afren 1q12

Afren plc

Afren plc (AFR LN)

Interim Management Statement

London, 15 May 2012 - Afren plc (“Afren” or the “Company”), announces its Interim Management Statement and financial results for the three months ended 31 March 2012 and an update on its operations to 15 May 2012, in accordance with the reporting requirements of the EU Transparency Directive. Information contained within this release is un-audited and is subject to further review.

Highlights

2012 exploration campaign yielding significant success

High value discoveries offshore south east Nigeria at Okoro East and Ebok North Fault Block

Transformational Simrit-2 discovery in Kurdistan region of Iraq; exploration well being deepened ahead of extensive testing programme

Ongoing prospect maturation in East Africa with significant data acquisition; 1,570 km total 2D seismic, 9,000 km gravity and magnetic data

2012 exploration targeting mean resources of 630 mmboe (net to Afren)

Q1 net production of 41,308 boepd in line with expectations for the period (+327% year-on-year)

Early production wells on Okoro East to be drilled shortly

Further development of Ebok field ongoing (four production wells)

On track for full year net production guidance (42,000 boepd to 46,000 boepd)

Development work underway at Barda Rash field

On track for first oil in August 2012

Significantly cash generative portfolio

Turnover US$386.7 million (Q1 2011: US$73.4 million); profit after tax US$53.2 million (Q1 2011: US$11.1 million loss)

Net operating cash flow generated of US$300.2 million (Q1 2011: US$12.8 million net operating cash flow used); US$153.1 million net cash flow generated post capex (Q1 2011: US$147.2 million net cash flow used post capex)

Cash at bank US$399.0 million (Q1 2011: US$333.0 million)

Diversified sources of funding; maturing capital structure

Successfully completed US$300 million bond issue; majority of debt long dated (2016-2019)

Net debt US$639.4 million (Q1 2011: US$291.6 million)

Afren plc

Commenting on today’s IMS, Osman Shahenshah, Chief Executive of Afren plc, said:

“We have made an excellent start to our 2012 exploration campaign with significant discoveries at

Okoro East, Ebok North fault Block and Ain Sifni. Group production during the first quarter was in line

with our expectations, generating US$300.2 million of net operating cash flow. We look forward to

continuing our exploration programme, with wells in Nigeria, the Nigeria-São Tomé & Príncipe JDZ ,

Congo, the Kurdistan region of Iraq and East Africa, targeting in excess of 630 million barrels of oil

equivalent net to Afren.”

Operations update

Production to Q1 2012 boepd Working interest Average gross production Average net production

Okoro 50.00% 16,345 8,884

Ebok 100.00% 28,557 28,557

CI-11 & LGP 47.96% / 100% 5,728 3,190

Total 50,630 40,631

Associate company production (FHN / OML 26)

45%* 3,341 677

Total including associate company volumes

53,971 41,308

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

Net working interest production during the first quarter was in line with expectations and reflects the management of ongoing development work, simultaneous operations and associated downtime at the Ebok field during exploration and development drilling. The Company remains firmly on track to achieve full year net production guidance.

Nigeria

Okoro and Okoro East

On 17 January 2012, Afren and its partner Amni International Petroleum Development Company Ltd. (“Amni”) announced that the Okoro East exploration well had successfully made a new oil discovery. Located approximately 2 km east of the Okoro main field, the well was targeting equivalent reservoirs to the main field in a fault sealed three-way dip closed structure in addition to further prospectivity in a deeper horst block structure – a play concept that had not previously been explored on the block.

The well encountered net pay of 549 ft across both the upper and deeper targets, and test data confirmed the oil to be light and of good quality (38° to 40° API) in excellent reservoir sands with multi-Darcy permeabilities and average porosity of between 30% to 35%. The pressure data also obtained has helped with the Company’s structural understanding of the field and supports the Company’s pre drill volumetric estimates (Pmean STOIIP of 157 mmbbls).

The year ahead will see ongoing management of existing production at the Okoro field with the objective of optimising the oil recovery factor from the already developed reservoir zones. Afren and its partner Amni will shortly commence the drilling of two new production wells at Okoro East, whilst also defining the most appropriate long-term development solution for the entire field.

Ebok and Ebok North Fault Block

Having commissioned all production wells associated with the initial phases of the Ebok field development in 2011, the Company and its partner Oriental Energy Resources (“Oriental”) are in the process of drilling and completing a further four horizontal production wells at the field. The wells

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are being drilled from the West Fault Block wellhead platform and are targeting proved oil bearing reservoir zones that were not captured by the initial phases of development work.

