Trading statement and operations update

Afren plc (AFR LN)

Trading statement and operations update

2012 FY production at record levels; E&A drilling campaign delivering significant success

London, 21 January 2013 - Afren plc ("Afren" or the "Company"), issues the following trading statement and operations update, in advance of the Company's 2012 full year results which are scheduled for release on 25 March 2013. Information contained within this release is un-audited and is subject to further review.

Key Highlights

Exploration and Appraisal Activities

·; Three significant exploration discoveries in 2012

- Okoro Field Extension encountered 549 ft of net oil pay (Pmean 157 mmbbl STOIIP). First production well onstream at 5,000 bopd

- Ebok North Fault Block encountered 370 ft net oil pay (Pmean 100 mmbbl STOIIP)

- Simrit-2 in the Kurdistan region of Iraq encountered 1,342 ft of net oil pay ; tested 13,584 bopd from Triassic reservoirs, nine further DST's ongoing

·; Seismic data acquisition and ongoing prospect maturation has upgraded Afren East Africa Exploration prospectivity (5,838 mmboe net to Afren)

- 3,483 km 2D seismic, 2,262 km2 3D seismic and 1,193 km gravity and magnetic data acquired in 2012

·; 14 well E&A drilling campaign targeting net Pmean resources in excess of 670 mmboe

·; Okwok-10 appraisal well (Nigeria), Simrit-3 exploration well (Kurdistan region of Iraq) and Paipai exploration well (Kenya) currently drilling

Development and Operations

·; FY 2012 net production in line with guidance at 42,830 boepd; FY 2013E net production estimated to average between 40,000 boepd to 47,000 boepd (excluding Barda Rash)

·; Progressing Field Development Plans for Okoro Field Extension, Ebok North Fault Block and Okwok offshore Nigeria

·; Barda Rash production initiated Q3 2012

Group financials

·; Record 2012 financial results expected; 2012 sales revenue of approximately US$1,500 million forecast (+151% increase over 2011); realised average oil price of US$107/bbl (US$3.50/bbl average discount to Brent)

·; 2012 full year capital expenditure of US$520 million; forecast 2013 capital expenditure of approximately US$620 million

·; Net debt at 31 December 2012 was approximately US$488 million (31 December 2011: US$548 million)

Commenting today, Osman Shahenshah, Chief Executive of Afren plc, said:

"2012 saw record production and financial performance combined with significant exploration success in Nigeria and the Kurdistan region of Iraq. In 2013 we expect to further grow our reserves base through a multi-well exploration and appraisal drilling campaign in both established and new basins, while continuing to grow our production base. We are financially well positioned with robust cash flows, a strong balance sheet and the necessary financial capacity and flexibility to optimally explore and develop our high quality portfolio of growth opportunities well into the future. There is much to look forward to in 2013 and beyond."

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 Trading Statement

Net production

Net production at the Company's assets during the full year 2012 (subject to final reconciliation) was approximately 42,830 boepd, driven by the year-on-year increase in net production from the Ebok and Okoro fields, offshore Nigeria. Notably during the period, the Company commenced production from the Okoro Field Extension offshore Nigeria within nine months of announcing the discovery and also initiated production from the Barda Rash field in the Kurdistan region of Iraq.

Realised commodity prices and revenue

Realised commodity prices during 2012 were in line with the previous year. The Company realised an average oil price of US$107/bbl (representing a US$3.50/bbl average discount to Brent), and average gas price of US$5.85/mcf.

Total revenue for 2012 is expected to be circa US$1,500 million, compared with US$597 million in 2011. The increase in revenue is due to higher sales volumes in 2012, principally due to increased production from the Ebok and Okoro fields offshore Nigeria together with continued strength in commodity prices.

Oil inventory

Oil and gas inventory at 31 December 2012 was approximately US$36 million (31 December 2011: US$44 million), representing approximately 780,000 barrels net to Afren.

Hedging

Hedges covering approximately 4.7 million barrels are in place for the period 1 January 2013 to 30 June 2014, providing minimum floor prices on these volumes of between approximately US$80-US$90/bbl before costs.

Capital expenditure

Capital expenditure for 2012 amounted to approximately US$520 million, in line with guidance. Of this amount, approximately US$315 million was allocated to production and development activities and approximately US$200 million to exploration and appraisal (US$5 million other). Based on current plans, capital expenditure for 2013 is forecast to be approximately US$620 million.

