A Review of the Nigerian Energy Industry

CAMAC Energy reports $24.9m net loss in 2011

15 March 2012, Sweetcrude, HOUSTON – CAMAC Energy Incorporated, a U.S.-based energy company engaged in the exploration, development and production of oil and gas in Nigeria, has reported a net loss of $24.9 million for the year ended December 31, 2011.

The company recorded a net loss of $230.5 million in 2010, saying the decrease in net loss in 2011 over 2010 “was principally related to the impairment charge of $186.2 million” for its Oyo field in Nigeria in 2010.

Dr. Kase Lawal, chairman and chief executive officer of the company said: “2011 was a transformational year for CAMAC Energy. As a result, we have entered 2012 with a growing portfolio of assets across Africa.

“The CAMAC Energy of today now has production in Nigeria, the provisional award of two offshore exploration blocks located in the West African Transform Margin, and a Heads of Agreement for three exploration blocks in East Africa’s rift basins. We continue to transform the Company into a Pan-African play for the advantage of our shareholders.”

The company also reported a net loss of $1.7 million for the quarter ended December 31, 2011. For the same period in 2010, CAMAC Energy reported a net loss of $35.6 million.

Operating revenues were $9.2 million for the fourth quarter of 2011 compared to $4.4 million for the same period in 2010. Fourth quarter revenues reflect an oil price of approximately $110 per barrel and gross production from the Oyo field of 3,226 barrels per day.

General and administrative expenses, according to the company, amounted to $3.8 million for the fourth quarter compared to $4.3 million for the fourth quarter of 2010. The decrease in 2011 was mainly due to lower stock-based compensation expense, the company said.

CAMAC’s principal assets in Nigeria include interests in OML 120 and OML 121, offshore oil leases in deepwater that started production from the Oyo field in December 2009.

It said its estimated net proved reserves at the end of 2011 were approximately 2.7 million barrels of oil, as compared to approximately 5.3 million barrels at December 31, 2010, with Oyo field accounting for 100% of the proved reserves.

CAMAC stated that its share of average daily net production at the Oyo field, excluding royalty, was 680 barrels of oil per day (bopd) for the quarter ended December 31, 2011, and 923 barrels per day for the year ended December 31, 2011.

This compares to average daily net production of 396 barrels from the date of original acquisition through December 31, 2010. The average sales price was $113 per barrel in 2011 and $85 per barrel in 2010.

The company expects to drill a seventh well in the Oyo field in the fourth quarter of this year and to increase oil production from the field.

CAMAC Energy has recently announced several new Africa initiatives.

The Company announced on January 23, 2012 that it had received provisional award of two offshore exploration blocks in Gambia, where it would be the operator with 85% interest.

It also announced on February 21, 2012 that it had entered into a heads of agreement with the Kenyan Ministry of Energy for the award of three exploration blocks.

CAMAC would be the operator with 90% interest in the blocks. The award is subject to negotiation and signing of formal Production Sharing Contracts for the Blocks within the next few weeks.

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