On 14 May 2012 the Company announced that the Ebok North Fault Block (“Ebok NFB”) exploration well has successfully made an oil discovery. The well was spudded on 12 April 2012 by Afren and Oriental, and reached a total depth of 4,320 ft, with the Transocean Adriatic IX jack-up drilling rig. The well was targeting a separate fault block structure located to the north of the main Ebok field, and has successfully encountered 370 ft net pay (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 discovery of significant oil pay at this location underlines the high-grade prospectivity that exists across the wider Ebok/Okwok/OML 115 area, and represents an important step towards unlocking the full volume and value potential of what is a core hub of Afren’s portfolio.

Logging operations at the Ebok NFB well have been completed, with data obtained supporting a Pmean STOIIP in excess of 100 million barrels of oil, towards the upper end of Afren’s pre-drill expectations. The well will now be suspended whilst Afren and Oriental determine the optimal development solution for Ebok NFB. This will likely incorporate synergies using the existing production, storage and offtake infrastructure at the main Ebok field and could involve the early drilling of new production wells from the existing wellhead platform at Ebok West Fault Block, followed by a full field development of Ebok NFB. The Transocean Adriatic IX rig will shortly commence the drilling of early production wells at the recent Okoro East discovery.

Okwok

Processing of the 348 km2 Ocean Bottom Cable 3D seismic survey that was acquired over the whole Ebok/Okwok/OML 115 area in late 2011 has been completed, and results are being integrated into the existing data set. The new data will assist in the optimal placement of one appraisal well at Okwok during the second half of the year to test upside potential, and development planning 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 existing 1.2 mmbbls capacity Ebok Floating Storage Offloading vessel (FSO) located approximately 13 km to the west.

OML 115

The partners plan to drill an exploration well on the block during the second half of 2012, most likely targeting the Ufon prospect. The Ufon prospect is a three-way dip closed structure that is interpreted to have oil prospectivity in the same reservoirs that have proven to be oil bearing at the nearby Ebok and Okwok fields.

OML 26

During the first quarter, output at OML 26 was restricted to 3,250 bopd owing to gaslift compressor outage and maintenance work that was undertaken on the SPDC operated Trans Forcados Trunkline which necessitated a 24 day period of downtime at the Ogini flowstation. Following a review of gaslift compression strategy at the field, the partners will in the near term seek to optimise production with the existing compression facilities and ultimately procure and install new compressor units in the third quarter. At the same time, the partners are evaluating reactivation and workover opportunities on existing wells prior to the planned commencement of drilling new horizontal wells in 2013, with the objective of ultimately increasing gross production to 50,000 bopd.

Kurdistan region of Iraq

Barda Rash

Having received all necessary approvals of the Field Development Plan (FDP) for Barda Rash during November 2011, the Company has commenced the development programme that will initially target

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approximately 500 million barrels of light recoverable oil out of the independently assessed 1.43 billion barrels total recoverable volume.

Phase I development work is focused on the existing BR-1, BR-2 and BR-3 wells that have been drilled at the field to date. The three wells will be sequentially re-entered, worked over, tested, completed and bought onstream. The wells will be tied back to a modular Early Production Facility that is being installed at the central BR-1 well location. Assembly of the Romfor 23 rig has been completed at the BR-1 well location, and final preparations are being made to re-enter the well. The Company is on track to commence production at Barda Rash by August, and expects all three wells to be onstream and producing at a rate of between 10,000 bopd to 15,000 bopd by year end. Acquisition of a comprehensive block wide 3D seismic survey has also commenced and is progressing well. The objective of the survey is to provide additional data that will assist in future development planning and well placement combined with enhancement of the Company’s understanding of fracture zone distribution.

Post completion of this initial phase, the Company will commence the drilling and completion of multiple new development wells with the intention of increasing production to a planned trucking capacity of 35,000 bopd and ultimately to a targeted 125,000 bopd by 2017. Following this, the Company will focus on the development and production of the heavier oil resources, which will offer further large scale production growth.

Ain Sifni

On 17 April 2012, the Company announced that the Simrit-2 exploration well had discovered a significant oil accumulation based on the results of drilling, wireline logs and sidewall core sampling. The objective of the Simrit-2 exploration well was to test the western extent of the Simrit anticline. The well was initially drilled to its prognosed total measured depth of 12,139 ft (12,129 ft true vertical depth) and successfully encountered an estimated 1,342 ft of net oil pay in Cretaceous, Jurassic and Triassic age reservoirs, an estimated 1,024 ft of which is interpreted as containing light oil. No oil water contact has been established in the target reservoirs.

As there were continuing strong hydrocarbon shows to the planned depth of 12,139 ft, Afren and operator Hunt Oil Middle East ran casing at that depth and continued drilling to a new total depth of circa 12,467 ft to test additional zones of prospectivity. Drilling operations are expected to be completed by the end of May, after which a comprehensive well testing programme will be undertaken across multiple reservoir intervals. Testing operations are expected to take up to two months to complete. Following this, the drilling rig will be mobilised to the East Simrit prospect to drill the Simrit-3 exploration well. Given the scale of the oil column that has been intersected with the Simrit-2 well, the initial volumetric estimates for the Ain Sifni PSC are being updated to incorporate the new data.

