All About Africa Oil Aug 16 2021

ALL ABOUT AFRICA OIL AUG 16 2021

Content

ALL ABOUT AFRICA OIL ...... 3 Disclaimer ...... 3 Executive Summary ...... 3 WHAT IS AFRICA OIL? ...... 4 History ...... 4 Prime Oil & Gas ...... 7 Kenya ...... 11 Acquisitions, share repurchases or dividends? ...... 11 Acquisition ...... 12 WHAT IS AFRICA ENERGY? ...... 15 AEC reserves and triggers ...... 16 WHAT IS ECO ATLANTIC ...... 19 Eco reserves and triggers ...... 20 WHAT IS IMPACT OIL & GAS? ...... 22 IMPORTANT EVENTS AND TRIGGERS ...... 25 Important events ...... 25 Possible triggers ...... 26 ANALYSIS TOOL ...... 27 ABOUT THE AUTHORS ...... 28

ALL ABOUT AFRICA OIL

Disclaimer

This document is intended only for persons in jurisdictions where the distribution of this type of information is permitted. Not for distribution in the US. The authors are biased and have long positions in Africa Oil, Africa Energy and Eco Atlantic. The authors reserve the right for factual and typographical errors. The authors have no other connection to Africa Oil and have not authored this document on behalf of Africa Oil. Equities are risky investments and can both increase and decrease in value. Do not buy stocks based on individual tips, buying advice or rumors. Do your own due diligence. All forward-looking comments and calculations are for inspiration only.

Executive Summary

The purpose of this document is to provide an introduction to Africa Oil, Africa Energy and Eco Atlantic from an investment perspective. The background to bringing these three companies together in a joint document is that analysis Africa Oil requires consideration of AOI's significant ownership and board interests in Africa Energy, Eco Atlantic and Impact Oil & Gas. These four companies also have geographically overlapping activities.

Through the acquisition of half of Prime, with its mature production assets in Nigeria, Africa Oil has gone from being a dormant oil exploration company to a cash flow machine. With a price hedge, the company elegantly got through the corona crisis and has been able to quickly repay the loans at both Africa Oil and Prime level. It is now harvest time in Africa Oil. The massive cash flows will be used for the acquisition of new producing assets, share repurchases or dividends. In addition to this, there is a chance for a number of value-driving events related to exploration and divestment in the portfolio companies. The main triggers are:

Extension Acquisition of Positively Sale Developmental Share of licenses in producing drilling results of shares in plan / FID repurchase/d Nigeria assets Venus-1 11B / 12B Kenya dividend

WHAT IS AFRICA OIL?

Africa Oil is an oil exploration and oil producing listed company, ticker OI on The Stockholm Stock Exchange and the Toronto Stock Exchange. The most concrete holding is a 50% share of Prime Oil & Gas, which holds shares in two oil-producing fields outside Nigeria. A number of blocks in Kenya with existing discoveries will be developed. AOI also has shares in an exploration block outside South Africa. In addition, AOI has significant holdings in three oil exploration companies, which are presented separately in separate sections later in the document.

AOI portfolio company AOI interest Africa Energy up to ~ 30%

Impact 32%

Eco Atlantic 20%

History

In 2010, Africa Oil was an oil exploration company without deposits or production. The goal was to drill blocks 10BB and 10A in Kenya. A 50 percent reduction in Tullow Oil was announced this year. The remaining 50 percent was owned at this time by Africa Oil or companies that would later be incorporated into Africa Oil. 2011 AOI was prepared for the drilling program in Kenya. In 2011, the share fluctuated between SEK 8-14. The drilling program started in early 2012 and the first oil discovery, Ngamia, was announced in March. At the end of 2012, prospect number 2, Twiga, was presented. These successes drove the stock north of SEK 70 when the oil price stood at around USD100. A series of new deposits followed. At the end of 2015, Maersk Oil acquired half of Africa Oil's share in Kenya. The purchase price was USD 427 million plus contingent additions of USD 480 million (development depends on when First Oil occurs, etc.). The time was perceived by the market as somewhat unfortunate as the oil price has since fallen to USD 40. In mid-2016, a 2C resource update set the known reserves in Kenya at 753 million barrels (with a 3C of 1.6 billion barrels).

Source: Africa Oil

Following this resource update, additional deposits were announced - Erut (25 m net pay) and Emekuya (75 m net pay). JV partners do not consider it worthwhile to demonstrate more reserves until the process of obtaining approval, pipeline planning, etc. by the Kenyan government is complete so that a final investment decision can be made. In the meantime, an Early Oil Pilot Scheme was launched, which involved producing and transporting 2,000 barrels of oil a day on trucks to an oil depot on the coast. The project now encounters a number of bureaucratic and political obstacles. The management realizes that the development of production facilities and pipelines will be further delayed. Therefore, they are now putting the majority of cash from Maersk Farm to work by finding new exploration projects and production that can finance exploration.

