Addax Petroleum Announces Record Results For 2008

CALGARY, Canada, March 4 /PRNewswire/ --

- 41 per cent increase in Funds Flow From Operations to US$1,850 million - 63 per cent increase in Net Income to US$784 million - 8 per cent increase in Production to 136.5 Mbbl/d - 20 per cent increase in Proved plus Probable Reserves to 536.7 MMbbl

CALGARY, Canada, March 4 /PRNewswire/ --

Addax Petroleum Corporation (Addax Petroleum or the Corporation) (TSX:AXC and LSE:AXC), today announced its results for the year ended December 31, 2008. The financial results are prepared in accordance with Canadian GAAP and the reporting currency is US dollars.

A conference call will be held for analysts and investors today Wednesday, March 4, 2009 at 11:00 a.m. Eastern Time / 4:00 p.m. London, U.K. Time. Full details can be found at the end of this announcement.

CEO's Comment

Commenting today, Addax Petroleum's President and Chief Executive Officer, Jean Claude Gandur, said: I take great pleasure to report that Addax Petroleum's 2008 performance has resulted in another year of record operational performance, robust reserves growth and a significant increase in our prospective oil resources. Despite a challenging environment in the fourth quarter of 2008, Addax Petroleum achieved record production of 142.5 Mbbl/d in the quarter and ended the year with a significant discovery at the Njaba prospect. We advanced our early entrant position in the rapidly developing Kurdistan Region of Iraq through the completion of a 30 Mbbl/d facility which is expected to translate into first commercial oil production later this year. In recognition of the current challenging environment, we have undertaken an aggressive cost control program and are prudently managing our business to protect our balance sheet and maintain ongoing liquidity. Addax Petroleum has operated successfully in previous low oil price environments similar to the one we are currently experiencing today and is positioning itself to do so again. I would like to thank our employees, management, board of directors, business partners and shareholders for their support and contribution to Addax Petroleum's outstanding performance in 2008.