Financing and net debt

Net debt, excluding finance leases, as at 31 December 2012 was US$488 million (31 December 2011: US$548 million) with cash at bank of US$525 million (31 December 2011: US$292 million).

Operations update

* Pre/post cost recovery

** Afren is a 45% shareholder in First Hydrocarbon Nigeria Limited (FHN) which owns a 45% interest in OML 26

Note: All production data remains subject to reconciliation

Nigeria

Okoro and Okoro Field Extension

Production operations continued to run smoothly at the Okoro main field throughout 2012. On 17 January 2012, Afren and its Partner Amni International Petroleum Development Company Ltd. ("Amni") announced that the Okoro Field Extension well (Okoro-13) had successfully made a new oil discovery. Located approximately 2 km east of the Okoro main field, the well encountered net pay of 549 ft, and test data confirmed the oil to be light and of good quality (38o to 40o API) in excellent reservoir sands with multi-Darcy permeabilities and average porosity of between 30% to 35%.

As part of the Partners' ongoing reservoir management and production optimisation work at the main Okoro field, Afren and Amni successfully side-tracked the existing Okoro-5 production well during Q2 2012. The objective of the side-track well was to access additional oil volumes in a previously un-swept area of the reservoir within the Okoro main field area. The Okoro-5 well was re-entered and side-tracked at a measured depth of 4,481 ft, and the side-track subsequently drilled to a total measured depth of 9,800 ft. The side-track successfully encountered oil pay in the target reservoir, in line with prognosis, and a 2,500 ft lateral drainage section within this pay zone was brought on stream at a stabilised rate of 2,000 bopd.

In July 2012, Afren and Partner Amni commenced early development drilling at the Okoro Field Extension. The Okoro-14 (Okoro Field Extension) development well was drilled by Afren and Amni from the existing wellhead platform ("WHP") and delivered rates in excess of 6,000 bopd on production test from the new reservoirs. The well was subsequently completed and brought onstream via the existing Okoro Floating Production Storage Offloading vessel ("FPSO") at a stabilised rate of 5,000 bopd of 38° API oil. The Partners are firstly utilising the available well head slots on the existing Okoro platform to gain early production information that will allow optimal design of the full field development configuration, which could potentially involve up to a further eight production wells under a full field development scenario. In 2013, the Partners intend to drill one infill production well/side-track in order to maximise sweep efficiency of the main field reservoirs and also plan to commence fabrication of a new wellhead platform required for the full development of Okoro Field Extension.

Ebok and Ebok North Fault Block

During early 2012, Afren and its Partner Oriental Energy Resources completed the drilling of two additional producers and one water injection well at the West Fault Block.

On 14 May 2012, the Company announced that the Ebok North Fault Block ("Ebok NFB") well had successfully encountered 370 ft (TVT) of good quality oil in the same Tertiary reservoir sands equivalent to those that have been developed and are in production at the main Ebok field development. The well reached a total depth of 4,230 ft and was targeting a separate fault block structure located approximately 2 km to the north of the main Ebok field. On 13 November 2012, the Company announced that the Adriatic IX drilling rig had been relocated to the Ebok field in order to undertake planned rig-based work, which includes the drilling of a development well to establish early production from the Ebok NFB discovery via existing facilities. The Ebok NFB early production well has been drilled and is currently being made ready for long term production. Performance data from this well will provide important reservoir information ahead of implementing an optimal development solution. In addition, the Partners have also completed and brought onstream a new horizontal production well that was drilled into a previously undeveloped reservoir in the Central Fault Block. This new reservoir delivered at initial rates of over 5,000 bopd on test, and crude quality has exceeded expectations.

In 2013 the Partners intend to drill three new production wells and a water injection well at the field.

Okwok

Processing and interpretation of the 348 km2 Ocean Bottom Cable 3D seismic survey that was acquired over the whole Ebok/Okwok/OML 115 area in late 2011 was completed in 2012. The new data is assisting with an appraisal programme to determine the optimal development plan for the field. On 24 November 2012, the Company and Partner Oriental spudded the Okwok-10 appraisal well in order to assess additional oil potential within a previously undrilled fault block. The well reached a total measured depth of 4,117 ft and successfully encountered 72 ft of net oil pay in the D Series reservoirs that have proved to be oil bearing elsewhere on the Okwok field and are in production at the nearby Ebok field. The Partners subsequently drilled a planned side-track well and encountered a further 89 ft of net oil pay. Testing operations are underway at Okwok-10, after which the Partners will suspend the well and commence drilling of Okwok-11, the final appraisal well prior to formal submission of a Field Development Plan to the Nigerian authorities. The most likely development scenario for Okwok comprises the installation of a separate dedicated production processing platform tied back to, and sharing, the Ebok Floating Storage Offloading vessel ("FSO") located approximately 13 km to the west.