Côte d’Ivoire

CI-11 and Lion gas Plant

Production operations continued uninterrupted at the Company’s assets in Côte d’Ivoire during the period and remain in line with expectations.

CI-01

The partners on Block CI-01 plan to acquire additional 3D seismic to augment the existing well and seismic dataset. It is believed that the Cretaceous accumulations may be significantly larger than originally mapped.

Afren plc

West Africa exploration

Keta Block (Ghana)

The objective of the Nunya-1x exploration well was to explore a large four-way dip closed Upper Cretaceous prospect in the Keta block, located offshore Ghana. On 25 April 2012, the Company announced that the well had intersected 502 ft of very good quality sandstone reservoirs, however they were interpreted as water bearing. The well was drilled with the Marianas semi-submersible drilling rig to a total depth of 14,928 ft in a water depth of 5,535 ft. Afren has a 35 per cent. carried interest in the block. The well has provided important information with which to calibrate and further enhance the Company’s understanding of this under-explored block in what still remains a high potential basin.

OPL 310 (Nigeria)

Afren has identified several prospects that lie in the same Senonian, Turonian and Albian sandstone intervals that have yielded significant discoveries along with the West African Transform Margin in Ghana and Côte d’Ivoire. The Company intends to drill an exploration well in 2012 and has plans in place to acquire additional seismic data.

Block 1 (Nigeria São Tomé & Príncipe JDZ)

The operator on Block 1, Total, has commenced a two well drilling campaign on the block with the West Polaris drill ship.

La Noumbi (Congo Brazzaville)

Following interpretation of depth processed 2D data on the block, two prospects have been identified and the operator has proposed drilling these in 2012.

Block 2B (South Africa)

The partners near-term work programme involves the acquisition of 600 km2 of new 3D seismic data, with reprocessing of existing 2D seismic and ongoing seismic inversion and regional biostratigraphy studies ahead of expected exploration drilling in 2014.

OPL 907/917 (Nigeria)

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.

East Africa exploration

Block 1 (Kenya)

Acquisition of the planned 1,800 km of 2D seismic data is well underway, and the Partners are targeting completion during 2012.

Block 10A (Kenya)

Having satisfied all seismic work commitments with the acquisition of 750 km of 2D seismic over the block in 2011, the operator (Tullow Oil) will commence the drilling of one exploration well on the Paipai prospect. The well is expected to spud in H2 2012.

Blocks L17/L18 (Kenya)

The Company has completed the acquisition of 1,207 km of additional 2D seismic data targeting the deepwater portion of the block. The preliminary interpretation of the deep water 2D seismic identifies four new highly encouraging prospects, in addition to the previously mapped prospects in the shallow water. Importantly, the leads mapped on the new seismic represent a major new play with lower risk and greater materiality than the shallow water play. Afren proposes to acquire 1,000

Afren plc

km2 3D seismic in H2 2012, in order to better understand the deep water prospectivity and identify a well location. The primary objectives of the 3D deep water seismic survey is to optimally image the deep water structures, define the reservoir distribution, potentially define fluid - or lithology - related amplitude anomalies and reduce risk.

Tanga Block (Tanzania)

During Q4 2011, the partners acquired over 900 km of deepwater 2D seismic, the results of which have now been interpreted and integrated with existing data. In 2012, the partners intend to acquire 3D seismic data over the deepwater areas of the block ahead of exploration drilling on the Orpheus prospect from a shallow water location. The Company is in the process of securing a suitable jack up rig.

Areas A,B,C (Seychelles)

Seismic data previously acquired by the partners revealed the presence of several large scale structures in all three licence areas. A major new survey in Q4 2011 (3,733 km) included new basins that could also contain significant Jurassic and Cretaceous sedimentary sections, and is currently being processed.

Block 1101 (Madagascar)

The expanded work programme on Block 1101 consists of the drilling of one exploration well to a minimum depth of 5,249 ft and the acquisition of additional 150 km of new 2D seismic and airborne gravity and magnetics. The gravity and magnetic acquisition was completed in January 2012, seismic acquisition is planned for H2 2012 and drilling is expected in 2013.

Blocks 7,8 (Ethiopia)

Work is ongoing to further interpret the prospectivity of Blocks 7 and 8 ahead of expected drilling in H2 2012.

