Africa Oil Signs Letter of Intent to Acquire Lion Energy

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Source: Marketwire

VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 03/08/11 -- Africa Oil Corp. ('Africa Oil' or 'the Company') (TSX VENTURE: AOI)(OMX: AOI) is pleased to announce that it has entered into a letter of intent to acquire all of the issued and outstanding common shares of Lion Energy Corp. (TSX VENTURE: LEO) ('Lion'), a publicly traded oil and gas company listed on the TSX Venture Exchange. Under the letter of intent the parties will negotiate and enter into a definitive agreement pursuant to which Africa Oil will acquire Lion, by way of a plan of arrangement. As per the terms of the letter of intent, Africa Oil is proposing to exchange each share of Lion for 0.2 shares of Africa Oil. Lion currently has 86,118,177 common shares issued and outstanding, 2,580,000 share options with a weighted average exercise price of $0.16/share, and 11,445,000 warrants. It is proposed that each warrant will be exchanged into an equivalent number of warrants of Africa Oil, adjusted for 0.2:1 ratio noted above.

Lion is a joint venture partner of Africa Oil in Kenya and Puntland (Somalia) as follows:


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Block
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Block 9 (Kenya)           Lion 33.3% Africa Oil 66.7%
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Block 10BB (Kenya)        Lion 10%   Africa Oil 40%     Tullow Oil plc. 50%
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Dharoor Valley (Puntland) Lion 15%   Africa Oil 45%     others 40%
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Nugaal Valley (Puntland)  Lion 15%   Africa Oil 45% (i) others 40%
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(i) Subject to Africa Oil fulfilling its sole funding obligation to Range
    Resources Ltd.

In addition to the above properties, Lion has cash, cash receivables and tradable securities with an approximate aggregate value of $30,352,336.

Assuming satisfactory completion of due diligence, it is anticipated that the definitive arrangement agreement will be entered into by March 25, 2011. The definitive agreement will provide for conditions precedent that are standard for a transaction of this nature, including receipt of all regulatory, partner and third party approvals, TSX Venture Exchange approval and approval by Lion's shareholders. Lockup agreements have been signed with Lion's directors and certain of its principal shareholders who hold, in aggregate, 29.23% of the issued and outstanding Lion shares.

Keith Hill, Africa Oil's President and Chief Executive Officer, commented, 'The acquisition of Lion consolidates our interest in the East African rift basins in Kenya and Puntland (Somalia). The cash portion of the deal will further strengthen our balance sheet to allow us to fully fund the upcoming aggressive exploration drilling campaign.'

Africa Oil Corp. is a Canadian oil and gas company with assets in Kenya, Ethiopia and Puntland (Somalia). Africa Oil's East African holdings are in what is considered a truly world-class exploration play fairway. The Company's total gross land package in this prolific region is in excess of 350,000 square kilometers. The East African Rift Basin system is one of the last of the great rift basins to be explored. New discoveries have been announced on all sides of Africa Oil's virtually unexplored land position including the major Albert Graben oil discovery in neighbouring Uganda. Similar to the Albert Graben play model, Africa Oil's concessions have older wells, a legacy database, and host numerous oil seeps indicating a proven petroleum system. Good quality existing seismic show robust leads and prospects throughout Africa Oil's project areas. The Company is listed on the TSX Venture Exchange and on First North at NASDAQ OMX-Stockholm under the symbol 'AOI'.

FORWARD-LOOKING STATEMENTS

Certain statements made and information contained herein constitute 'forward-looking information' (within the meaning of applicable Canadian securities legislation). Such statements and information (together, 'forward looking statements') relate to future events or the Company's future performance, business prospects or opportunities. Forward-looking statements include, but are not limited to, statements with respect to estimates of reserves and or resources, future production levels, future capital expenditures and their allocation to exploration and development activities, future drilling and other exploration and development activities, ultimate recovery of reserves or resources and dates by which certain areas will be explored, developed or reach expected operating capacity, that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.

All statements other than statements of historical fact may be forward-looking statements. Statements concerning proven and probable reserves and resource estimates may also be deemed to constitute forward-looking statements and reflect conclusions that are based on certain assumptions that the reserves and resources can be economically exploited. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as 'seek', 'anticipate', 'plan', 'continue', 'estimate', 'expect, 'may', 'will', 'project', 'predict', 'potential', 'targeting', 'intend', 'could', 'might', 'should', 'believe' and similar expressions) are not statements of historical fact and may be 'forward-looking statements'. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. The Company does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by applicable laws. These forward-looking statements involve risks and uncertainties relating to, among other things, changes in oil prices, results of exploration and development activities, uninsured risks, regulatory changes, defects in title, availability of materials and equipment, timeliness of government or other regulatory approvals, actual performance of facilities, availability of financing on reasonable terms, availability of third party service providers, equipment and processes relative to specifications and expectations and unanticipated environmental impacts on operations. Actual results may differ materially from those expressed or implied by such forward-looking statements.

ON BEHALF OF THE BOARD

Keith C. Hill, President and CEO

Africa Oil's Certified Advisor on First North is E. Ohman J: or Fondkommission AB.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contacts:
Africa Oil Corp.
Sophia Shane
Corporate Development
(604) 689-7842
(604) 689-4250 (FAX)
africaoilcorp@namdo.com
www.africaoilcorp.com

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