Trading statement and operations update

Afren plc (AFR LN)

Trading statement and operations update

London, 26 January 2011 - Afren plc ("Afren" or the "Company"), issues the following trading statement and operations update, in advance of the Company's 2010 full year results which are scheduled for release on 29 March 2011. Information contained within this release is un-audited and is subject to further review.

Highlights

u Net working interest production averaged approximately 14,320boepd in 2010, and is expected to average circa 40,000 boepd in 2011 with an exit rate of 55,000 boepd

u Ebok field development at an advanced stage

o Phase 1 and Phase 2 wellhead platforms installed; pipelines in place

o Three Phase 1 production wells tested at combined rate of 12,500 bopd, supporting the Company's guidance of 15,000 bopd from five wells in Phase 1

o Production facilities all in transit to field location; currently targeted to come onstream February 2010

u Okwok field confirmed as a commercial development project

u Acquisition of OML 26 onshore Nigeria by First Hydrocarbon Nigeria (FHN)

o 184 mmbbls gross recoverable reserves at the Ogini and Isoko fields

o 144 mmboe gross contingent and 615 mmboe gross prospective upside

o Phased work programme estimated to increase production up to 50,000 bopd

o Transitioning of operational control is advanced withrequisite approvals anticipated shortly

u Acquisition of Black Marlin Energy established core presence in East African rift and coastal basins

o Four new country entries with multiple high impact exploration targets

u Full year 2010 capital expenditure of approximately US$410 million; forecast capital expenditure in 2011 of approximately US$410 million

u Net debt at 31 December 2010 approximately US$142 million; cash at bank approximately US$140 million

u Up to 9 exploration and appraisal wells planned in 2011 targeting an estimated 600 mmboe net resources

Osman Shahenshah, Chief Executive of Afren plc commented:

"2010 was a defining year for Afren. We maintained excellent production performance at our operations in Nigeria and Côte d'Ivoire and have advanced the Ebok development, with first oil currently targeted for February. We continue to add reserves to the Ebok/Okwok/OML 115 complex, having recently successfully established the commerciality of the Okwok field. Importantly, we have announced the acquisition of Shell, Total and ENI's stake in OML 26, Nigeria, through our indigenous partner First Hydrocarbon Nigeria. This ground breaking acquisition is materially accretive and crystallises our Nigerian acquisition strategy, where we expect further opportunities. The acquisition of Black Marlin Energy has opened up a new core area for us in East Africa, significantly increasing our exposure across the full cycle E&P value chain and allowing us to leverage our West African production base and pursue multiple high impact exploration opportunities. Looking forward we have a nine well exploration and appraisal drilling programme in 2011 targeting an estimated 600 mmboe net resources and we expect further accretive acquisitions."

Notes to Editors

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 February 2011 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.

TRADING STATEMENT

Net production

Net production from the Company's assets during the full year 2010 (subject to final reconciliation) was approximately 14,320 boepd. This figure takes into account payback at the Okoro field being achieved earlier than expected at mid year, with Afren's interest reverting to 50% from 95% as a result of the strengthening oil price. Details of production at individual assets are provided in the operations update.

The Company expects net working interest production to average circa 40,000 boepd over the full year 2011, with an exit rate of 55,000 boepd.

Realised commodity prices

During 2010 the Company realised an average oil price of US$80/bbl, and realised an average gas price of US$5.7/mcf.

Capital expenditure

The Company invested approximately US$410 million in development, appraisal and exploration activities during 2010, the majority of which was allocated to the Ebok field development. We anticipate our capital expenditure in 2011 will remain substantially consistent with that of 2010, and currently estimate approximately US$410 million of capital expenditure in the year ahead. Approximately 80% of this amount is expected to be allocated to the ongoing development, appraisal and exploration of the Ebok/Okwok/OML 115 area. In addition, we expect approximately 12% will be allocated to the Company's exploration activities.

Financing and net debt

In March 2010, the Company secured an up to US$450 million reserve based lending facility to fund ongoing development of the Ebok/Okwok/OML 115 area. At 31 December 2010 approximately US$107 million had been drawn on this facility.

Net debt at 31 December 2010 was approximately US$142 million and cash at bank was approximately US$140 million.

OPERATIONS UPDATE

West Africa

* 95% pre cost recovery / 50% post cost recovery economic interest; cost recovery achieved mid 2010

Nigeria

Okoro (Afren 50% economic interest)

Average full year 2010 production at the Okoro field, located offshore south east Nigeria, was in line with expectations at approximately 16,100 bopd for the year. During November 2010, the GSF High Island Vll jack up drilling unit was mobilised to the Okoro field location and commenced work on the Okoro-11 and Okoro-12 infill production wells. The infill wells have been placed up-dip from the existing Okoro-4 and Okoro-5 production wells in the lower sand in order to optimise sweep efficiency in that part of the field and access additional oil volumes. The two wells are currently targeted to add gross incremental production volumes of between 3,000 bopd to 5,000 bopd, with full year 2011 gross production at the field expected to average 16,000 bopd. 