Afren plc

Forward 2012 exploration and appraisal drilling schedule

Country Asset Effective Working

Interest

Gross Mean prospect size

mmbbls

E&A wells / Seismic

Kurdistan region of Iraq Ain Sifni** 20% 917 3 wells

Nigeria - São Tomé & Príncipe JDZ Block 1 JDZ** 4.41% 193 2 wells

Nigeria Ebok North Fault Block** 100%/50%* 35 1 well

Kenya Block 10A 20% 100 1 well

Tanzania Tanga Block 74% 200 1 well &

3D seismic

Nigeria OPL 310 70% 250 1 well

Nigeria OML 115 100%/50%* 60 1 well

Nigeria Okwok 70%/56%* 70 1 well

Ethiopia Blocks 7 & 8 30% TBC 1 well

Congo La Noumbi 14% TBC 2 wells

Kenya Blocks L17/L18 100% - 1,000 km

2

3D seismic

Madagascar Block 1101 90% - 150 km 2D

seismic

South Africa Block 2B 25% - 600 km

2

3D seismic

Kenya Block 1 50% - 1,800 km

2D seismic

* Working interest pre/post cost recovery; ** Well operating; Simrit-2 (Kurdistan region of Iraq) discovery announced 17 April 2012, Ebok NFB (offshore Nigeria) discovery announced 14 May 2012

Financial position

Revenue in the period was US$386.7 million (Q1 2011: US$73.4 million), reflecting increased production from the Ebok field. The company realised an average oil price of US$115.5/bbl (Q1 2011: US$104.1/bbl) and an average gas price of US$6.0/mcf (Q1 2011: US$7.6/mcf).

Oil and gas inventory at Q1 2012 was US$36.3 million (Q1 2011: US$13.4 million), representing approximately 460,000 barrels at Ebok and 270,000 barrels at Okoro net to Afren.

Hedges covering approximately 2.7 million barrels are in place for the period 1 April 2012 to 31 December 2012, following the purchase of additional deferred put options and spreads post year end, providing minimum floor prices on these volumes of between approximately US$79-US$90/bbl.

Profit from continuing activities before tax was US$143.2 million (Q1 2011: US$2.0 million). This reflects an increase in gross profit of US$171.6 million compared with the prior period, but also includes the effect of losses on derivative financial instruments of US$30.2 million on the valuation of mark to market oil price hedges (Q1 2011: US$9.6 million loss), finance costs of US$23.6 million largely arising from interest charges on the Company’s banking facilities and secured loan notes, and a share of FHN’s unrealised losses on oil price hedges (US$9.3 million net to Afren) arising from Afren’s shareholding in FHN offset by gains on the recognition of deferred tax assets relating to FHN’s historical losses.

Afren plc

Normalised profit in the period was US$78.3 million (Q1 2011: US$9.9 million). Normalised profit excludes the effect of unrealised hedge movements on Afren and on its share of the derivative financial instrument losses in FHN, share related costs, and the cost of early debt repayment.

On 8 March 2012, the Company completed a second bond issue raising approximately US$300 million before issue costs. The coupon on the bonds is 10.25% and they are listed on the Luxembourg Stock Exchange. The proceeds from the issue of the new bond have been used in part to repay and cancel the up to US$200 million VTB/BNPP facility and for general corporate purposes.

Capital expenditure on appraisal and exploration in the period was US$41.3 million (Q1 2011: US$27.4 million), which included US$15.7 million in respect of the successful Okoro East exploration well. Development expenditure was US$105.2 million (Q1 2011: US$105.0 million). Deferred consideration of US$200 million in respect of the acquisition of Afren’s interests in the Barda Rash PSC was paid in the period.

Net debt, excluding finance leases, as at Q1 2012 was US$639.4 million (31 December 2011: US$548.3 million) with cash at bank of US$399.0 million (Q1 2011: US$333.0 million).

Afren Net debt Q1 2012 US$mm

Coupon Repayment due

2016 senior secured notes 500 11.5% 2016

2019 senior secured notes 300 10.25% 2019

Ebok RBL 218 LIBOR +4.0% to 5.25% Up to US$450 million facility. Repayments commence 2012

through 2015

Unsecured corporate facility 50 LIBOR +4.5% 23 month facility.

Repayment in July 2013

Borrowing costs net capitalised interest (30)

Total debt at end period 1,038

Cash at bank 399

Net debt at end period 639

Ends.

For further information contact:

Afren plc (+44 20 7451 9700) Pelham Bell Pottinger (+44 20 7337 1500)

Andrew Dymond Investor Relations

James Henderson Mark Antelme

Notes to Editors

Afren Plc

Afren is an independent upstream 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 29 assets across 12 countries spanning the full cycle E&P value chain. Afren is currently producing from its assets offshore Nigeria and Côte d'Ivoire and holds further interests in the Kurdistan region of Iraq, Ghana, Nigeria, Côte d'Ivoire, Congo Brazzaville, the Joint Development Zone of Nigeria - São Tomé & Príncipe, Kenya, Ethiopia, Madagascar, Seychelles, Tanzania and South Africa. For more information please refer to www.afren.com.

http://www.afren.com/

Afren plc

Condensed Group Income Statement for the three months ended 31 March 2012 (unaudited)