OML 115

The Company and Partner Oriental plan to spud the first exploration well on the block using the recently contracted Transocean Monitor Rig. The Ufon structure remains the most likely target, and is structurally and geologically analogous to the nearby Ebok and Okwok fields. The Partners expect to commence drilling in the second quarter of 2013.

OML 26

Following completion of an independent assessment of the reserve and contingent resource potential of the Ogini and Isoko fields for First Hydrocarbon Nigeria ("FHN"), an Afren Associate, gross remaining 2P oil reserves at the fields have been increased to 129.3 million barrels and gross contingent resources have been estimated at 75.7 million barrels (gross 2P+2C reserves and resources 205.0 million barrels; 92.3 million barrels net to FHN). This represents a 218 per cent. increase on 2P reserves previously carried by FHN and a 12 per cent. increase on previously carried 2P+2C volumes.

In order to optimise production from currently active wells, a new 5.2 mmcfd gaslift compressor unit was procured in October 2012 and has been installed, with plans also in progress to install a Lease Automatic Custody Transfer (LACT) unit at the Eriemu manifold. Furthermore, sub-surface and facilities studies are in progress and it is the Partners' intention to finalise the full Ogini FDP by year end and the full Isoko FDP in 2013. The drilling of new horizontal wells will commence in 2013 with the objective of ultimately increasing gross production to 50,000 bopd.

Kurdistan region of Iraq

Barda Rash

Having commenced an extensive testing programme at the BR-1 well in July 2012 and establishing oil rates in excess of 6,000 bopd of 28° to 32° API oil, as well as obtaining valuable information on the production characteristics of the Mus/Adiayah reservoir, the Company initiated production in August 2012 and has produced its first cargo of sales specification oil to tank. Initial storage capacity limits during the early phases of start-up at the field led the Company to restrict flow-to-tank from the well to approximately 18,800 barrels as at end 2012. The work-over and testing operations on the existing Barda Rash well-stock is continuing. The Viking I-10 rig has also been contracted to commence the first of two new wells to be drilled on the block by Afren which will target additional prospectivity while also enhancing the production capacity of the field.

Ain Sifni

On 17 April 2012, the Company announced that the Simrit-2 exploration well had successfully encountered an estimated 1,342 ft of net oil pay in Cretaceous, Jurassic and Triassic age reservoirs. The well was initially drilled to its prognosed total measured depth of 12,139 ft but was subsequently deepened to a revised total depth of 12,467 ft to test additional zones of prospectivity. The Partners completed drilling on the Simrit-2 exploration well in July 2012. The objective of the well was to test the western extent of the Simrit aniticline, a large scale east to west trending structure located on the northern part of the Ain Sifni PSC. Analysis of data collected over the deepened section of well indicated the continual presence of light oil shows, and extended the estimated net oil pay encountered by the well to 1,509 ft throughout Cretaceous, Jurassic and Triassic age reservoirs. No oil water contact was encountered in the target reservoirs.

Following the conclusion of drilling operations at Simrit-2, a comprehensive well test programme was undertaken. The Partners intend to undertake up to 12 separate drill stem tests ("DSTs") in total, and announced on 26 July 2012 that the first batch of three DSTs in the Triassic age Kurra Chine formation had yielded an aggregate flow rate of 13,584 bopd of 39° API oil. Operator Hunt Oil Middle East ("Hunt Oil") has re-commenced testing operations after an extensive rig acceptance process for the Hitech-3 rig.

On 12 September 2012, Afren announced that exploration drilling had commenced at the East Simrit prospect (Simrit-3 well). The Simrit-3 well is located approximately 10 km east of the successful Simrit-2 discovery well, and is exploring the eastern extent of the large scale Simrit anticline. The operator Hunt Oil is planning to drill a further three exploration wells in 2013.