Because it takes time to find and acquire new prospects with direct interests, Africa Oil took a portfolio approach where they bought into other oil exploration companies. However, these investments put only a relatively small part of the cash assets into work. Africa Oil now strives to buy already producing assets to take advantage of continuous cash flows, which in turn would finance future exploration. The opportunity came when Petrobras had to sell its 50% stake in POGBV, which owned 8 and 16% respectively in two producing offshore blocks in Nigeria. Africa Oil took a 25% share in a consortium that otherwise consisted of Vitol and Delonex. The deal was announced on October 31, 2018 and just needed

approval by the Nigerian authorities. Nothing happened in a year and there was speculation as to whether the Nigerian authorities opposed the deal and tried to seize some form of transaction fee. This contributed to the growing distrust of AOI's management's ability to create shareholder value and Kenya's ability to create conditions for FID. This resulted in the share price going from SEK 18 in early 2017 and fluctuating between SEK 7 and 10 in 2018 and 2019.

In November 2019, it was announced that Vitol and Delonex withdrew from the POGBV deal and that Africa Oil's share increased from 25 to 100%. No explanation was given, but speculation was circulating that the deal would not be closed, or that changed tax terms made the deal less attractive. This quadrupling of the deal had a weak initial effect on the share price. After a couple of weeks, the price is back at the same level as before the press release. But on January 14, 2020, the press release came that the deal was approved. Perfectly timed, a dispute is now beginning between oil-producing countries that is putting pressure on the oil price, and shortly afterwards the Covid crisis sent the oil price down into a bottomless pit.

The sad share price development has other explanatory factors than just a mistrust based on perpetual delays in the Kenya project and volatile oil prices. Part of this can be explained by the fact that Tullow Oil, an operator and partner with 50% ownership in Kenya, has struggled with large debt and partly lower production than expected. They are now focusing on activities that provide cash flows in the short term and have tried to sell out parts of them the exploration portfolio. Tullow Oil has said that it is reducing its share in Kenya and has together with Total (which now owns the 25% Maersk shares) entered the market in a joint attempt to sell these. The effect of the perpetual delays in the Kenya project has led investors to attribute virtually no or even negative value to the project. Africa Oil also wrote down the Kenya project during the first quarter of 2020. Tullow / Africa Oil / Total Energies is now working on a revised development plan, also sustainable at lower oil prices, which must be presented to the Kenyan authorities in 2021.

It is a "fun fact" that Tullow has not only been a part of Africa Oil's uphill in Kenya but it is also the reason why Eco is stomping in the Orinduik block (some dubious decisions in connection with the choice of drilling targets and to continue drilling without checking the oil quality).

In addition, Tullow was the operator of the Cormorant well, the only dry well for Africa Energy to date. With Tullow's current financial status, further exploration for PEL37 is far down the priority list.

In addition to Nigeria, Kenya and the three portfolio companies, Africa Oil has made a 20% farm-in on block 3B / 4B in South Africa. The information about this is scarce but a number of leads have been identified from existing 3D seismic.

Prime Oil & Gas

The Nigeria deal was made with a so-called lock box, ie all dividends from 2018-01-01 that were paid out from POGBV to Petrobras were deducted from the final payment. In this way, $ 1,030 million was deducted from the final purchase price, which amounted to $ 519.5 million net. Of this, $ 250 million was financed through a bridge loan from BTG Pactual. This loan had a usury rate of 15%. The loan was replaced in July 2021 with a corporate loan with a clearly lower interest rate (initially Libor + 6.5%).

POGBV was renamed Prime Oil & Gas, in which Africa Oil now owns a 50% share. In 2019, Africa Oil's share of production in the Agbami, Akpo and Aegina fields amounted to 33,600 barrels per day. The table below indicates the key figures in the following quarter, net to AOI.

2nd

g'line Guideline

(avg) (avg) Q2

2020 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2021 Q1 2021 2021

Working interest, boepd 29000 26000 33500 28300 26900 26200 27700 28100

Economic entitlement production, boepd 34000 28000 43000 35000 27800 30100 30300 30500

Operating cost per barrel, USD 5.8 5.1 4.4 5.9 6.4 6.0

Received dividends 87.5 25 25 62.5 0 37.5

Remaining bridge loan / corporate facility 141 141 98

Prime sales revenue 179.5 159.3 212.5 82.3 153.3 127.6

EBITDA 198.3 193 99 128.8 143.1 155.1

Cash flow from operations 572.5 375 196 134.5 107.5 146.4 85.9 252.3

Capital expenditure 22.5 42.5 2.6 3.1

Writedown of Kenya intang. assets - 215.6

Writedown of Nigeria intang. assets - 72.4

The table below contains data from Prime Oil's annual reports with results, balance sheet and cash flow in the first three columns. To the right dividends and other relevant information in point form. Rounded numbers in MMUSD and referswhole Prime. To get Africa Oil's share in Prime, multiply by 0.5.

