First Quarter Report | Africa Oil Corp.

Operations

A two rig drilling program commenced during the first quarter of 2012 with two wells spud. In Block 10BB (Kenya), the Company discovered over 100 meters of net oil pay in Ngamia-1, the first Tullow-Africa Oil joint venture exploration well to be spud. In the Dharoor Block (Puntland (Somalia)), the Company announced that the Shabeel-1 well has completed drilling and petrophysical analysis indicates a potential net pay zone of 12 to 20 meters in the Upper Cretaceous Jesomma Formation and an additional potential 3 meters of net pay in the Jurassic Adigrat Formation. Additional details are provided below.

It is anticipated that two additional drilling rigs will be secured and mobilized into the Company's areas of operation during the second half of 2012, bringing the total number of rigs in operation to four before the end of the year. It is anticipated that one additional rig will be utilized in Ethiopia and one additional rig will be utilized in Kenya. In addition to the Shabeel-1 and Ngamia-1 wells, which have completed drilling or are in the process of being drilled, four additional wells are currently planned: the Twiga-1well in Block 13T (Kenya), the Paipai-1 well in Block 10A (Kenya), the Shabeel North well in the Dharoor Block (Puntland (Somalia)), and an additional exploration well in the South Omo Block (Ethiopia). The Company will also continue to actively acquire, process and interpret 2D seismic over Blocks 10BA, 10BB, 12A, 13T and South Omo.

KENYA

The Company and Tullow, its operating partner in each of the Kenyan Blocks other than Block 9, are actively exploring for oil as described below.

Block 10BB

The Company and its operating partner on the Block, Tullow, spudded the partnership's first well, Ngamia-1, on January 24, 2012. The Ngamia-1 exploration well in Kenya has now been deepened to a total depth of approximately 1940 meters. The well has encountered in excess of 100 meters of net oil pay in multiple reservoir zones over a gross interval of 650 meters of the upper Lokhone sandstone (855 meters to 1500 meters). The reservoirs in these sections are composed of good quality Tertiary age sandstones. Moveable oil with an API greater than 30 degrees has been recovered to surface from four representative intervals. This oil has similar properties to the light waxy crude which has been discovered in Uganda by Tullow. Plans are in place for at least two drill stem tests upon completion of drilling operations. The Ngamia-1 well is now being drilled to a depth of approximately 2,700 meters to explore for deeper potential including the lower Lokhone sandstone which was one of the primary objectives of this well. The Ngamia-1 well has encountered additional oil and gas shows over a gross interval of 140 metres from a depth of 1,800 meters to 1,940 meters. The reservoirs are similar to those previously encountered at a shallower depth.

The positive results of the Ngamia-1 well have led the Company and its operating partner to accelerate the pace of exploration activities along the Ngamia-1 trend in Block 10BB and adjacent Block 13T. It is planned that one additional rig will be brought into Kenya as soon as possible and an additional 850 km of 2D seismic data will be acquired as infill across the trend which has been de-risked by the Ngamia discovery. The 2D infill seismic is to further evaluate the Ngamia discovery and adjacent prospects.

The drilling of the Ngamia-1 well satisfies the last remaining work obligation (first period) under the Block 10BB PSC.

Block 13T

Following the Ngamia discovery, the Company and its operating partner on the Block, Tullow, have focused additional efforts to better delineate the prospects along the Ngamia trend northward into Block 13T. Based upon the recently acquired 500 km of 2D seismic data, 3 prospects and 3 leads have been mapped in Block 13T. Additional 2D seismic is now being acquired in conjunction with Block 10BB to mature the leads to drillable prospects. The Company has fully satisfied its work obligations (first period) under the Block 13T PSC.

Block 10A

The Company and its operating partner on the Block, Tullow, have agreed on the location of the first exploratory well in Block 10A. The prospect to be drilled is the Paipai prospect with a proposed total depth of 4150m. Paipai-1 will test a large four-way closed structure with Cretaceous-age sandstone targets at multiple depths. As part of the accelerated exploration efforts mentioned above, the current plan is to move the Weatherford 804 rig, currently at the Ngamia-1 location, to Block 13T and an additional rig will be mobilized to Paipai-1 as soon as possible. The Paipai civil works associated with the location have been completed and sufficient materials have been purchased and mobilized to the location for drilling operations. The Paipai-1 well will complete the required work obligations (first period) under the Block 10A PSC.

Block 10BA

The Company and its operating partner on the Block, Tullow, have initiated the onshore 2D seismic program along the western shores of Lake Turkana. Approximately 17% of the 1350 km of planned 2D seismic have thus far been acquired. The offshore and nearshore portions of the 2D program will commence in July of this year. The 2D seismic program will fulfill the work obligations (first period) under the Block 10BA PSC.