Selected 2008 Financial Highlights The following table summarizes the selected financial highlights. ------------------------------------------------------------------------- Selected financial highlights Year ended / US$ million unless as at December 31 otherwise stated 2008 2007 Change ------------------------------------------------------------------------- Petroleum sales before royalties 4,607 3,412 35% Average crude oil sales price, US$/bbl 94.38 72.94 29% Sales volumes, MMbbl 48.7 46.8 4% ------------------------------------------------------------------------- ------------------------------------------------------------------------- Funds Flow From Operations 1,850 1,313 41% Net Income 784 482 63% Weighted average common shares outstanding (basic, millions) 156 155 1% Funds Flow From Operations per share (US$/basic share) 11.86 8.45 40% Earnings per share (US$/basic share) 5.03 3.10 62% Weighted average common shares outstanding (diluted, millions) 163 156 4% Funds Flow From Operations per share (US$/diluted share) 11.49 8.31 38% Earnings per share (US$/diluted share) 4.95 3.09 60% Total assets 5,317 3,847 38% Long-term debt, excluding convertible bonds 1,200 950 26% ------------------------------------------------------------------------- Capital Expenditures - by Region Nigeria (excluding deepwater) Cameroon 1,160 773 50% Gabon 431 216 100% Kurdistan Region of Iraq 56 83 -33% Deepwater Nigeria JDZ 47 16 194% Corporate, acquisitions, farm-in and license signature fees 82 84 -2% Total 1,776 1,172 52% Capital Expenditures - by Type Development 1,376 822 67% Exploration appraisal 318 266 20% subtotal 1,694 1,088 56% Corporate, acquisitions, farm-in and license signature fees 82 84 -2% Total 1,776 1,172 52% ------------------------------------------------------------------------- ------------------------------------------------------------------------- - Petroleum sales before royalties in 2008 amounted to US$4,607 million, an increase of 35 per cent over petroleum sales before royalties of US$3,412 million in 2007. The increase in petroleum sales before royalties was primarily driven by a 29 per cent increase in average crude oil sales price in 2008 to US$94.38 per barrel (/bbl) as compared to US$72.94/bbl realized in 2007 and an increase of 8 per cent in the average gross working interest oil production. The Corporation experienced a build up of crude oil inventory in the fourth quarter of approximately 540 Mbbl (equivalent to approximately 5.9 Mbbl/d) as production volumes exceeded sales volumes. This crude oil inventory is expected to decline in the first half of 2009. - Funds Flow From Operations for the fourth quarter of 2008 decreased 26 per cent to US$318 million (US$2.03 per basic share) compared to US$428 million (US$2.75 per basic share) in the fourth quarter of 2007. On an annual basis, Funds Flow From Operations for 2008 increased 41 per cent to US$1,850 million (US$11.86 per basic share) compared to US$1,313 million (US$8.45 per basic share) in 2007. - Net Income for the fourth quarter of 2008 decreased 98 per cent to US$3 million (US$0.02 per basic share) compared to US$180 million (US$1.16 per basic share) in the fourth quarter of 2007. On an annual basis, Net Income for 2008 increased 63 per cent to US$784 million (US$5.03 per basic share) compared to US$482 million (US$3.10 per basic share) in 2007. - Capital expenditures, excluding corporate and acquisition costs, totaled US$521 million in the fourth quarter of 2008 and were comprised of US$406 million for development and US$115 million for exploration and appraisal activities. Capital expenditures, excluding corporate and acquisition costs, increased by 56 per cent to US$1,694 million in 2008 from US$1,088 million in 2007. Development capital expenditures totaled US$1,376 million in 2008, an increase of 67 per cent over development capital expenditure of US$822 million in 2007. Exploration and appraisal capital expenditures totaled US$318 million in 2008, a 20 per cent increase over exploration and appraisal capital expenditures of US$266 million in 2007. - Corporate and acquisition costs associated with new business activities were US$82 million in 2008 as compared to US$84 million in 2007. New business activities included the acquisition of four new exploration license areas for the Corporation's property portfolio, the increase of the Corporation's working interest in one exploration license area and the commencement of an integrated gas utilization project in Nigeria. - Bank debt increased in 2008 by US$250 million to US$1,200 million and is currently drawn under two facilities that consist of a US$1.6 billion senior secured reducing revolving borrowing base facility (of which US$1.3 billion can be drawn as debt) and a US$500 million senior unsecured revolving facility that was entered into during the year. Selected Operational Highlights The following table summarizes selected operational