Côte d'Ivoire

CI-11 and Lion Gas Plant

In 2012, gross production at Block CI-11 averaged 4,900 boepd, with 800 boepd of Natural Gas Liquids ("NGL") production at the Lion Gas Plant. Production operations continue uninterrupted at the Company's assets in Côte d'Ivoire and remain in line with expectations.

CI-01

Progress is being made to advance the field development plan and associated work programme with Petroci and the Government on this block. 3D seismic to augment the existing well and seismic dataset is expected to be part of this programme. It is believed that the acquisition of new data will significantly enhance the prospectivity of this block.

West Africa exploration

Nigeria São Tomé & Príncipe JDZ

Block 1

The Obo-2 and Enitimi-1 wells were drilled during the first half of 2012. Both wells encountered oil and gas pay, and the operator Total continues to evaluate the results and commercial viability.

Congo Brazzaville

La Noumbi

Following interpretation of depth processed 2D data on the block, two prospects have been identified and the operator plans to commence drilling these in February 2013.

Nigeria

OPL 310

Afren has identified several prospects that lie in the same Senonian, Turonian and Albian sandstone intervals that have yielded significant discoveries along the West African Transform Margin in Ghana and Côte d'Ivoire. Detailed technical work and well planning continues in preparation for an exploration well in the first half of 2013.

OPL 907, 917

The Company is continuing to evaluate the potential of the blocks in order to identify areas for future seismic acquisition that could ultimately lead to future exploration drilling.

Ghana

Keta Block

The Partners have progressed into the next two year exploration phase. The work programme associated with the current phase involves the acquisition of new 3D seismic data, which was undertaken during the fourth quarter of 2012, and the drilling of one exploration well in 2014.

South Africa

Block 2B

The Partners' near-term work programme involves the acquisition of 686 km2 of 3D seismic data in the first quarter of 2013. Exploration drilling is expected in 2014.

East Africa exploration

Kenya

Block 10A

Having satisfied all seismic work commitments with the acquisition of 750 km of 2D seismic over the block in 2011, the operator (Tullow Oil) commenced exploration drilling at the Paipai prospect in September 2012, which is currently ongoing.

Block 1

The acquisition of 1,900 km of 2D seismic data is now complete and is expected to enhance the Company's understanding of existing prospectivity and facilitate prospect selection ahead of planned exploration drilling in 2014.

Blocks L17/L18

Interpretation of 1,207 km of 2D seismic data acquired in January 2012 identified four new prospects in the deeper water areas of the acreage, in addition to the previously mapped prospects in the shallow water. The new deeper water play that has been identified represents a potentially lower geological risk opportunity than the shallow water play, in closer proximity to the interpreted source kitchen area. As a result, Afren, in close consultation with the Ministry of Energy, has completed the acquisition of 1,000 km2 3D seismic in lieu of an exploration well commitment, in order to better understand the deep water prospectivity, prior to exploration drilling. In addition, an onshore 2D seismic survey of 120 km has also been completed to simultaneously continue maturation of the shallow water/onshore play.

Tanzania

Tanga Block

Interpretation of the previously acquired 900 km 2D seismic data reinforced the Partners' views that the prospectivity in the deeper water parts of the acreage represents a potentially lower geological risk exploration opportunity. A 550 km2 3D seismic survey has been completed in order to bring the deeper water prospectivity to equal technical maturity as the shallow water prospects in order to allow the Company to optimise the prospect selection process ahead of exploration drilling.

Seychelles

Areas A, B

On 12 December 2012, Afren announced that it had commenced a major 3D seismic programme, the first 3D survey to be conducted in the Seychelles. The programme consists of two surveys in Afren's licence areas that extend over a combined area of approximately 14,319 km2. The first 3D survey is being conducted in the southern portion of the licence over the Bonit prospect and this will cover 600 km2. The second survey will be in the northern section of the licence area and will cover an area of 2,750 km2. In this area, significant prospectivitiy exists in both Cretaceous and Jurassic intervals.

Madagascar

Block 1101

Having completed an airborne gravity and magnetic survey in January 2012, the Partners on Block 1101 conducted Geological fieldwork in June 2012 and a 250 km 2D seismic acquisition is underway. An exploration well is planned in 2013.

Ethiopia

Blocks 7, 8

Work is ongoing to further interpret the prospectivity of Blocks 7 and 8 ahead of planned drilling by the new operator New Age in the first half of 2013.

Forward exploration and appraisal drilling schedule

* Working interest pre/post cost recovery;

Ends.