1 INCOME STATEMENT PRIME 2018 2019 2020 39 DIVIDENDS 2018 2019 2020 2021 Prime 2 Turnover revenue 2018919 1720 1267 40 January 100 0 0 0 3 Cost of sales -423 -552 -544 41 February 0 75 125 0

4 Whereof Depreciation -237 -403 -448 42 March 300 75 50 0

5 Gross profit 496 1167 723 43 April 0 50 0 0

6 Other operating income and expenses -41 12 -221 44 May 0 100 50 0 6 7 Operating Profit 455 1179 502 45 June 100 100 0 75

8 Finance income 6 16 67 46 July 0 100 0 0

9 Finance cost -72 -142 -130 47 August 0 100 50 75

10 Whereof paid interest RBL -65 -112 -81 48 September 0 100 0

Whereof RBL amort on cap trans fees of amended 11 RBL + add rate 0 -28 -28 49 October 0 200 50

12 Profit before tax 389 1052 438 50 November 0 160 0

13 Income tax expense -255 -530 6 51 December 500 0 75

14 Profit of the year 133 522 444 52 Year total 1000 1060 400 150

15 53

16 EBITDA 686 1593 1239

18 FINANCIAL POSITION

19 Total assets 4494 4283 3553

20 Non current assets 3934 3779 3151

21 Current assets 560 504 402

23 Total equity 1068 510 571

25 Total liabilities 3426 3773 2982

26 Non current loans 1760 1191 804

27 Decommissioning liabilities 202 254 263

28 Deferred income tax liabilities 1169 1452 1311

29 Current loans 0 621 487

30 Trade and other payables 269 231 106

31 Other liabilities 26 24 11

33 CASH FLOW

34 Cash beginning of year 338 302 140

35 Cash flows from operating activities 489 1075 1050

36 Cash flows after investing activities 14 875 1011

37 Cash flows after financing activites -37 -161 91

38 Cash end of year 302 140 231

“Prime EBITDA 2020 was 1239 MMUSD. That translates to

11.3 SEK per share in Africa Oil.”

Nigerian authorities release monthly production figures per field. These give a good indication of Prime's production and sales (corrected for over- and underlift).

The period above includes OPEC + production restrictions and gradual return to normal quotas. It is difficult to draw conclusions about a reduction in field productivity from these figures. If one takes into account that the Reserve Replacement Ratio, how much new oil reserves were added in a period in relation to how much oil was produced in the same period, was 117% in 2020 and given the low capex spent during the year, the fields are better than before estimated.

11 Kenya

The deposits in Kenya were, until the Nigeria deal went through, the jewel of Africa Oil. The preparatory work for reaching a final investment decision - acquisition of land,drafting of laws, distribution of revenue between the state and local areas in Kenya, FEED, etc. - has been delayed and then delayed again. Before Tullow Oil's financial problems and their desire to withdraw from Kenya, FID was expected to be reached in the second half of 2020. The original plan's pipeline, with a capacity of 80,000 barrels per day, which will run from Turkana to the coastal city of Lamu, takes two years to build. It is therefore unlikely that production can be expected before 2024.

The current 2C figure for Kenya from Tullow Oil is 560 million barrels gross. This information comes from the operator Tullow Oil. Africa Oil has previously published the figure 753 '' + 12 '' + two oil deposits that have not been estimated would probably amount to 900 million barrels gross, 225 million net to Africa Oil. Keith Hill has also mentioned that with the unexplored leads in the fields, there are twice as many barrels. The difference between Tullow Oil's and Africa Oil's data may be due to the fact that in the negotiations with the Kenyan authorities it is desirable to keep estimates down in order to obtain more favorable terms.

As an illustration, one can calculate a "barrel in the ground" value for Kenya. This example uses Tullow's figures of 560 million barrels times 0.25 times $ 5 per barrel times $ 8.63 / SEK divided by 472 million shares. This gives a NAV of SEK 12.8 per share, or USD 700 million for Africa Oil's share in Kenya. That is more than Maersk paid for the second quarter of the Kenya project.

With new CEO Rahul Dhir, Tullow Oil, together with Africa Oil and Total, is now taking a new approach to Kenya and will present a revised development plan, sustainable even at lower oil prices, with a deadline from Kenyan authorities this year.

Acquisitions, share repurchases or dividends?

With easing of OPEC's production restrictions, rising oil prices, reduced debt burden, lower interest costs and increased credit space, cash flow will be exceptionally positive in the future.