information. ------------------------------------------------------------------------- Selected operational results Year ended / as at December 31 2008 2007 Change ------------------------------------------------------------------------- Annual average gross working interest oil production (Mbbl/d) Nigeria (offshore) 100.7 97.1 4% Nigeria (onshore) 7.3 7.4 -1% Nigeria sub-total 108.0 104.5 3% Gabon (offshore) 6.7 6.4 5% Gabon (onshore) 21.8 15.0 45% Gabon sub-total 28.5 21.4 33% Total 136.5 125.9 8% Prices, expenses and netbacks (US$/bbl) Average realized price 94.38 72.94 29% Operating expense 8.53 6.70 27% Operating netback 68.42 53.70 27% Gross working interest oil reserves (MMbbl) Proved 214.2 233.3 -8% Proved plus Probable 536.7 446.7 20% Proved plus Probable plus Possible 738.4 580.3 27% Gross working interest best estimate prospective oil resources (MMbbl) Unrisked 2,772 2,246 23% Risked 825 738 12% Gross working interest best estimate contingent gas resources Gas (Bcf) 2,820 2,415 17% Associated gas liquids (MMbbl) 83.5 77.2 8% ------------------------------------------------------------------------- ------------------------------------------------------------------------- - Average gross working interest oil production in 2008 was 136,450 bbl/d, an increase of approximately 8 per cent over the 2007 average production of 125,940 bbl/d. Average oil production for 2008 included 107,980 bbl/d from Nigeria and 28,470 bbl/d from Gabon. - Total gross working interest proved plus probable reserves, as evaluated in accordance with National Instrument 51-101 by Netherland, Sewell Associates (NSAI) as at December 31, 2008, increased by approximately 20 per cent to 536.7 MMbbl from 446.7 MMbbl as at December 31, 2007. The Corporation did not make reserves acquisitions or disposals during the year and the 2008 reserve additions arose primarily from the Corporation's operational activity, including extensions and discoveries. Proved reserves decreased by 8 per cent in the same period as NSAI has not assigned proved reserves to wells without production test results. Addax Management elected not to test the Kita Marine appraisal wells in 2008, where 34.0 MMbbl of proved plus probable (2P) reserves were added during the year, given Addax Petroleum had previously tested the initial discovery in 2007 and has adequate data to submit a Field Development Plan to the Government. Similarly, 42.0 MMbbl of 2P reserves were added from the Njaba well but there were no proved (1P) reserves booked due to the fact that the well was drilled late in the year and had not been production tested within the year. Management expects a portion of these reserves to be reclassified as 1P reserves through additional drilling in 2009. - The Corporation's overall 2008 reserves replacement ratio was 281 per cent. The reserves replacement ratio is calculated by dividing the gross working interest 2P reserve additions of 140.0 MMbbl (before deduction of 2008 production of 49.9 MMbbl) by the 2008 production. - Development project highlights in 2008 include: Nigeria - drilled 12 successful new development wells offshore, 10 in OML123 and two in OML126, all of which were placed on production during the year; - drilled two successful new development wells onshore in OML124, all of which were placed on production during the year; - initial production from the Inagha field in OML123; and, - ongoing full field development at the Adanga North Horst field in OML123 and at the Okwori field in OML126. Gabon - drilled 23 development wells on the Corporation's onshore and offshore license areas, of which 21 were placed on production during the year; - ongoing surface facilities development at the onshore Maghena, Panthere NZE and Awoun license areas; - completed installation of the platform and pipeline from the offshore Ebouri field to the Etame Marin floating production storage and offloading vessel; and, - completed the extension of the Corporation's onshore export system, including a new 38-kilometre, 12-inch pipeline which will allow for further increases in production by availing of spare capacity through the Shell operated Rabi station. The Corporation expects the expanded export system to be commissioned in the second quarter of 2009. Kurdistan Region of Iraq - an early production system was installed and commissioned at Taq Taq allowing production capacity of up to 30 Mbbl/d and intermittent sales were commenced in the local market; and, - environmental studies and front end engineering and design associated with an export pipeline were completed and Addax Petroleum is currently investigating long-lead items required for the construction of the export pipeline. - Total gross working interest unrisked prospective oil resources increased by approximately 23 per cent to 2,772 MMbbl as at December 31, 2008 from 2,246 MMbbl as at December 31, 2007. Risked prospective oil resources increased by approximately 12 per cent to 825 MMbbl as at December 31, 2008 from 738 MMbbl as at December 31, 2007. Of