Ebok (Afren 100% / 50%, pre / post cost recovery economic interest)

The Ebok Floating Storage and Offloading vessel (FSO) set sail from the Yulian shipyard in Shenzhen, China, on 2 December 2010 and remains in transit to the field location. Arrival time at the field will coincide with that of the Mobile Offshore Production Unit (MOPU) which is currently in dry tow across the Atlantic Ocean.

At the field location, field development work is at an advanced stage. The Phase 1 wellhead platform has been fully installed, with all in-field flow lines and the 12 fixed point mooring lines for the FSO also in place and ready for connection to the MOPU and FSO immediately upon arrival. Three out of the five Phase 1 production wells were tested during December 2010 and delivered a constrained aggregate rate of 12,500 bopd. Together with the remaining production wells, these results support the Company's production expectation of 15,000 bopd from Phase 1, with first oil anticipated in February 2011.

Installation of the Phase 2 wellhead platform at the West Fault Block location was successfully completed early January 2011. Phase 2 development drilling, incorporating four horizontal production wells and up to two water injection wells, is set to commence in early February 2011 with the GSF High Island Vll jack up drilling rig, once infill drilling operations on the Okoro field have completed. Production start up from Phase 2 is currently expected in early March 2011, with a combined production of more than 35,000 bopd from Phases 1 and 2 expected by end Q2 2011.

Okwok (Afren 70% / 56%, pre / post cost recovery economic interest)

The Company announced in November 2010 that the Okwok-9 appraisal well had successfully achieved its objective of confirming the minimum economic field size required for commercial development of the Okwok field. The well was completed over a 35 ft interval of good quality D2 reservoir (average porosity 30%) and flowed 31° API crude oil at constrained rates intended to ensure integrity of the completion. The well was flowed for 48 hours and shut in for a 54 hour build-up. The final build-up pressure was equal to the initial reservoir pressure, indicating no depletion. The information obtained from the well is consistent with and supports Afren's subsurface model for the field, indicating that well productivity under a development completion scenario from a horizontal well would be consistent with rates typically expected in the area of between 2,000 bopd to 4,000 bopd per well.

Work is ongoing to review potential development concepts that could be utilised to bring the field onsteam. These include developing the field as a satellite tie back to the nearby Ebok field, or as a separate stand alone development should the reserves base prove sufficiently large. In order to assist this work and future decision making on development requirements, the Company intends to acquire a new set of 3D seismic data over the broader Ebok/Okwok/OML 115 area during the first half of 2011, with further appraisal drilling expected during the second half of the year.

OML 115 (Afren 100% / 40%, pre / post cost recovery economic interest)

The planned exploration well on OML 115 will be drilled in the second half of 2011. The Ufon prospect is a 60 mmbbls target that is interpreted to have oil prospectivity in the same D series reservoirs that have been proven to be oil bearing at the nearby Ebok and Okwok fields.

OPL 310 (Afren 91% / 70%, pre / post cost recovery economic interest)

Processing of the electromagnetic survey acquired over OPL 310 (Afren 70%) during the first half of 2010 has been completed, and is now fully integrated with the existing 3D seismic data that was also reprocessed to pre stack depth migration (PSDM) format. This work has provided technical support to a number of defined prospects. The Company has also launched a farm out process to attract a partner to participate in future exploration work and drilling on the block.

First Hydrocarbon Nigeria

The Company announced in October 2010 that First Hydrocarbon Nigeria ("FHN"), the indigenous Nigerian upstream oil and gas company in which Afren holds a 45% interest, had reached a Definitive Agreement with Shell Petroleum Development Company of Nigeria Ltd ("SPDC"), Total E&P Nigeria Ltd ("Total") and Nigeria Agip Oil Company ("NAOC") for the acquisition of their combined 45% interest in OML 26. Transitional work and planning is underway and progressing well in order to ensure a smooth transfer of operational control. Afren and FHN management are in the process of obtaining standard requisite approvals, which are expected shortly.

Operationally, the successful re-commissioning of a gas compressor unit at the Ogini field has had a positive impact on field production levels. Post completion, Afren and FHN will seek to immediately commence work on a three phase field redevelopment plan for the Ogini and Isoko fields, ultimately increasing production to gross rates of up to 50,000 bopd. Concurrently, the partners will also evaluate and define a forward work programme to appraise the substantial upside potential that exists at the undeveloped Aboh, Ovo and Ozoro fields and numerous exploration prospects mapped on good quality 3D data.

