VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 26, 2013) - Africa Oil Corp. (News - Market indicators)(NASDAQ OMX:AOI) ("Africa Oil", "the Company" or "AOC") is pleased to announce its financial and operating results for the year ended December 31, 2012.

• Following the significant light oil discovery at Ngamia-1 exploration well in Block 10BB, the Company and its partner moved the rig 22 kilometers to drill the Twiga South-1 exploration well in Block 13T (Kenya) which is on trend with Ngamia-1. Twiga South-1 successfully encountered 30 meters of net oil pay in three Auwerwer sandstone intervals analogous to Ngamia-1. The Company and its partner performed a DST on five intervals at Twiga South-1. The DST on three Auwerwer sandstone intervals resulted in a cumulative flow rate of 2,812 bopd, constrained by surface equipment. With optimized testing equipment, these flow rates are anticipated to have increased to a cumulative rate of approximately 5,200 bopd. Two deeper tests were also completed on the tight reservoir rock at the bottom of the well, and despite reconfirming the presence of movable oil, both zones produced at sub-commercial flow rates. The well has been suspended as a potential future production well. The rig has now been moved to Ngamia-1 where testing operations on five to six zones have commenced.
   
• The Ministry of Energy in Kenya has been provided with the Twiga South-1 testing results, which accompanied a formal Notice of Discovery under the terms of the Block 13T PSC. Following this Notice of Discovery, the Ministry of Energy has agreed to the Tullow proposal, as operator of Blocks 10BB and 13T, to carry out a combined exploration and evaluation program over a defined Area of Interest ("AOI") including all of the mapped prospects and leads along the basin bounding fault on the western edge of the Lokichar Basin. The basis of the AOI approach is to adopt a basin-wide approach to concurrently explore and evaluate the area as opposed to undertaking well-by-well appraisals for each discovery well. This basin-wide approach, with regards to the AOI, is mutually agreed to be the most efficient and quickest approach to moving the exploration and evaluation work program forward towards reaching a commercial threshold of reserves required to justify any large scale oil development.
   
• During December 2012, the Company completed a non-brokered private placement issuing an aggregate of 30 million common shares at a price of CAD$7.75 per common share for gross proceeds of CAD$232.5 million. The Company paid a finder's fee of CAD$8.3 million in cash on the private placement.
   
• The Company and its operating partners on Block 10A (Kenya) spud the Paipai-1 exploration well in September 2012. Paipai-1 was drilled to a total depth of 4,255 meters. Light hydrocarbons were encountered while drilling a 55 meter thick gross sandstone interval. Attempts to sample the reservoir fluid were unsuccessful and the hydrocarbons encountered while drilling were not recovered to surface. The Company and its partners were unable to test the well at the time due to the unavailability in country of testing equipment capable of handling the higher reservoir pressures encountered at this depth. As a result, the well has been temporarily suspended pending further data evaluation.
   
• The Company and its partners selected Sabisa-1 as the first drilling location in the South Omo Block (Ethiopia). Sabisa-1 spud in January 2013 and is currently drilling.
   
• In Puntland (Somalia), the Company, through its 44.6% ownership interest in Horn Petroleum Corporation ("Horn"), completed site restoration at both Shabeel-1 and Shabeel North-1 wells and demobilization from Puntland has been completed. While the Company was disappointed that the first two exploration wells in Puntland did not flow oil, the Company remains highly encouraged that all of the critical elements exist for oil accumulations and based on this encouragement, the Company and its partners have entered into the next exploration period in both the Dharoor Valley and Nugaal Valley PSC's which carry a commitment to drill one exploration well in each block by October 2015.
   
• The Company completed a farmout transaction with Marathon Oil Corporation ("Marathon") during the fourth quarter of 2012 whereby Marathon acquired a 50% interest in Block 9 (Kenya) and a 15% interest in Block 12A (Kenya). In accordance with the farmout agreement, Marathon paid the Company $32.0 million in consideration of past exploration expenditures, and has agreed to fund the Company's working interest share of future joint venture expenditures on these blocks to a maximum of $25.0 million. The Company has retained a 20% working interest in Block 12A and a 50% working interest in Block 9.
   