the unrisked prospective oil resources as at December 31, 2008, 1,359 MMbbl or 49 per cent relate to the Corporation's Deep Water Gulf of Guinea portfolio, 1,030 MMbbl or 37 per cent to onshore Nigeria and shallow water offshore Nigeria and Cameroon, 248 MMbbl or 9 per cent to Gabon, predominantly offshore, and 136 MMbbl or 5 per cent to the Kurdistan Region of Iraq. - Total gross working interest best estimate contingent gas resources increased by approximately 17 per cent to 2,820 Bcf as at December 31, 2008 from 2,415 Bcf as at December 31, 2007. Best estimate liquids associated with contingent gas resources increased by approximately 8 per cent to 83.5 MMbbl as at December 31, 2008 from 77.2 MMbbl as at December 31, 2007. The largest additions are in OML137 where 411 Bcf and 8.7 MMbbl were added arising from the Corporation's successful appraisal efforts during 2008. - Average realized sales price for the fourth quarter of 2008 decreased 44 per cent to US$49.28/bbl compared to US$88.46/bbl in the fourth quarter of 2007. The decrease was primarily driven by a 38 per cent decrease in the average dated Brent benchmark price in the fourth quarter of 2008 as compared to the fourth quarter of 2007 and the timing of the crude oil liftings. - Royalties as a percentage of sales increased in the fourth quarter of 2008 compared to the first nine months of 2008 primarily due to activities in Gabon. Gabon offshore Royalty Oil as a percentage of revenues increased in the fourth quarter of 2008 as Royalty Oil is determined in the production month, rather than in the month sold. Inventory levels for Etame grew early in the quarter and were sold later in the quarter while the average sales price had fallen. - Operating netbacks in 2008 increased 27 per cent to US$68.42/bbl compared to US$53.70/bbl in 2007. Unit operating expenses in 2008 increased to US$8.53/bbl, an increase of 27 per cent over the 2007 level of US$6.70/bbl, due to cost inflation for the provision of services, an increase in the number of well workovers and security related costs in Nigeria, an increase in personnel related costs to support the growing operations in Gabon and local currency appreciation relative to the US dollar. Selected Exploration and Appraisal Highlights - Exploration and appraisal activity and highlights in 2008 include: Gulf of Guinea Shallow Water (Nigeria and Cameroon) - drilled a highly successful exploration well in OML124, onshore Nigeria, which discovered the Njaba prospect. Significant quantities of oil were discovered for which 42.0 MMbbl of probable reserves were booked at year end 2008. An appraisal well was also drilled in the northern area of the Ossu field in OML124 that expanded the areal extent of the field by proving the presence of oil north of a saddle separating the main field from an independent block; - drilled four successful appraisal wells in OML123, offshore Nigeria, that appraised the Adanga, Kita Marine and Oron West fields. Notably, in March 2008, the KTM-6 well encountered an aggregate gross oil column of 173 feet over four zones and resulted in 34.0 MMbbl of 2P oil reserves being booked at year end 2008. During the fourth quarter of 2008, Addax Petroleum drilled the Adanga North Graben prospect in OML123 and encountered gas; - drilled two successful appraisal wells in OML137, offshore Nigeria, on the Ofrima North discovery, one of which confirmed the western extension of the H42 oil reservoir and the other discovered 62 feet of oil and 92 feet of liquids-rich gas in deeper horizons; and, - drilled four exploration wells in the Ngosso and Iroko license areas offshore Cameroon. At Ngosso, the Odiong and Tali exploration prospects were drilled mid-2008, whereby the Tali sidetrack established a gross hydrocarbon column of 79 feet while the two Ngosso exploration wells were plugged and abandoned. The Iroko exploration well encountered hydrocarbons in the main objective interval. Gabon - drilled two successful appraisal wells at the Ebouri field in the Etame Marin license area, offshore Gabon, and commenced production in late January 2009; - completed 2D seismic data acquisition over the Corporation's Remboue license area and the northern part of the Epaemeno license area, both onshore Gabon; and, - drilled one exploration well on the Andok prospect in the fourth quarter of 2008 in the Maghena license area onshore Gabon where hydrocarbon shows were encountered in the main objective interval and through an up-dip sidetrack. Kurdistan Region of Iraq - drilled and tested two cretaceous appraisal wells on the Taq Taq field (TT-08 and TT-09) with aggregate flow rates ranging from 16.2 Mbbl/d to 35.8 Mbbl/d; - drilled and tested one Pila Spi appraisal well on the Taq Taq field (TT-11) with a flow rate of 470 bbl/d from a gross oil column of 52 metres. The oil tested from the Pila Spi is a much heavier oil than that from the cretaceous formations and the Corporation believes that significantly higher rates can be