OPL 907 (Afren 41%) and OPL 917 (Afren 42%)

The Company is reviewing its strategic options.

Côte d'Ivoire

CI-11 (Afren 47.9592%) and Lion Gas Plant (Afren 100%)

Full year 2010 production at Block CI-11 was approximately 5,100 boepd, in line with expectations. A wireline workover programme to remove wellbore wax build up and obtain down hole pressure data has been completed. A detailed reservoir simulation model has also been constructed and history matched, with model iterations and updates using the newly acquired data ongoing in order to enable evaluation of the impact of potential new infill wells and/or pressure maintenance on field productivity. Natural Gas Liquid (NGL) output at the Lion Gas Plant (Afren 100%) during full year 2010 was 720 boepd, in line with expectations.

CI-01 (Afren 65%)

Full technical evaluation of the Kudu field has been completed, following on from previous work undertaken at the Ibex field where a sequence stratigraphic approach is now also being deployed to better define the channel bodies. Afren and its partners on the block intend to acquire new 3D seismic over a significant portion of the block in order to provide a greatly expanded contiguous data set with a view to ultimately defining optimal appraisal drilling locations for the existing discoveries on the acreage.

Ghana - Keta Block (Afren 70%)

The Company expects to drill one exploration well during 2011 on the Keta Block and is currently in the process of farming down a portion of its interest ahead of this. Ongoing subsurface studies on the block have yielded positive results, further validating existing prospectivity and in particular identifying substantial additional potential in large scale Turonian intervals analogous to those that have proven to be oil bearing at the large Jubilee field and other discoveries to the west.

Congo Brazzaville and Nigeria São Tomé & Príncipe JDZ

The joint venture has opted to proceed into the next designated exploration phase on the La Noumbi permit (Afren 14%) onshore Congo Brazzaville.

Total, who also operates the nearby Akpo field in Nigerian waters, has formally assumed operatorship of JDZ Block 1 (Afren 4.41%) in the offshore Nigeria São Tomé & Príncipe Joint Development Zone and has proposed the drilling of one appraisal well on the Obo discovery, which will also be tested, and one exploration well.

East Africa

Kenya

L17/L18 (Afren 100%)

A programme of 400km short offset shallow marine 2D seismic data was acquired in the Shimoni area of Block L18 and in the Mombassa area of Block L17. The new data are of a high quality and are presently being interpreted. A number of prospects and leads have been identified elsewhere on the block that represent attractive exploration targets, the main focus being targets in the Upper Cretaceous with additional potential also in clastic Tertiary sequences. The Company currently expects to drill one exploration well, targeting a 60 mmbbls prospect, commencing late 2011/early 2012

Block 10A (Afren 20%)

On Block 10A, the Tullow Oil operated joint venture is currently acquiring 750km of 2D seismic over the block to supplement the existing 2D coverage of 2,631km. This work will satisfy seismic obligations for the current exploration period, which also carries a one well commitment (drilling expected in 2012).

Block 1 (Afren 50%)

Final preparations are underway for the commencement of 1,200 km 2D seismic acquisition during the first half of 2011. Several major structures have already been mapped on the block that currently has 850km of 2D seismic coverage, ahead of planned exploration drilling in 2012.

Madagascar - Block 1101 (Afren 40%)

An environmental impact assessment (EIA) has been submitted to the Malagasy authorities in preparation for exploration drilling on Block 1101 during 2011 targeting an estimated 150 mmbbls prospect. As part of the work commitments associated with the current exploration phase, the partners have carried out interpretation work on the existing 200km seismic data set acquired in 2008, field mapping, geochemical surveys and analysis.

Ethiopia - Blocks 2,6,7,8 (Afren 30%)

Seismic acquisition was recently completed across the onshore Blocks 2,6,7 and 8. During the current exploration period, the partners have obtained 15,000km of airborne gravity and magnetic data, 551km of 2D seismic data and are required to drill one exploration well.

Seychelles - Blocks A,B,C (Afren 75%)

The partners fulfilled early work obligations with the acquisition of 3,637km long offset seismic in 2007, and in 2009 a further 1,271km of 2D seismic was acquired. This new data revealed the presence of several large scale structures in all three license areas, in addition to new basins that could also contain significant Jurassic sedimentary sections. The partners intend to acquire 3,500km of further seismic data in 2011 over Blocks A, B and C, ahead of planned exploration drilling in 2012.

Exploration and appraisal drilling summary

* Pre/post cost recovery economic interest

** Awaiting confirmation from Operator

Ends.