Notes

3 months ended 31 March

2012 US$000’s

3 months ended 31 March

2011 US$000’s

Revenue 386,745 73,429

Cost of sales (183,225) (41,527)

Gross profit 203,520 31,902

Administrative expenses (6,817) (9,722)

Other operating income/(expenses)

– impairment charge on exploration and evaluation assets - (17)

– service fees receivable from associate company 1,250 2,500

– derivative financial instruments (30,160) (9,592)

Operating profit 167,793 15,071

Investment revenue 41 10

Finance costs 2 (23,640) (10,109)

Other gains and (losses)

– foreign currency gains/(losses) 244 (240)

– fair value of financial liabilities and financial assets (65) (1,457)

Share of loss of an associate company (1,179) (1,238)

Profit from continuing operations before tax 143,194 2,037

Income tax expense 5 (90,030) (13,316)

Profit/(loss) from continuing operations after tax 53,164 (11,279)

Discontinued operations Profit for the period from discontinued operations - 172

Profit/(loss) for the period 53,164 (11,107)

Earnings/(loss) per share from continuing activities

Basic 3 5.0c (1.2)c

Diluted 3 4.8c (1.2)c

Earnings/(loss) per share from all activities

Basic 3 5.0c (1.1)c

Diluted 3 4.8c (1.1)c

Comprehensive income/(loss) for each period was equivalent to profit/(loss) after tax for each period presented.

Afren plc

Condensed Group Balance Sheet as at 31 March 2012 (unaudited)

Notes

31 March 2012 Unaudited

US$000’s

31 December 2011 Audited

US$000’s

Assets

Non-current assets

Intangible oil and gas assets 752,702 713,679

Property, plant and equipment

– Oil and gas assets 1,659,610 1,668,619

– Other 7,140 7,401

Prepayments 233 583

Derivative financial instruments 12,433 13,358

Investments in associates 20,574 21,753

2,452,692 2,425,393

Current assets

Inventories 62,586 67,119

Trade and other receivables 175,781 145,616

Derivative financial instruments – 684

Cash and cash equivalents 399,025 291,693

637,392 505,112

Total assets 3,090,084 2,930,505

Liabilities

Current liabilities

Trade and other payables (341,142) (317,364)

Borrowings (180,807) (157,807)

Current tax liabilities (54,682) (39,572)

Deferred consideration and payables on acquisitions – (216,720)

Obligations under finance lease (18,409) (18,135)

Derivative financial instruments (18,468) (10,280)

(613,508) (759,878)

Net current assets/(liabilities) 23,884 (254,766)

Non-current liabilities

Deferred tax liabilities (198,851) (124,497)

Provision for decommissioning (30,908) (31,627)

Borrowings 7 (857,643) (682,212)

Obligations under finance leases (112,666) (117,372)

Derivative financial instruments (11,920) (7,565)

(1,211,988) (963,273)

Total liabilities (1,825,496) (1,723,151)

Net assets 1,264,588 1,207,354

Equity

Share capital 18,680 18,673

Share premium 918,610 918,142

Other reserves 29,753 26,385

Merger reserve 179,359 179,359

Retained earnings 118,186 64,795

Total equity 1,264,588 1,207,354

Afren plc

Condensed Group Cash Flow Statement for the three months ended 31 March 2012 (unaudited)

3 months ended 31 March 2012

US$000’s

3 months ended 31 March 2011

US$000’s

Operating profit for the period 167,793 15,071

Depreciation, depletion and amortization 90,956 20,761

Unrealised losses on derivative financial instruments 14,152 8,432

Impairment charge on exploration and evaluation assets - 17

Share based payments charge 4,234 3,652

Operating cashflows before movements in working capital 277,135 47,933

Cash provided by operating activities of discontinued operations – 213

(Increase) in trade and other operating receivables (32,381) (86,696)

Increase in trade and other operating payables 48,212 24,557

Decrease in inventory (crude oil) 7,317 853

Foreign exchange adjustments (75) 332

Net cash generated by/(used in) operating activities 300,208 (12,808)

Purchases of property, plant and equipment

– Oil and gas assets (105,198) (104,990)

– Other (558) (2,045)

Deferred consideration paid (discounted) (190,290) –

Exploration and evaluation expenditure (41,338) (27,352)

Cash received on disposal of equipments of discontinued activities 1,283 –

Increase in inventories - spare parts and materials (2,782) (7,987)

Investment revenue 41 10

Net cash used in investing activities (338,842) (142,364)

Issue of ordinary share capital 475 6,588

Net proceeds from senior secured loan notes 294,475 479,957

Net proceeds from bank borrowings 97,966 50,000

Repayment of borrowings and finance lease (204,432) (182,268)

Deferred consideration-unwinding of discount paid (9,710) –

Interest and financing fees paid (33,039) (5,983)