• The Company completed a farmout transaction with New Age (Africa Global Energy) Limited ("New Age") during the fourth quarter of 2012 whereby New Age acquired an additional 25% interest in the Company's Blocks 7 & 8 (Ethiopia), together with operatorship of Blocks 7 & 8 and the Adigala Area (Ethiopia). In accordance with the farmout agreement, New Age paid the Company $1.5 million in consideration of past exploration expenditures. The Company has retained a 30% working interest in Blocks 7/8.
   
• The Company continues to actively acquire, process and interpret 2D seismic over Blocks 10BA, 10BB, 12A, 13T and South Omo with three seismic crews currently active.
   
• In first quarter of 2013, the Company executed a PSA for the Rift Basin Area in Ethiopia. Located north of the South Omo Block, the Rift Basin Area covers 42,519 square kilometers. This block is on trend with highly prospective blocks in the Tertiary rift valley including the South Omo Block in Ethiopia, and Kenyan Blocks 10BA, 10BB, 13T, and 12A.
   
• Africa Oil ended the quarter in a strong financial position with cash of $272.2 million and working capital of $237.7 million as compared to cash of $109.6 million and working capital of $90.2 million at December 31, 2011.

Keith Hill, President and CEO, commented, "Africa Oil is very encouraged with the results of our first two exploration wells in the Lockichar basin. Our improved financial position as a result of the non-brokered private placement and the farmouts completed in the fourth quarter of 2012 will enable the Company to drill and test multiple wells in the Lokichar sub-basin in Kenya in an effort to reach commercial thresholds, and to drill multiple additional potential basin-opening wells across its vast East African exploration acreage."

2012 Financial and Operating Highlights

Operating expenses increased $3.7 million for the year ended December 31, 2012 compared to the prior year. In the current year, the Company recorded a $3.1 million impairment of intangible exploration assets relating to Blocks 7 and 11 in Mali, while in the previous year, the Company recorded a $7.0 million impairment of intangible exploration assets relating to Blocks 2/6 in Ethiopia. In 2012, the Company made a $2.3 million donation to the Lundin Foundation, a registered Canadian non-profit organization that provides grants and risk capital to organizations dedicated to alleviating poverty in developing countries. The increase in professional fees in 2012 was the result of 420,000 common shares issued in the year as a settlement of claimed professional fees relating to previously completed farmout transactions. Compensation related costs and travel costs increased due to increased compensation related costs and travel costs associated with increased operational activity, increased headcount, and the exploration success in 2012.

The gain relating to the acquisition of Lion Energy Corp. ("Lion") in the second quarter of 2011 was a result of the Company acquiring net working capital and intangible exploration assets in excess of the consideration issued. The consideration paid was valued at $21.7 million, net of AOC shares acquired, versus working capital acquired of $20.1 million, excluding the value of AOC shares held by Lion, and the fair market value of intangible assets acquired estimated at $5.7 million.

A $4.6 million dilution loss on the sale of a subsidiary was recognized during the third quarter of 2011 as a result of Africa Oil transferring its Puntland (Somalia) exploration assets to Horn. This transaction was recorded as a reverse acquisition.

Financial income and expense is made up of the following items:

The loss on revaluation of marketable securities is the result of a decrease in the value of 10 million shares held in Encanto Potash Corp which were acquired as part of the acquisition of Lion. These shares were sold during the three months ended March 31, 2012.

At December 31, 2012, nil warrants were outstanding in AOC. The Company incurred a $3.8 million gain on the revaluation of Horn warrants during the year ended December 31, 2012 due to a significant decrease in the share price of Horn during the year.

The foreign exchange gains and losses are the direct result of changes in the value of the Canadian dollar in comparison to the US dollar. The Company's cash holdings are primarily in US and Canadian currency.

The increase in total assets from December 31, 2011 to December 31, 2012 is primarily attributable to cash received from the CAD$232.5 million non-brokered private placement and farmout transactions which closed in 2012, as well as significant intangible asset expenditures in Kenya, Ethiopia and Puntland (Somalia).

The increase in cash in 2012 is mainly the result of funds raised on the AOC and Horn non-brokered private placements, the exercise of warrants and stock options, and the proceeds from farmouts completed, partially offset by intangible exploration expenditures and cash-based operating expenses.

The Company's consolidated financial statements, notes to the financial statements, management's discussion and analysis for the year ended December 31, 2012 and the 2011 Annual Information Form have been filed on SEDAR (www.sedar.com) and are available on the Company's website (www.africaoilcorp.com).