achieved with the installation of artificial lift; and, - drilled one cretaceous appraisal well (TT-10) that will be tested in the first quarter of 2009. Gulf of Guinea Deep Water (Nigeria and JDZ) - continued to conduct technical studies evaluating the exploration prospect drilling locations of the Corporation's deep water licenses that contain working interest unrisked prospective oil resources of 1,359 MMbbl (493 MMbbl risked). The Corporation plans to drill its first high impact exploration well in the Deep Water Gulf of Guinea in late 2009 at the Kina prospect in Block 4 of the Joint Development Zone. Chevron Corp. has notified the Nigeria/Sao Tome Joint Development Authority of its intent to move into the second exploration phase for Block 1. Selected New Business Highlights - 2008 continued an active new business program for Addax Petroleum with the addition of four new exploration license areas to the Corporation's property portfolio and the increase of the working interest in a deepwater exploration license area. In addition, Addax Petroleum received Federal Government of Nigeria approval for an integrated gas utilization initiative which could lead to the development and monetization of the Corporation's considerable gas resources in Nigeria. - New business highlights in 2008 include: Gulf of Guinea Shallow Water (Nigeria and Cameroon) - the Corporation was awarded a 40 per cent interest in Oil Prospecting License (OPL) 227, offshore Nigeria, subject to receipt of the formal deed of assignment. The OPL227 license area covers approximately 851 km(2) (210,300 gross acres) and is located to the north-east of the Shell-operated OML79 license area which is reported to have commenced production in 2002 and to contain approximately 350 MMbbl of remaining recoverable oil. There have been four wells drilled in the OPL227 license area, all between 1974 and 1988, all of which encountered hydrocarbons in non-commercial quantities or shows. In addition, there has been minimal 2D seismic and no 3D seismic data acquired on OPL227 to date; - Addax Petroleum signed a Production Sharing Contract (PSC) with the Republic of Cameroon, relating to the Iroko exploration license area. Under the PSC, Addax Petroleum acquired a 100 per cent interest in the Iroko license area and is the operator. The Iroko license area covers an area of 16 km(2) (3,900 gross acres) and lies approximately 30 kilometres offshore Cameroon adjacent to the Corporation's OML123 license area in Nigeria; and, - Addax Petroleum announced, together with its partners Chrome Oil Services Limited and Korea Gas Corporation, that it has received the approval from the Federal Government of Nigeria for its proposed implementation of an integrated gas utilization project in Nigeria. The integrated gas utilization project is intended to include the exploration and development of gas fields in Nigeria, including Addax Petroleum's OML137, and to secure the gas reserves necessary to commercialize a new liquefied natural gas production facility of up to 10 million tonnes per annum. It is also expected to provide domestic power generation capacity along with the provision of feedstock for the development of petrochemical facilities. The project is still in the preliminary stages of development. Gabon - Addax Petroleum acquired an additional 18 per cent working interest in, and operatorship of, the Iris Marin license area where the Corporation now holds a 51.33 per cent working interest. The Iris Marin license area is an exploration permit of approximately 403 km(2) (99,600 gross acres) in the southern Gabon basin; and, - Addax Petroleum acquired a 68.75 per cent interest in, and operatorship of, the Gryphon Marin license area. The Gryphon Marin license area covers a gross area of 9,750 km(2) (2,409,200 gross acres) and is immediately north of Addax Petroleum's Etame Marin license, offshore Gabon. The Corporation plans to commence exploration activities in Gryphon Marin with the spudding of two wells during the first half of 2009. Kurdistan Region of Iraq - Addax Petroleum acquired a 33.33 per cent interest in the Sangaw North PSC, effective September 2008. The Sangaw North license area contains a large surface anticline, a number of surface oil seeps and is located approximately 80 kilometres southeast of Addax Petroleum's Taq Taq license. During the fourth quarter of 2008, an assignment to the Korean National Oil Corporation was completed which reduced Addax Petroleum's interest to 26.67 per cent. The Corporation completed the acquisition of 2D seismic on the license area in fourth quarter of 2008 and plans to drill an exploration well within the exploration period. Joint Development Zone (JDZ) - Addax Petroleum was awarded an additional 7.2 per cent participating interest in Block 4 of the JDZ as a result of an arbitration award by a panel of the London Court of International Arbitration. The award increased Addax Petroleum's interest in Block 4 to 45.5 per cent.