Net cash provided by financing activities 145,735 348,294

Net increase in cash and cash equivalents 107,101 193,122

Cash and cash equivalents at beginning of the period 291,693 140,221

Effect of foreign exchange rate changes 231 (249)

Cash and cash equivalents at end of period 399,025 333,094

Afren plc

Condensed Group Statement of Changes in Equity for the three months ended 31 March 2012 (unaudited)

Share capital US$000’s

Share premium

account US$000’s

Other reserves

US$000’s

Merger reserve

US$000’s

Accumulated losses and

retained earnings

US$000’s

Total equity

US$000’s

Group

At 1 January 2011 17,007 896,812 22,764 – (77,868) 858,715

Issue of share capital 78 6,510 – – – 6,588

Share based payments for services – – 2,917 – – 2,917

Other share based payments – – 16 – – 16

Reserves transfer relating to loan notes – – (2,194) – 2,194 –

Reserves transfer on exercise of options, awards and LTIP

–

–

(266)

–

266

–

Exercise of warrants – – (27) – 5,668 5,641

Net loss for the period – – – – (11,107) (11,107)

Balance at 31 March 2011 17,085 903,322 23,210 – (80,847) 862,770

At 1 January 2012 18,673 918,142 26,385 179,359 64,795 1,207,354

Issue of share capital 7 468 – – – 475

Share based payments for services – – 3,463 – – 3,463

Other share based payments – – 8 – – 8

Reserves transfer on exercise of options, awards and LTIP

– – (64) – 64 –

Exercise of warrants – – (39) – 163 124

Net profit for the period – – – – 53,164 53,164

Balance at 31 March 2012 18,680 918,610 29,753 179,359 118,186 1,264,588

Afren plc

1. Basis of accounting and presentation of financial information

The condensed Group interim financial statements comprised of Afren plc (‘‘Afren’’) and its subsidiaries (together, ‘‘the Group’’) have been prepared in accordance with International Accounting Standard (‘‘IAS’’) 34, ‘‘Interim Financial Reporting’’, as adopted by the International Accounting Standards Board (“IASB”). Accordingly, certain information and footnote disclosure normally included in annual financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the IASB, have been omitted or condensed as is normal practice. The condensed Group interim financial statements for the three months ended 31 March 2012 have been prepared solely for the purposes of compliance with the terms of issue of the senior secured loan notes. The condensed Group interim financial statements are unaudited, and do not constitute statutory accounts as defined in sections 435(1) and (2) of the Companies Act 2006. Statutory accounts for the year ended 31 December 2011 were published and copies of which have been delivered to the Companies House. The report of the auditors on those accounts was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report, and did not contain any statement under sections 498(2) or (3) of the Companies Act 2006.

Changes in accounting policy

The same accounting policies, presentation and methods of computation have been followed in these condensed Group interim financial statements as were applied in the preparation of the Group's financial statements for the year ended 31 December 2011. These interim financial statements should be read in conjunction with the Group’s consolidated financial statements for the year ended 31 December 2011.

Going concern

The directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed Group interim financial statements.

2. Finance costs

2012

US$000's

2011

US$000's

Bank interest payable 5,527 2,467

Borrowing costs amortisation and facility fees 5,130 8,284

Interest on finance lease 2,234 -

Interest on loan notes 16,500 11,551

Corporate facility interest payable 625 -

Unwinding of discount on loan notes - 2,454

Unwinding of discount on decommissioning and deferred consideration 464 476

30,480 25,232

Less: capitalised interest (6,840) (15,123)

23,640 10,109

Afren plc

3. Earnings per share

Period ended 31 March

2012 2011

From continuing and discontinued operations

Basic 5.0c (1.1)c

Diluted 4.8c (1.1)c

From continuing operations

Basic 5.0c (1.2)c

Diluted 4.8c (1.2)c

The profit/(loss) and weighted average number of ordinary shares used in the calculation of the earnings/(loss) per share are as follows:

Profit/(loss) for the period used in the calculation of the basic earnings/(loss) per share from continuing and discontinued operations (US$000's)

53,164 (11,107)

Effect of dilutive potential ordinary shares - -

Profit/(loss) for the period used in the calculation of the diluted earnings/(loss) per share from continuing and discontinued operations (US$000's)

53,164 (11,107)

Profit for the period from discontinued operations - 172

Profit/(loss) used in the calculation of the basic and diluted earnings/(loss) per share from continuing activities (US$000's)

53,164

(11,279)

The weighted average number of ordinary shares for the purposes of diluted earnings/(loss) per share reconciles to the weighted average number of ordinary shares used in the calculation of basic earnings/(loss) per share as follows:

Weighted average number of ordinary shares used in the calculation of basic earnings/(loss) per share

Effect of dilutive potential ordinary shares: 1,073,621,187 973,263,335

Share based payments schemes 42,114,129 -

Warrants 218,974 -

Weighted average number of ordinary shares used in the calculation of diluted earnings/(loss) per share

1,115,954,290

973,263,335

-

There were no anti-dilutive potential ordinary shares for the period to 31 March 2012. For the period ended 31 March 2011 all potential ordinary shares were anti-dilutive because of the loss in the period.

