and we are excited to be acquiring a substantial interest in a license that is in a highly prospective area but has seen very little modern exploration activity to date. We are also pleased that Addax Petroleum has been selected by Express and PPI to be their partner of choice for OPL227 and we look forward to working more closely with both organizations."

The OPL227 license area covers approximately 851 km(2) (210,300 acres) and is adjacent to and to the north-east of the Shell-operated OML79 license area. OML79 contains Shell's EA field development which is reported to have commenced production in 2002 and to contain approximately 350 MMbbl of remaining recoverable oil. There have been four wells drilled in the OPL227 license area, all between 1974 and 1988, all of which encountered hydrocarbons in non-commercial quantities or shows. In addition, there has been minimal 2D seismic and no 3D seismic data acquired on OPL227 to date.

Under the terms of the award, Addax Petroleum received a 40% interest in OPL227 while Express and PPI received interests of 39% and 21%, respectively. Express is the operator while Addax Petroleum will conduct technical operations in its capacity as technical advisor. In return, Addax Petroleum has paid a farm-in fee to Express and PPI and a signature bonus to the Federal Government of Nigeria, and is obligated to fund 80% of a work program comprising a minimum of 500 km(2) of 3D seismic acquisition during the exploration period, while Express will fund the remaining 20%. Addax Petroleum will also initially fund 80% of all capital and operating costs on OPL227, with Express funding the remaining 20%, and will be entitled to a higher than pro-rata share of the net production from OPL227 until all capital costs have been recovered after which all parties will be entitled to their pro rata share of production.