Vancouver, British Columbia-based Africa Oil Corp. (TSX-Venture:AOI), a leading oil and gas exploration company with assets in Kenya, Ethiopia and Somalia, does not appear content with its nearly quarter of a million square kilometres of holdings in East Africa. The Company has been regularly adding to its growing portfolio of land in the prolific, yet relatively unexplored East African Rift Basin.
In August, Africa Oil completed the acquisition of South Omo Block in Ethiopia, which spans 29,465 square kilometres within the Tertiary age East African Rift, just north of Lake Turkana, Kenya and within the same petroleum system as the Company's Kenya Block 10BB and Tullow Oil’s Uganda discoveries. Since that time, the Company has negotiated farmout deals for exploration on several of its projects including several blocks in Ethiopia and Kenya with Tullow and Lion Energy Corporation.
In Kenya, blocks controlled by Africa Oil Corp are in close proximity to, and considered by many to be an extension of, the Sudan Basin. This Basin contains reserves in excess of six billion barrels and produces approximately 500,000 barrels per day (bpd). In Somalia, African Oil-owned blocks are speculated to be an extension of the prolific Yemeni basins, which contain an estimated nine billion barrels of oil equivalent reserves with current production of over 400,000 bpd.
The Company’s property in Uganda surrounds the major Tullow Albert Graben oil discovery which contained a discovery of nearly two billion barrels of oil with the contention that much more oil is yet to be discovered in the region. This goes without mentioning the Africa Oil blocks in Ethiopia. These are considered to be a "wildcat" as the area is largely unexplored, but valuable, as an analogue petroleum system is predicted based on nearby outcrop data and field surveys.
Today, Africa Oil announced it will be adding to its extensive exploration portfolio in the region through the signing of a definitive agreement to acquire all of the issued and outstanding common shares of Centric Energy Corp. (TSX-Venture:CTE) upon Centric shareholder approval, which is scheduled for a vote in February 2011.
The terms of the agreement state that Africa Oil will acquire the shares of Centric in consideration for 0.3077 Africa Oil shares for each common share of Centric. The transaction is subject to certain conditions precedent including completion, by each of Africa Oil and Centric, of their previously announced farmout agreements with Tullow, TSX Venture Exchange, Kenyan and Mali Government, and court approvals and any requisite third-party consents and right of first refusal waivers.
The primary asset that will be acquired by Africa Oil through the agreement is control of Block 10BA in Kenya which is in a prime location within the oil-rich East African Tertiary Rift System between blocks 10BB and the South Omo Block, which are already controlled by Africa Oil. Additionally, Centric also has a carried 25% interest in Block 7 and Block 11, both located in the Republic of Mali and operated by Heritage Oil Corporation, which will become an Africa Oil asset.
With blocks of land that now are approximately the size of Great Britain, Africa Oil is establishing itself as a large player in the much sought after East African oil exploration Rift Systems.
Shares have climbed from $0.86 to over $2.25 in roughly six months and are in a minor consolidation period now at $2.00, but investors and traders will likely have their eyes on V.AOI from here on forward as continued exploration could lead to a significant discovery which would send the Company’s share price past its most recent high of $2.28 as shares were trading in excess of $7 just a few short years ago.
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