Afren plc

4. Reconciliation of profit/(loss) after tax to normalised profit after tax

2012 US$000's

2011

US$000's

Profit/(loss) after tax 53,164 (11,279)

Unrealised losses on derivative financial instruments* 14,152 8,432

Share based payment charge 4,234 3,652

Foreign exchange (losses)/gains (244) 240

Fair value financial liabilities 65 1,457

Finance costs on settlement of borrowings 1,824 7,431

Share of after tax loss of associate’s derivative financial instruments losses 5,096 -

Normalised profit after tax 78,291 9,933

* Excludes realised losses on derivative financial instruments of US$ 16.0 million (31 March 2011: US$ 1.2 million).

Normalised profit after tax is a non-IFRS measure of financial performance of the Group, which in

management’s view more accurately reflects the Group’s underlying financial performance. This may

not be comparable to similarly titled measures reported by other companies.

5. Taxation

2012 US$000's

2011

US$000's

UK corporation tax - -

Overseas corporation tax 15,676 16,743

15,676 16,743

Deferred tax 74,354 (3,427)

90,030 13,316

The effective tax rate reflects having largely utilised the available tax losses and the commencing of

production at the Ebok field during 2011 and throughout the 3 months ended 31 March 2012.

Afren plc

6. Operating Segments

For management purposes, the Group currently operates in five geographical markets which form the basis of the information evaluated by the Group’s chief operating decision maker: Nigeria, Cote d’Ivoire, Other West Africa, Eastern Africa and Middle East and North Africa. Unallocated operating expenses, assets and liabilities relate to the general management, financing and administration of the Group.

Nigeria

US$000’s

Côte

d’Ivoire

US$000’s

Other

West

Africa

US$000’s

Eastern

Africa

US$000’s

Middle East

and North

Africa

US$000’s

Unallocated

US$000’s

Consolidated

US$000’s

Three months to March 2012

Sales revenue by origin 381,142 5,603 – – – – 386,745

Operating gain/(loss) before derivative financial instruments

205,331 (1,155) (6) (154) (3) (6,060) 197,953

Derivative financial instruments losses (30,160) – – – – – (30,160)

Segment result 175,171 (1,155) (6) (154) (3) (6,060) 167,793

Investment revenue 41

Finance costs (23,640)

Other gains and losses – foreign currency gains 244

Other gains and losses – fair value of financial assets and liabilities

(65)

Share of loss of an associate (1,179)

Profit from continuing operations before tax 143,194

Income tax expense (90,030)

Profit from continuing operations after tax 53,164

Loss from discontinued operations -

Profit for the period 53,164

Segment assets – non-current 1,389,208 132,018 75,422 226,492 612,091 17,461 2,452,692

Segment assets – current 497,629 23,899 4,279 3,145 1,505 106,935 637,392

Segment liabilities (883,151) (39,322) (7,442) (46,614) (2,204) (846,763) (1,825,496)

Capital additions – oil and gas assets 63,969 – – – 18,369 – 82,338

Capital additions – exploration and evaluation 20,793 112 4,668 8,554 4,871 25 39,023

Capital additions – other 316 1 – – 24 217 558

Capital disposal – other – – – (38) – – (38)

Depletion, depreciation and amortisation (85,306) (5,221) – – (2) (427) (90,956)

Afren plc

6. Operating Segments continued

Nigeria

US$000’s

Côte

d’Ivoire

US$000’s

Other

West

Africa

US$000’s

Eastern

Africa

US$000’s

Middle

East and

North

Africa

US$000’s

Unallocated

US$000’s

Consolidated

US$000’s

Year to December 2011

Sales revenue by origin 546,830 49,833 – – – – 596,663

Operating gain/(loss) before derivative financial instruments

279,312 20,825 (287) (1,158) (26) (17,990) 280,676

Derivative financial instruments losses (11,253) (1,272) – – – – (12,525)

Segment result 268,059 19,553 (287) (1,158) (26) (17,990) 268,151



Other gains and losses – foreign currency gains 1,190

Other gains and losses – dilution gain on investment in associate company

14,683

Other gains and losses – gain on derivative financial instruments on shares of associate company

7,964

Other gains and losses – fair value of financial assets and liabilities

(70)

Share of loss of an associate (14,003)

Profit from continuing operations before tax

221,365


Profit from continuing operations after tax

125,362

Loss from discontinued operations (3,654)

Profit for the period 121,708

Segment assets – non-current 1,390,155 139,110 71,461 216,577 588,827 19,263 2,425,393