2 The various stakeholders in a company may have conflicting incentives and goals. The management team may be longing for reputation, fame and power rather than the best interests of shareholders. Such management is inclined to acquire more assets or merge with other companies. Doing business is more fun than doing nothing. Shareholders may also have different incentives, depending on their investment horizon. Furthermore, the present value of a company is in principle the discounted value of all future cash flows to shareholders. Roughly speaking, it is the present value of all expected dividends. Regardless of one's view of peak oil demand and supply, we can conclude that the oil industry will not exist in its current form forever. Thus, at some point, an oil company must begin to repay investors, rather than later.

In an environment where oil investments are increasingly concentrated, there is a need for active price maintenance. This means that an oil company facing an investment opportunity (an acquisition) should carefully weigh the pros and cons of it compared to paying dividends to shareholders. Making repurchases or paying dividends is not very exciting, neither for company management nor short- term traders who prefer quick triggers over long-term activities.

Acquisition

When the AOI management is now looking at the alternatives of using cash for acquisitions, repurchases or repurchases, the first step should be to weigh the value of investments and stock management activities. We know that Africa Oil has bid for producing assets in West Africa. Such investments must have exceptional returns. The alternative is to "invest" in the own share. With Africa Oil's current valuation, with extremely low key figures, it should be difficult to match the return on acquisitions with the value of share repurchases. Conversely, there are, of course, advantages to acquisitions - the company becomes larger and the company risk decreases. A higher market value may mean that institutional investors who only trade in shares of a certain size can start investing in Africa Oil. Today, all production is also located in one country and distributed in a few fields. Diversification across more oil fields and jurisdictions would reduce different types of risks.

Share repurchase 13

Let us assume that the decision is to use part of the cash for share care. Are dividends or share repurchases most optimal? When you skim through a couple of Swedish university essays on the subject, there are some theories. One theory deals with the signal value of stock repurchase programs. The theory suggests that share repurchases are a signal to the market that management has a firm belief that the stock is undervalued and worth investing in. A dividend signals nothing about the valuation of the stock but instead the readiness to transfer funds to shareholders. Empirically, these essays suggest that dividends in Sweden result in a premium in the share price compared with corresponding companies that do not pay dividends. For share repurchases, there is no evidence of any lasting effect on the share price. This may depend on the choice of input data. It can be assumed that most share repurchases are mainly made by mature companies where the valuation is more market average. In the case of Africa Oil where the valuation is under pressure, there should be every opportunity for exchange.

Example

Let a simplified assumption be made. We have two types of investors in a company.

1) Long-term investors who rarely trade across the market, who see themselves as fully invested in the company given their current availability of cash. These investors have high price targets.

2) Short-term speculators who go in and out of positions often due to smaller price movements. These account for a large part of the share's daily turnover.

The company management now has a bag of cash that they want to return to the shareholders. They can:

a) Pay cash dividends

b) Make share repurchases over the stock exchange and cancel these shares.

c) Make repurchases with a reverse auction offer where the company repurchases a certain percentage of the share capital from the shareholders who offer their shares at the lowest price. Purchased shares are canceled.

d) Make share repurchases via redemption rights. This means that all shareholders receive the right to sell a certain percentage of their share capital at a given price. These redemption rights do not have to be used but can be sold to other shareholders who wish to redeem a larger share of their shares.

Cash flow to Cash flow to Core value per share Course driving Power for wiring short-term investors long-term investors immediately after the event event incentive program May trigger taxation Dividend Yes Yes Down No Negative Yes Yes, for the investors

Share repurchases across the market Yes No Up Yes Positive who sell Probably, if in Yes, for the investors Share repurchase with reverse auction Yes No Up smaller extent Positive who sell

Probably, if in Yes, when exercising the right Share repurchase via redemption right Yes Yes Up smaller extent Positive of redemption

For Africa Oil's long-term shareholders, the alternative of repurchase via redemption rights appears to be a strong alternative. In the same way that Africa Oil pays dividends to shareholders, share repurchases with redemption rights, just like dividends, mean that Africa Oil pays funds to all shareholders. The advantage is that Africa Oil gets something in return for the money, ie the repurchased shares. When these are canceled, the number of shares decreases while the value of the company (after payment) is the same. That is, the underlying value per share goes up. Compared with the other share repurchase types, the cash flow goes to the long-term shareholders. These are more likely to reinvest the redemption proceeds in Africa Oil than the more volatile short-term speculators.

"Share repurchases via redemption rights are the same as dividends, with the

advantage that the company receives repurchased shares that can be canceled."

What the different alternatives mean with regard to capital gains and dividend taxation is not discussed here. Factors such as whether the investor is private or institutional, belonging to which country and in what form the share is held (eg depository, ISK, KF) play a role.

WHAT IS AFRICA ENERGY?

