Third Quarter Report

Seismic Program

In Block 10BB, Kenya, the Company has completed the recording of 610km of 2D seismic. The seismic data acquired is currently being processed. Processing is approximately 50% complete. The Company has reprocessed all available vintage seismic data sharpening the imaging and the amplitude response for use in detecting direct hydrocarbon indicators. A surface geochemical survey was completed during the third quarter of 2010, modules are in the process of being analyzed in order to detect oil and gas seepage from identified prospects and leads on the Block. Drilling is expected to be initiated in the first half of 2011. The Company currently holds an 80% working interest in this Block, which is expected to reduce to 40% upon completion of farmout with Tullow and amendment to the farmout with Lion.

In Block 10A, Kenya, the Company is reprocessing all available vintage seismic data with the objective of improving the imaging of the data acquired in the late 1980s. New play concepts are being developed based on the reprocessed data in combination with vintage drilling data. The Company intends to acquire 750 km of 2D seismic in the Block. The seismic crew is currently being mobilized from Block 10BB as its seismic acquisition program has been completed. The Company holds a 55% working interest in this Block which is expected to reduce to 30% upon completion of farmout with Tullow and amendment to the farmout with Lion.

Seismic acquisition is in progress in the Company's Ogaden area of Ethiopia. It is anticipated that the 500 km 2D seismic acquisition program will be completed during the fourth quarter of 2010. The seismic program is aimed at previously identified leads in order to mature these leads into drillable prospects. The Company holds a 55% working interest in the Ogaden Blocks.

In Ethiopia, in the Adigala Block, the Company has completed interpretation of the 500 km of 2D seismic that was acquired during 2009. Additional geological and geophysical work is being contemplated, potentially including basin modeling, field geology and additional seismic data acquisition. Earlier completed surface geology and sampling has documented the presence of excellent quality source and reservoir along the basin margin. The Company holds a 50% working interest in this Block.

During 2009, in the Dharoor Block of Puntland, Somalia, the acquisition of 782 kilometers of good quality 2D seismic (comprised of 15 grid lines) was completed. The Company has combined 555 kilometers of previously acquired data into the seismic database which continues to be evaluated to determine exploration well locations.

In the Nugaal Block in Puntland, Somalia, AOC acquired more than 4,000 kilometers of existing good quality 2D data which was recorded in the late 1980's. This has enabled the Company to work up an inventory of drilling prospects from which the first exploration well locations will be selected.

Exploration Drilling

In Block 9, Kenya, the CNOOC-operated Bogal-1 exploration well was spud on October 28, 2009. The well reached a total depth of 5,085 meters. Gas shows and petrophysical analysis of wireline logs indicated multiple gas pay zones totaling approximately 91 meters in Lower Cretaceous sandstones. Preliminary testing on two potential gas pay zones has been completed, with only minimal flow of gas from each zone. Analysis of the test results indicates that neither test was in communication with the extensive fracture network proven by the abundant fluid losses during drilling and the Formation Micro Imaging (FMI) log. The well has been plugged pending further analysis of the test results to determine the feasibility of an additional testing program, which might include fracture and acid stimulation, due to potential wellbore damage during drilling. The Company holds a 20% working interest in this Block which contains a number of excellent oil and gas prone prospects.

The Company has completed a comprehensive interpretation of newly acquired 2D seismic data over the Dharoor Block in Puntland (Somalia). Several large prospects have been identified. Africa Oil and its joint venture partners are in discussion regarding drilling plans for 2010-2011 and continue to seek drilling contractors willing to operate in Puntland (Somalia) on commercially acceptable terms. The Company holds a 65% working interest in this project which is expected to reduce to 45% upon completion of the farmout agreement with Red Emperor.

Additional drilling activity in the Kenya Blocks and the Ethiopian Blocks will await completion of seismic acquisition, processing, and interpretation.