Segment assets – current 364,871 60,356 4,420 1,756 20,155 53,554 505,112

Segment liabilities (726,401) (49,617) (6,955) (43,582) (312,794) (583,802) (1,723,151)

Capital additions – oil and gas assets 660,628 270 – – 4,945 – 665,843

Capital additions – exploration and evaluation* 72,674 939 10,059 18,105 583,880 750 686,407

Capital additions – other 1,657 268 – 2 – 2,570 4,497

Capital disposal – other – – – (2,122) – – (2,122)

Depletion, depreciation and amortisation (143,952) (14,331) – (1) – (1,845) (160,129)

* During the year ended 31 December 2011, exploration and evaluation additions of US$415.4 million in respect of the Barda Rash licence were transferred to oil and gas assets in the Middle East and North Africa segment.

Afren plc

6. Operating Segments continued

Nigeria US$000’s

Côte d’Ivoire US$000’s

Other West Africa

US$000’s

Eastern Africa

US$000’s Unallocated

US$000’s

Consolidated

US$000’s

Three months to March 2011

Sales revenue by origin 66,918 6,511 – – – 73,429

Operating profit/(loss) before derivative financial instruments 33,875 (535) (17) (212) (10,948)

22,163

Derivative financial instruments (losses) (8,321) (1,271) – – –

(9,592)

Segment result 25,554 (1,806) (17) (212) (10,948) 12,571



Other gains and losses – foreign currency gains

(240)

Other gains and losses – fair value of financial assets & liabilities

(1,457)

Share of result of associate 1,262

Profit from continuing operations before tax 2,037


Profit from continuing operations after tax (11,279)

Loss from discontinued operations 172

Profit from continuing operations after tax (11,107)

Segment assets – non current 917,257 149,959 75,017 196,387 5,080 1,343,700

Segment assets – current 181,070 22,641 7,372 166 295,269 506,518

Assets held for sale – – – 2,812 – 2,812

Segment liabilities (386,614) (40,193) (6,675) (41,266) (515,512) (990,260)

Capital additions – oil and gas assets 125,138 – – – – 125,138

Capital additions – exploration and evaluation 2,804 304 6,571 3,900 –

13,579

Capital additions – other 288 – – 2 1,763 2,053

Depletion, depreciation and amortisation

(16,741) (3,615) – (1) (404) (20,761)

Exploration costs write-off – – (17) – – (17)

7. Senior secured loan notes

On 8 March 2012, Afren announced the closing of its offering of US$300 million of its 10.25% senior secured notes due 2019 (the Notes). The Notes are guaranteed on a senior basis by certain subsidiaries of Afren plc and on a subordinate basis by Afren Resources Limited. Interest will be paid semi-annually. The interest charged for the period is calculated by applying the 10.25% to the total proceeds. Interest amounting to US$2.0 million has been charged to the income statement for the period to 31 March 2012. Total expenses of the offering incurred amounted to US$7.9 million which are being amortised over the life the Notes. Part of the proceeds of the offering were used to settle borrowings amounting to US$200.0 million and accrued interest of US$0.3 million. 8. Contingent liabilities

There has been no change to the contingencies reported in the annual report for the year ended 31 December 2011.

Afren plc

9. Subsequent events

On 25 April 2012, Afren announced that the Nunya-1x exploration well in the Keta block offshore Ghana has encountered thick and high quality water bearing reservoirs. An assessment will be carried out to determine whether this will lead to an impairment of the well costs incurred. 10. Related parties

The following table provides the total amount of transactions which have been entered into with related parties during the three months ended 31 March 2012 and 2011:

Trading transactions

Sale of goods/services Purchase of goods/services Amounts owed

to/(by) related parties

Three months ended

31 March 2012 US$000’s

Three months ended

31 March 2011 US$000’s

Three months ended

31 March 2012 US$000’s

Three months ended

31 March 2011 US$000’s

As at 31 March 2012

US$000’s

As at 31 March 2011

US$000’s

St John Advisors Ltd - - 70 1,435 - (28)

STJ Advisors LLP - - 94 - - -

First Hydrocarbon Nigeria Ltd 1,250 2,500 - - (4,018) -

St John Advisors Ltd and STJ Advisors LLP are the contractor companies for the consulting services of John St. John, a Non-Executive Director of Afren, for which they receive fees, including contingent completion and success fees, from the Company. Both St John Advisors and STJ Advisors LLP also receive monthly retainers of £15,000 and £30,000 under contracts which started from 27 June 2008 and 15 December 2011 respectively. The contracts have a twelve month period which automatically continues unless terminated by either party.

In addition, a separate contract was entered into with STJ Advisors LLP in 2010 for consulting services provided in relation to the issue of the senior secured loan notes which completed on 27 January 2011. First Hydrocarbon Nigeria Limited (FHN) is an associate of Afren plc.

afren 1q12

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