Outlook

The Ngamia-1 and Twiga South-1 light oil discoveries in the Lokichar sub-basin, combined with positive results from reservoir analysis and flow rate tests at Twiga South-1, has led to a significant increase in the pace of exploration focused on tertiary rift basins. The Company and its joint venture partners in the tertiary rift play in east Africa plan to have four rigs operating by the end of 2013. The focus of these rigs in 2013 will be to continue drilling and testing wells in the Lokichar sub-basin in Kenya with improved efficiencies in an effort to reach commercial thresholds, and to drill potential basin-opener wells in the Turkana and the Chew B'hir basins in the tertiary rift play within Ethiopia. The Company and its partners will continue to acquire seismic data throughout the tertiary rift in Kenya and Ethiopia in an effort to add to its existing portfolio of drill-ready prospects.

The Company and its operating partner in Block 9 in Kenya are currently planning to drill the Bahasi-1 exploratory well. This well will be drilled on a large anticlinal structure targeting tertiary and cretaceous sandstones where six billion barrels of oil was discovered along trend in Sudan in a similar geologic setting. A follow-up well is also being considered towards the end of 2013 in Block 9. The Company and its operating partners in Blocks 7/8 in Ethiopia are currently planning to drill a well to appraise reservoir characteristics of Jurassic carbonates on the El Kuran oil accumulation. The main focus of this well is to establish commercial rates with acidizing, fraccing and horizontal sidetracks being considered.

The Company, through its 44.6% ownership interest in Horn, and its partners entered the next exploration period in both the Dharoor Valley and Nugaal Valley PSAs which carry a commitment to drill one well in each block within an additional three year term. The current operational plan is to contract a seismic crew to acquire additional data in the Dharoor Valley block and to hold discussions with the Puntland Government regarding drill ready prospects in the Nugaal Valley block. The focus of the Dharoor Valley block seismic program will be to delineate new structural prospects for the upcoming drilling campaign.

Africa Oil Corp. is a Canadian oil and gas company with assets in Kenya, Ethiopia and Mali as well as Puntland (Somalia) through its 45% equity interest in Horn Petroleum Corporation. Africa Oil's East African holdings are in within a world-class exploration play fairway with a total gross land package in this prolific region in excess of 250,000 square kilometers. The East African Rift Basin system is one of the last of the great rift basins to be explored. Two new significant discoveries have been announced in the Lockichar basin in which the Company holds a 50% interest along with operator Tullow Oil plc. The Company is listed on the TSX Venture Exchange and on First North at NASDAQ OMX-Stockholm under the symbol "AOI".

FORWARD-LOOKING STATEMENTS

Certain statements made and information contained herein constitute "forward-looking information" (within the meaning of applicable Canadian securities legislation). Such statements and information (together, "forward looking statements") relate to future events or the Company's future performance, business prospects or opportunities. Forward-looking statements include, but are not limited to, statements with respect to estimates of reserves and or resources, future production levels, future capital expenditures and their allocation to exploration and development activities, future drilling and other exploration and development activities, ultimate recovery of reserves or resources and dates by which certain areas will be explored, developed or reach expected operating capacity, that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.

All statements other than statements of historical fact may be forward-looking statements. Statements concerning proven and probable reserves and resource estimates may also be deemed to constitute forward-looking statements and reflect conclusions that are based on certain assumptions that the reserves and resources can be economically exploited. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "seek", "anticipate", "plan", "continue", "estimate", "expect, "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions) are not statements of historical fact and may be "forward-looking statements". Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. The Company does not intend, and does not assume any obligation, to update these forward- looking statements, except as required by applicable laws. These forward-looking statements involve risks and uncertainties relating to, among other things, changes in oil prices, results of exploration and development activities, uninsured risks, regulatory changes, defects in title, availability of materials and equipment, timeliness of government or other regulatory approvals, actual performance of facilities, availability of financing on reasonable terms, availability of third party service providers, equipment and processes relative to specifications and expectations and unanticipated environmental impacts on operations. Actual results may differ materially from those expressed or implied by such forward-looking statements.

ON BEHALF OF THE BOARD

Keith C. Hill, President and CEO

Africa Oil's Certified Advisor on NASDAQ OMX First North is Pareto Öhman AB.