Block 12A

Based upon the recently acquired FTG survey, the Company and its operating partner on the Block, Tullow have identified a primary area of interest, the Kerio Valley in the southwestern portion of the block where a 500km 2D seismic acquisition program will be focused. The seismic crew in Block 13T is expected mobilize to Block 12A in the second half of 2012 upon completion of seismic in Block 13T. The 500km 2D seismic program will satisfy the work obligations (first period) under the Block 12A PSC.

Block 9

The Company holds a 100% interest and acts as the operator in Block 9 where a major new seismic acquisition program of 750 km was completed in 2011. The new data was acquired over the Kaisut subbasin in northwestern Block 9. Based upon the new data set, several large prospects have been mapped and resources have been estimated. The Company is currently discussing farmout opportunities on this block to bring in one to two partners. One exploration well is expected to be drilled during 2013, which will satisfy the remaining work obligations (second period) under the Block 9 PSC.

Ethiopia

South Omo Block

The Company and its operating partner on the Block, Tullow, have completed approximately 80% of a 1000 km 2D seismic program in the western portion of the South Omo Block. The recently acquired FTG data over the South Omo Block was used extensively to lay out the new seismic program. A number of very interesting leads have thus far been identified and an infill seismic program was partially acquired to mature these leads to drillable prospects. The onset of the rainy season in May has suspended this infill program which is planned recommence late in the second quarter of 2012. An additional 500 km of 2D seismic is currently under review in the eastern portion of the South Omo Block (Chew B'hir Basin) in the second half of 2012. One exploratory well is planned in the block before the end of 2012, which will satisfy the remaining work obligations (first period) under the South Omo PSA.

Ogaden Blocks 7/8

The Company and its partners continue their focus on the El Kuran oil accumulation in Block 8, discovered in the early 1970's. The Company has completed a second phase reservoir characterization study over the El Kuran structure and an economic evaluation. The Company is currently analyzing the economic feasibility of re-drilling and testing the El Kuran structure in hopes of proving up movable, commercial quantities of oil and gas. Additionally, the Company is evaluating recently received tenders for the drilling and third party services for one well on El Kuran.

Adigala Block

The Company and its partner have entered the second exploration period for the Adigala Block following successful negotiations with the Ethiopian Ministry of Mines to alter the PSA work obligations. During the first quarter of 2012, the Company completed an airborne FTG survey, the key work obligation in the amended PSA. Geologic fieldwork was completed in February of this year with a focus on critical outcrops along the periphery of the sedimentary basin. 2D seismic data acquired in 2009 is being reprocessed in hopes of improving the data quality.

Rift Valley Joint Study Block

The Company completed the acquisition of high resolution gravity and magnetic data over the Rift Valley Block. The block is on trend with highly prospective blocks in the Tertiary rift valley such as Ethiopian South Omo block, and Kenyan blocks 10BA, 10BB, 13T, and 12A. The Company has submitted an application to convert the Rift Valley Block to a formal production sharing agreement.

PUNTLAND (SOMALIA)

Dharoor and Nugaal Valley Blocks

The Shabeel-1 well has been successfully drilled, reaching a total depth of 3470 meters. Several oil and gas shows were encountered indicating the existence of a working petroleum system. The well encountered metamorphic basement at a depth of 3430 meters and has been suspended for future testing. The well encountered a 355 meter section of Upper Cretaceous sands and shales of the Jesomma Formation at a depth of approximately 1660 meters. The sands in this interval exhibited both oil and gas shows and petrophysical analysis of downhole electrical logs indicates a potential pay zone of between 12 and 20 meters in the section. Attempts to sample formation fluids using a wireline formation tester were not successful and thus the zone will require cased hole testing in the future to confirm whether they are oil bearing. In addition to potential net pay in the Jesomma Formation, the well has encountered additional potential net pay sands in the Jurassic Adigrat Formation at a depth of 3246 to 3430 meters, several of which exhibited oil and gas shows. Petrophysical analysis of the well log data indicates up to 3 meters of potential hydrocarbon pay in several thin sand units. These sands do not warrant testing at this time, but do further indicate the existence of a working petroleum system.

The rig will now move to the Shabeel-North location, which is located 3.5 kilometers north of the Shabeel-1 location. The Shabeel-North drilling site construction has been completed. The primary objective of this well will be to evaluate the Upper Cretaceous Jesomma Sands which appear to be oil bearing at the Shabeel-1 location. Subsequent to the drilling and potential testing of this well, it is the intention of the Company to return to the Shabeel-1 well and test the Jesomma sands once the necessary testing equipment has been mobilized into the country. A surface geochemical survey is being finalized for implementation in the Nugaal Valley Block in the second half of 2012.

A surface geochemical survey is being finalized for implementation in the Nugaal Valley Block in the second half of 2012.

MALI

Blocks 7 and 11

Recent security issues in Mali are being closely monitored, but currently the operational areas are not accessible. The Company's share of costs for initial seismic and the drilling of the first exploratory well are fully carried by its single partner and Operator, Heritage. During the three months ended March 31, 2012, the Company has written-off $3.1M of capitalized intangible exploration assets due to security concerns in Mali which has halted operations on the Company's Blocks.