First Hydrocarbon Nigeria Acquisition

Afren plc (AFR LN)

First Hydrocarbon Nigeria has today announced the acquisition of an interest in OML 26 in Nigeria.

London, 21 October 2010 - First Hydrocarbon Nigeria ("FHN"), the indigenous Nigerian upstream oil and gas company in which Afren plc ("Afren" or the "Company") holds a 45% interest, has today announced the reaching of Definitive Agreements with Shell Petroleum Development Company of Nigeria Ltd ("SPDC"), Total E&P Nigeria Ltd ("Total") and Nigeria Agip Oil Company ("NAOC") (together called the "Assignors"), for the acquisition of OML 26, Delta State onshore Nigeria.

Highlights

u FHN26 Limited, a subsidiary of First Hydrocarbon Nigeria (together "FHN") has acquired a 45% interest in OML 26, that includes two producing and three proved undeveloped assets with significant exploration upside

u Independently certified recoverable reserves and contingent resources of 184 mmbbls

u Additional exploration potential of 615 mmboe gross unrisked prospective resources

u Current combined gross production of approximately 5,000 bopd; a phased work programme, including facilities upgrade, has been defined to increase production to 40,000 bopd over four years

u FHN will make a net investment of US$187.5 million in OML 26, which includes both the acquisition cost and FHN's equity share of the phased development

u Afren has agreed terms with BNP Paribas for a US$130 million credit facility towards the acquisition cost

u FHN will assume operatorship, with Afren acting as Technical Service Provider to FHN

FHN has today announced the acquisition of a 45% interest in OML 26, which holds two producing and three undeveloped assets, from the Assignors in Nigeria. Total independently certified recoverable reserves and contingent resources are 184 million barrels.

Significant additional exploration potential has also been defined on OML 26, with estimates of 615 mmboe gross unrisked prospective resources across multiple prospects, that will continue to be worked up in parallel to and integrated with the development plans.

The Ogini and Isoko fields are currently producing approximately 5,000 bopd gross from a limited number of currently active drainage points, with several wells currently shut in. Existing flow station capacity for the fields is currently 30,000 bopd. Combined STOIIP is 777 mmbbls and cumulative gross production to date from Ogini and Isoko is 73.9 mmbbls (46.8 mmbbls and 27.1 mmbbls respectively).

Forward work programme

A three phase field re-development has been defined for the Ogini and Isoko fields. Production is expected to increase to 40,000 bopd, following the first two phases over four years. This will include the drilling of 21 production wells and existing well locations will be expanded to accommodate multi-well clusters. Workovers and side-tracking of existing production wells will also be undertaken along with de-bottlenecking of existing production handling and export facilities. Gas lift and other pressure support methods as deemed appropriate will also be implemented. The Initial Investment will include the first phase development targeting a 2P reserves base of 40.7 mmbbls, expected to be completed by the end of 2013. Capex for phases two and three will be supported by existing field cash flows.

Further, Afren will provide technical and operational management services to FHN under an agreed set of terms. Transition planning is underway between the SPDC team and FHN and its Technical Services Provider Afren, who will operationally work together in order to ensure the smooth transfer of operational control.

Afren has agreed terms with BNP Paribas for a US$130 million credit facility towards the acquisition cost. The facility has a term of six years. The acquisition is subject to regulatory and customary approvals.

Osman Shahenshah, Chief Executive of Afren, commented:

"Afren's support of First Hydrocarbon Nigeria's acquisition of a 45 % stake in OML 26, marks an important milestone in our long-term commitment to the indigenous oil and gas sector in Nigeria.

With an established technical and operational track record, in particular gained through the successful Okoro and Ebok greenfield developments, Afren is very well placed to continue to lend its support to indigenous operators. As Technical Services Provider, we look forward to working with FHN, to safely and efficiently develop OML 26. This acquisition is materially accretive to Afren's NAV, and is a strong endorsement to Afren's long term strategy, of working with indigenous companies to reactivate fallow assets held by the major international oil companies in Nigeria, and further builds on our unique position in sub Saharan Africa's largest oil and gas province."

Chief (Dr) Oladele Fajemirokun, Director of FHN, commented:

"First Hydrocarbon Nigeria, an indigenous company, was established in 2009 with a vision of expanding local upstream ownership and significantly adding to Nigeria's production base. We are very pleased to have reached our first ground breaking agreement with SPDC, Total and Nigeria Agip Oil Company on the acquisition of their interests in OML 26 in Nigeria.

Our partner and Technical Services Provider, Afren, has a long established operational track record in Nigeria, having successfully worked with several indigenous companies. Together with our partner, we will optimally develop the fallow fields within OML 26, while seeking to acquire and develop further discovered but undeveloped, under producing and shut-in fields, thereby significantly adding to Nigeria's indigenous production base."

Analyst Presentation

There will be a presentation for analysts at 9.00am BST in Room 10, 6th floor, Bank of America Merrill Lynch, 2 King Edward Street, London, EC1A 1HQ. This will be broadcast live at www.afren.com, where the accompanying presentation will also be available from 7.00am BST.

About FHN

In direct response to the Nigerian government's objective to increase the level of local participation in the oil and gas sector and in line with the Company's strategy, FHN was established in June 2009 with the support of two leading Nigerian financial institutions, First City Monument Bank Plc ("FCMB") and Guaranty Trust Bank Plc ("GTBank"). FHN fulfils the Nigerian government's criteria for indigenous operators, and in line with stated strategy it has and will seek to further acquire substantial oil and gas assets in Nigeria.

About Afren

Afren is an African focused independent oil and gas exploration and production company listed on the main market of the London Stock Exchange and constituent of the Financial Times Stock Exchange Index of the leading 250 UK listed companies. Afren has a portfolio of 27 assets across nine countries across the full cycle E&P value chain. Afren is currently producing from its assets offshore Nigeria and Côte d'Ivoire, with the significant Ebok appraisal and development project due onstream in 2010 from Nigeria. Afren has exploration interests in Ghana, Nigeria, Côte d'Ivoire, Congo Brazzaville, the Joint Development Zone of Nigeria - São Tomé & Príncipe, Kenya, Ethiopia, Madagascar and Seychelles. For further information please refer to www.afren.com.

For further information please refer to www.afren.com.