Source: Africa Energy

Africa Energy is a listed oil exploration company trading in Toronto and

Stockholm. Africa Energy was created by Horn Petroleum, once closely linked to Africa Oil, and a team from Tullow Oil. About five years ago, license shares were acquired in blocks PEL37 Namibia and 11B / 12B and 2B in South Africa. The first exploration well was the Cormorant prospect at PEL37, with Tullow as operator. In September 2018, it was announced that the hole was dry and further exploration on PEL37 has been suspended and results from other wells in nearby blocks are awaited.

The second attempt for Africa Energy was on the South African offshore block 11B / 12B, where it had a 4.9 percent share. Total, which has previously tried to drill in the block and failed due to the harsh weather conditions, is the operator. In February 2019, Brulpadda was announced as a deposit. 57 meters of net pay of oil condensate were found in two separate reservoirs. The share price moved significantly before the announcement, mainly due to a kind of information leak from a South African official. The market reaction to the announcement was somewhat negative as it contained the word "gas". The fact that it was a gas condensate (which is a liquid form of hydrocarbon) was largely ignored because it there was no additional information on the quality and distribution between liquid hydrocarbons and gas.

Without obvious immediate triggers, the share price moved sideways until January 2020, when expectations of the drilling program for 2020 began to build up. The first target was the Leopard prospect. Two private placements were made in 2020, where larger ones such as Africa Oil provided cash to the company. In August 2020, it was announced that Impact Oil and Gas and Arostyle had entered into an agreement with Africa Energy to convert a loan and Arostyle's share of Main Street into shares in Africa Energy. This increased Africa Energy's share in block 11B / 12B to 10% and at the same time increased the number of shares to close to SEK 1.5 billion. The Covid crisis hit in February / March 2020, which resulted in a downgrade of the share. This reversed when expectations for spud increased. On October 28, the press release came that a large deposit on Leopard. A net pay of 73 meters in a reservoir with almost twice the area of Brulpadda. However, the announcement also stated that Total is satisfied with the discoveries so far on 11B / 12B and its potential commerciality. Thus, they intend to go directly to the development phase and thus end the exploration program. The word "gas" in combination with a canceled drilling program was a major disappointment for the stock market, which punished the share price with a significant decline. Investors had expected a "sure bet" drill on Blasoop and an exciting wildcat drill in the mysterious and huge Kloofpadda prospect. Suddenly, investors were without planned value-driven activities in the block. In June 2021, a press release came that Total with partners is considering an accelerated schedule by developing the deposits in several phases.

AEC reserves and triggers

Africa Energy has two proven oil discoveries. The toad has been estimated to contain 500 to 1000 million boe (Total has indicated the lower figure and AEC the higher). An expanded 3D and 2D seismic was made last year but no update of the Toad Reservoir has been published. Nor has any figure been officially communicated about the Leopard discovery, but it can be twice as big as the Toad. As the data are very imprecise, the total number of proven reserves varies (1.5-3 billion boe). The other prospects in Paddavissie fairway Blaasop, Platanna and Woudboom now have an estimated Chance Of Success of 95%. Kloofpadda and other leads on the east side of the block must also be taken into account.

South Africa is expected to have good jurisdiction to produce oil and gas in. The government is being pressured to complete the Petroleum Bill which is a prerequisite for the development of the fields. The tax conditions are assumed to be favorable. The country is in desperate need of energy, which could accelerate the development of resources. In addition, there is an existing gas pipeline near Brulpadda and Luiperd that can supply energy plants that have the capacity to use gas.

So what is 11B / 12B worth? In interviews before Covid Garrett Soden mentioned $ 7 per barrel in the ground. One would expect the estimate to be optimistic already at that time. With the uncertainty after covid and the weak sentiment around oil investments, it can be quite optimistic. If you apply $ 2 per barrel to the ground times 2 billion barrels gross, you get an asset value close to AEC's share price at the time of writing, SEK 1.8 per share. This can probably be considered a very cautious valuation and the absolute minimum value of Africa Energy. If you instead apply $ 7 per barrel to 4 billion barrels, you get a value of SEK 16 per share. There may be a contradiction between getting a good price for the license shares and the ambition to make such a deal within a year. Future possible triggers for Africa Energy related to 11B / 12B are

* Statement on evaluation wells or other exploration on 11B / 12B

* Sale of the shares in 11B / 12B. According to CEO Garrett Soden, the intention is to sell the license shares within 6-12 months or participate in the evaluation phase.

Block 2B was phased out in February 2020 to Azinam, which will also become the operator. Africa Energy retains a 27.5% stake and does not need to provide capital for the forthcoming exploration drilling of Gazania-1, which is expected at the end of 2021. The Chance Of Success is relatively high (59% according to Jan Maier), among other things due to there is an existing deposit from 1988 in the same basin.

As the borehole at PEL37 in Namibia was dry and the operator Tullow has challenges with its economy, no activity is expected on this block. Therefore, the block is not assigned any significant value for Africa Energy. However, there are a couple of interesting leads on the block and if drilling in adjacent blocks or generally offshore Namibia (eg Venus-1) is successful, PEL37 can be on the agenda again.

