Africa Oil, Denovo to Close Transaction in Few Weeks

- Africa Oil, Denovo to Close Transaction in Few Weeks

Tuesday, September 06, 2011
Africa Oil Corp.

Africa Oil provided an update to its previously announced proposed transaction with Denovo Capital whereby Denovo will acquire all the issued and outstanding shares of Canmex Holdings (Bermuda) I Ltd., Africa Oil's wholly-owned subsidiary.

The TSX Venture Exchange approved the filing of Denovo's filing statement dated August 29, 2011 relating to the Transaction and the Filing Statement was filed on SEDAR on September 1, 2011. Denovo has made its initial submission to the Exchange but has not received conditional approval of the Transaction. Africa Oil and Denovo expect to be in a position to close the Transaction in the next few weeks.

Following the completion of the Transaction, Denovo will, among other things, have consolidated its issued and outstanding common shares on the basis of one post-consolidation common share for every 0.65 pre-consolidation common shares, continued into the Province of British Columbia under the Business Corporations Act (British Columbia) and changed its name to "Horn Petroleum Corporation". For further information regarding the Transaction, please see Denovo's press release dated August 11, 2011.

In connection with the Transaction, Africa Oil announced the results of an independent evaluation of the prospective resources held by Canmex in the Dharoor Valley and Nugaal Valley Blocks in Puntland (Somalia) ("Resource Report"). The Resource Report, effective June 30, 2011, was prepared for Denovo by Petrotech Engineering Ltd. ("Petrotech") and in accordance with the current guidelines outlined in the Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities. A copy of the Resource Report may also be found under Denovo's profile on SEDAR.

The Resource Report indicates that gross best estimate prospective resource in the Dharoor Valley and Nugaal Valley Blocks, including both prospects and leads, are in excess of 5.2 billion barrels of oil. A summary of Canmex's gross and net share of the unrisked prospective resources (prospects) and the net present values from the profit oil revenue less the un-recoverable amount of funds from the production operation; discounted at 0, 5, 10, 15 and 20% before and after income tax are presented in the table below. The net cash flow is calculated at forecast prices and escalated costs on the prospective resources, to all future time and after deduction of the capital costs, royalties and before and after deduction of income tax. All cash flow data is in U.S. dollars.

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