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CAMAC Energy Signs Heads Of Agreement To Acquire Avana Petroleum

Stocks in this article: CAK

CAMAC Energy Inc. (NYSE Amex: CAK), a U.S.-based energy company engaged in the exploration, development and production of oil and gas in West Africa and China, today announced that it has signed a heads of agreement (“HOA”) to acquire one hundred percent of the issued share capital of Avana Petroleum Limited, a private Isle of Man company (“Avana”), for a purchase price of US$15 million, payable in shares of the Company’s common stock. Avana is an independent oil and gas exploration group whose core area of interest centers on the western Indian Ocean and East African margin with interests in the Seychelles Islands and offshore Kenya.

The purchase is subject to a number of conditions, including the negotiation and signing of a definitive share purchase agreement, the satisfactory completion of technical, financial, and operational due diligence and the receipt of any necessary governmental and regulatory approvals. Under the HOA, the Company and Avana have agreed to negotiate in good faith, on an exclusive basis, with the intent of signing the definitive purchase agreement within thirty days. The purchase consideration is payable in shares of common stock of the Company, based on the volume-weighted average closing price of the common stock on the NYSE Amex for the thirty trading days immediately before the date of issue, in three tranches: US$10 million upon completion of the purchase; US$2.5 million six months following completion; and US$2.5 million 12 months following completion.

Avana’s primary asset is a 25% participating interest in an approximately 15,000 km 2 (3.7 million acre) shallow water exploration area in the Seychelles Islands operated by its partner East Africa Exploration, a wholly owned subsidiary of Afren Plc (“Afren”). The acreage is independently estimated to contain 464 million barrels of oil equivalent of gross prospective resources, and Afren plans to drill its first exploration well in 2012. (Source: www.afren.com.)

Additionally, Avana owns a 10% interest in an exploration block offshore Kenya operated by Dominion Petroleum Limited (“Dominion”). The production sharing contract for the 5,110 km 2 (1.3 million acre) exploration area was awarded to the partners in May 2011. Dominion, which has recently announced that it has agreed to the terms of a recommended offer to purchase all of its issued share capital by Ophir Energy plc, plans to shoot 500km 2 of 3D seismic data, reprocess 2,500 km of 2D seismic and carry out G&G studies during the first two-year exploration period. (Source: www.dominionpetroleum.com.)

Avana is pursuing opportunities to take additional hydrocarbons interests throughout the wider East Africa and western Indian Ocean region.

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