WHAT IS ECO ATLANTIC

Eco Atlantic is an exchange-traded oil exploration company, listed in Toronto and on AIM. Eco has a 15 percent share in the offshore block Orinduik in Guyana, a ten percent share in JHI Associates which has a share in the Canje block in Guyana and four blocks offshore Namibia with a majority share. The main Orinduik project is directly connected to the Exxon / Hess block Stabroek, with eighteen successful deposits estimated to contain 9 billion barrels.

Source: Eco Atlantic / Gustavson

Eco Atlantic has also recently started a hobby project - Solear, a subsidiary in renewable solar energy. The intention is to develop the company before a separate IPO. The investment for Eco is less than 10% of Eco's market cap.

In mid-2019, Eco started its drilling program in Guyana with Tullow Oil as operator. The first prospectus Jethro is reported as a hit on August 12 and it drives the share price from CAD 1.14 to 2.85. The second Joe well is also a deposit on September 16th. A few months later it was announced that the analysis of the oil from Jethro and Joe shows that the oil is both heavy (low API) and acidic (very high sulfur content). The question is whether Jethro and Joe are commercially viable at all. From Eco's side, it was claimed that the sources have both high temperature and high pressure, which would compensate for the fact that the oil is thick and enable production.

It was also claimed that there is a demand for heavy oil because there are refineries with heavy oil as a specialty, especially around the Gulf of Mexico. Skeptics say that you can write off all Tertiary leads because it is likely that they also contain heavy, sulfur-rich oil. The focus should then be on Cretaceous leads (where the majority of Stabroek's deposits were located).

Eco Atlantic CEO Gil Holzman has later stated that the Jethro deposit is larger than what was originally announced. This could mean that the current proven reserves are close to 500 million barrels of heavy and sulfur-rich oil. The drop in oil prices that followed in the footsteps of covid made the discussion about the value go silent. It is reasonable to value these deposits as an option - with rising oil prices there is a point where production can become profitable. Should you get a hit on a Cretaceous prospect near Jethro, you can also imagine some form of tieback.

Around the turn of the year 2019, Tullow Oil announced that the CEO was fired and that the company had serious financial concerns, which put further pressure on Eco Atlantic's share price. When the Covid crisis hit the world, the last hope for a continued drilling program on Orinduik died 2020. The Eco share has long been in limbo and is traded around 1/10 of the top listing. Recently, the stock has shown signs of life. Through the acquisition of up to 10% in JHI Associates, which has 17.5% in the Canje block, Eco received close exposure to the drilling prospects Jabillo and Sapote. One week after the acquisition, it was announced that Jabillo was drilling dry. The question is whether the result was known to Eco Atlantic at the time of acquisition.

For the blocks in Namibia, Eco has the ambition to farm out to an operator that bears Eco's exploration costs. Gil Holzman has expressed the ambition to present such a partner shortly.

Eco reserves and triggers

Eco Atlantic has two proven deposits on the Orinduik block, Jethro and Joe, which exceed 300 mmboe. However, the oil is heavy and rich in sulfur. Furthermore, the Stabroek deposit Hammerhead seems to extend into the Orinduik block. When Hammerhead goes into production, there may be an opportunity for unitisation, ie that Orinduik partners can receive some form of compensation.

Especially interesting is the comprehensive list of leads on Orinduik. In the latest Competent Person Report published on February 3, 2020, Gross Prospective Resources had been increased by 29 percent to 5,141 million barrels, of which 3,936 million barrels in Cretaceous. There are eleven leads in Cretaceous with about 30% Chance Of Success, four of which with over 500 million barrels each.

Source: Eco Atlantic and Gustavson

When JV partners presents a drilling program for 2022, the share has enormous potential. To illustrate this - if Eco can only prove half of the best estimate Creataceous Resources, 2 billion boe, and we apply a value of $ 5 per barrel to the ground, then we end up with a fair value per share of 21 CAD. At the time of writing, the share price is CAD 0.5.

Gustavson: "Gross Prospective Resources (P50) in Orinduik is 5141 million barrels, of which 3936 million barrels in Cretaceous targets”

WHAT IS IMPACT OIL & GAS?

Impact Oil & Gas is a privately owned company and therefore the flow of information has been more limited than for Africa Oil's other portfolio companies. Since Impact was founded by a handful of geologists and geophysicists in 2010, the company has until recently gone a little under the radar. The focus has been on building and developing their portfolio of offshore block licenses in Namibia, South Africa and the AGC.

Block Country Interest% Prospect

AGC Profond Guinea-Bissau 20 Gainde

2913B Namibia 20 Venus Q4 '21

2912 Namibia 19 - ”-

Orange Basin deep South Africa 22

Algoa & Transkei South Africa 50

Tugela South South Africa 100

Area 2 South Africa 90

Over the past year, Impact has been increasingly active. It was known that Impact had provided a loan to Arostyle Investment to finance their 51% stake in Main Street in 1549, the company holding 10% in the 11B / 12B block outside South Africa (in which Africa Energy had the remaining 49%). The terms of the loan were not announced before 14 August 2020 when a deal between Impact, Arostyle and Africa Energy was announced. The deal is that Africa Energy takes 100% control of Main Street 1549 and the share in 11B / 12B (10%). The Impact loan to Arostyle has been converted into Africa Energy shares, which means that Impact now owns more than a third of Africa Energy. Arostyle has also received a bundle of AEC shares.

The most exciting asset in Impact's portfolio in the short term is a 20% share in Block 2913B outside Namibia, where the Venus prospect is located. Keith Hill, CEO of Africa Oil, describes Venus as the largest lead he has ever seen (multi billion barrels) and that it has all the right attributes for potential discovery. Total has repeatedly postponed the date of the spud. Spud is now expected to take place in Q4 2021. On the west side of block 2913B is block 2912. Robert Wilde, CFO, says that they see similar leads on this block as on 2913B. The interest in Venus is great. Qatar Petroleum has recently taken a seat in the block just east of 2913B.

Source: Impact

"Venus-1, a multi-billion barrel prospectus"

Impact has a number of other blocks outside South Africa. A virtual flood of news came from Impact in connection with the 11B / 12B Leopard deposit. First, they informed that Equinor and Exxon had left their shares in blocks Algoa & Transkei and Tugela South and Impact took 100% of these blocks. Shortly afterwards, Impact announced that Shell had phased into Algoa & Transkei with a 50% share and taken over the operatorship. Philip Birch, director of exploration at Impact, is particularly upset about the Transkei block. He says that Impact's focus now is on developing a prospectus for this license. He also sees that the Transkei margin has many similarities with the Guyana margin. There is potential for "very very large reserves captured near the Agulha Formation".

Source: Impact

At the same time, a third press release was released stating that Impact had taken 90% of the huge Area 2 license associated with both Transkei and 11B / 12B. One can imagine that there are leads on Transkei that extend over to Area 2. Another possibility is that the leads on the east side of 11B / 12B can continue over to Area 2 and Algoa.

Impact also has 20% in block AGC Profond, where the Chinese operator CNOOC intended to drill the Gainde prospect in 2020. No update has been published.

IMPORTANT EVENTS AND TRIGGERS

Important events

Date Company Event Comment

2021-01-26 Eco Eco launches the company Eco Eco starts a hobby project in renewable solar energy. Atlantic Renewables (later Solear) Maybe in an attempt to appease the ESG drive.

2021-03-04 Africa Oil Pareto Securities gives buying buy, target price 12 sec 2021-03-29 Africa Oil Update of 2P reserves For the production fields in Nigeria, the 2P reserves were updated. The replacement ratio is 117%, which means that the revaluation more than covers the entire 2020 production. Africa Oil's present value NPV10 was stated at USD 1356MM (corresponding to SEK 25 / share).

2021-04-20 Africa Africa Energy closes block 2B farmout Africa Energy leaves 62.5% of block 2B and Energy operatorship to Azinam and retains 27.5%. Preliminary drilling plan end of 2021. 2021-05-13 Africa Oil New corporate loan to replace the AOI has taken out a new corporate loan to replace the bridge loan expensive bridge loan that was used to purchase the shares in Prime. The interest cost thus goes from 15% to + - 6.5%. Savings of over 10MMUSD / year on current loan amount. The corporate loan was capitalized in July 2021. 2021-05-17 Impact Impact closes the acquisition of 90% of Area Area 2 is a huge license (area like the Czech Republic) that 2 is adjacent to 11B / 12B and is linked to Impact's previous licenses Transkei and Algoa. Total with 2021-06-08 Africa Block 11B / 12B partners evaluate partners evaluates an accelerated timeline with Energy early production the development of the fields in phases. 2021-06-28 Eco Eco acquires up to 10% of JHI Eco was exposed to two nearby wells in the Associates holding shares in Canje block. Canjeblocket in Guyana 2021-06-29 Africa Oil Dividend of 37.5MMUSD The first dividend of the year 2021-07-01 Africa Oil Nigeria's Petroleum Industry Bill Club Nigeria's GDP has been delayed year after year but has now in Parliament. approved. Initially, the wording seems to be positive for Africa Oil's existing production. Furthermore, conditions are set for Total to be able to proceed with FID for the Preowei field. A third effect is that production licenses can be chosen to be extended prematurely. This means that the repayments on Prime's RBL loans can be spread over many years, which frees up cash flows that can be used for dividends to AOI. 2021-07-05 Eco Jabillo and Canje are drilled dry 2021-07-29 Eco Berenberg gives Eco köprek, target price Four hundred percent upside compared to 125Gbpence the share price that day. 2021-08-01 Africa Oil AOI increases the loan amount on The loan amount is increased so that AOI has an the corporate loan unutilized credit of 62MMUSD. Speculation is whether this will be used for the acquisition of producing assets. 2021-08-02 Africa Oil Renaissance Capital gives AOI a buying spree, target price 11 sec 2021-08-13 Africa Oil Announces that Equinor paid out $ Equinor has paid USD 152.5M net to AOI as a deposit 152.5 million net to APO related to the dispute over ownership interests in the Agbami field. Related is a conditional payment to Petrobras of USD 118M. 2021-08-13 Africa Oil Announces sales of 36MMUSD Three years of gas sales from OML130 have now been related to gas sales decided, which gives an increase in turnover of 36MMUSD net to AOI and conditions for future gas sales. 2021-08-13 Africa Oil Renaissance Capital gives AOI a TP of 17 sek

Possible triggers

Company Trigger When Comment

Africa Oil Acquisition of producing asset H2 2021 in With the accumulation of cash and cash equivalents in

West Africa Africa Oil and Prime and expanded credit facilities, AOI

has positioned itself for acquisitions. Keith Hill has said

they have bid on a number of assets.

Africa Oil Extension of With the new GDP, there is a possibility that the licenses in

production licenses in Nigeria Nigeria will be extended prematurely. This would mean that Prime can repay less, pay more dividends and / or

increase loans for acquisitions.

Africa Oil Repurchase or dividend policy Q4 2021 The Q2 report stated a clearer wording that

management is considering share repurchases /

dividends until the end of the year.

Africa Oil Revised development plan for Sep-21 JV partners have taken a new approach to

Kenya will be presented for Kenya Kenya to present an improved production plan that is profitable at lower oil prices.

Africa Oil Final Investment Decision 2022 If the development plan is approved by all parties, a FID should come in 2022, or not at all. Tullow and

Africa Oil New partner in Kenya Total have had their shares in Kenya for sale. Right

now it does not look relevant, but there is a

possibility that one of the companies will receive a

bid.

Africa Oil Comment on the net effect of Q3 2021 The dispute over Equinor's stake in Agbami has been

Equinor's reduced share in settled. Equinor has paid out funds. Africa Oil has a

Agbami contingent payment in the acquisition of Prime. A

comment from Africa Oil's management on what this

means net for the company should come soon.

Africa Oil Plan for block 3B / 4B South Africa Reasonably, nothing happens here until the results from

Venus-1 are presented.

Africa Energy Established spud date block 2B Q3 2021 If block 2B is to be drilled this year, spud date

must be presented very soon.

Africa Energy Drilling result block 2B Q1 2022 Even if block 2B has time to start this year, the

announcement of the result will probably be made in 2022.

Africa Energy Presentation of accelerated Q4 2021 Total should be able to present its proposal for the

development plan for 11B / 12B development of 11B / 12B before the turn of the year. The

Africa Energy Disposal of shares in 11B / 12B during 2022 main idea for AEC is to capitalize on the shares in 11B / 12B

as soon as possible. Can be done with the license share or

the entire AEC.

Eco Atlantic Presentation of drilling program Q3 2021 Gil Holzman has promised a drilling plan for 2022 2022 for Orinduik from JV partners soon.

Eco Atlantic Tullow divests shares in It is not impossible that Tullow tilts the Orinduik - new operator Farm operatorship of Orinduik.

Eco Atlantic unloading in Namibia Spud H2 2021 Business of license shares is said to be relevant.

Impact date for Venus-1 Q3 2021 Spud date should be presented shortly if spud is to take place in 2021

Impact Spud Venus-1 Q4 2021 It's time for Venus-1 to be drilled.

Impact Progress or plan for Q4 2021 With Shell in the driver's seat, the plan for Transkei et al

Transkei / Algoa / Area 2 crystallizes out, possibly with a seismic activity. Impact Plan for Gainde 2022 Gainde has previously been planned for 2020.

ANALYSIS TOOL

Finally, I want to give you as a reader the opportunity to make your own analysis, with your own values and assumptions. At Google Docs you will find this excel sheet

Once inside, go to File> Copy to create a copy of your own Google Docs. Alternatively go to File> Download> Microsoft Excel to save a copy for further processing in Excel. Then you can change assumptions and do stress tests completely freely on your own.

ABOUT THE AUTHORS

Responsible author is Jonas Wander-Levin. For the past 15 years, he has run consulting operations in investment management systems, with asset managers such as the Norwegian Petroleum Fund, Danske Bank, Deutsche Bank, Swiss Life and ADIA as customers.

Thanks to Gøran Karlsen for your contribution with the Excel analysis sheet.

Thanks to Andreas, Mikael, Johannes and Stefan for proofreading, fact checking, valuable tips and suggestions.