Dividends

The Corporation declared and paid aggregate dividends in 2008 of CDN$0 .40 per share. A dividend of CDN$0.10 per share was declared on March 3, 2009, payable on April 2, 2009 to shareholders of record on March 19, 2009. In accordance with Canada Revenue Agency Guidelines, dividends paid by the Corporation during the period are eligible dividends.

Recent Developments

In January 2009, the Corporation announced a significant discovery from the Njaba 2 well in the eastern part of the OML124 license area in Nigeria. The discovery resulted in Addax Petroleum booking 42.0 MMbbl of probable reserves from this well as at December 31, 2008.

In January 2009, the Corporation commenced production from the Ebouri field in the Etame Marin license area, offshore Gabon.

In February 2009, the operator completed drilling the North Etame exploration well in the Corporation's Etame Marin license area offshore Gabon. The well encountered lower than anticipated hydrocarbons, was water bearing and is expected to be plugged and abandoned.

2009 Outlook Capital Budget

For 2009, Addax Petroleum has budgeted total capital expenditures of approximately US$1.6 billion (excluding acquisitions), which are expected to result in total production averaging between 140 Mbbl/d to 145 Mbbl/d from its Nigeria and Gabon operations. This budget is consistent with the Corporation's philosophy of funding capital expenditures from internally generated cash flow and has been determined using the average Brent Crude price of US$60/bbl. Should the prevailing Brent Crude price continue to be below US$60/bbl for the balance of 2009, Addax Petroleum intends, and has the flexibility, to reduce its capital expenditures such that total capital expenditures continue to be funded by internally generated cash flow. An average Brent Crude price of US$40/bbl would result in a reduction of capital expenditures to approximately US$1 billion and the associated reduced drilling and facilities expenditures would result in Addax Petroleum's total production for 2009 averaging between 132 Mbbl/d and 137 Mbbl/d.

Regulatory Filings

This announcement coincides with the filing with the Canadian and U.K. securities regulatory authorities of Addax Petroleum's Audited Consolidated Financial Statements for the year ended December 31, 2008 and related Management's Discussion and Analysis, as well as Addax Petroleum's Annual Information Form including the Corporation's Statement of Reserves Data and Other Information, Report of the Independent Qualified Reserves Evaluator and Report of Management and Directors. Copies of these documents may be obtained via http://www.sedar.com, http://www.londonstockexchange.com and the Corporation's website, http://www.addaxpetroleum.com.

Analyst Conference Call

Financial analysts are invited to participate in a conference call today Wednesday, March, 4, 2009 at 11:00 a.m. Eastern Time / 4:00 p.m. London, U.K. time with Mr. Jean Claude Gandur, President and Chief Executive Officer, Mr. Michael Ebsary, Chief Financial Officer and Mr. James Pearce, Chief Operating Officer. The media and shareholders may participate on a listen only basis. To participate in the conference call, please dial one of the following:

Toronto: 416-644-3420 Toll-free (Canada and the US): 1-800-731-5319 Toll-free (UK): 00-800-2288-3501 Toll-free (Switzerland): 00-800-2288-3501

A replay of the call will be available at +1-(416)-640-1917 or +1-(877)-289-8525, passcode 21296229 followed by the number sign until Wednesday, March 18, 2009.

Capital Markets Day

Addax Petroleum will host a Capital Markets Day presentation to financial analysts and investors on Monday, March 23, 2009 in London, UK and Tuesday, March 24, 2008 in Toronto, Canada. The Corporation's senior management team will discuss the Corporation's most recent operating results and expectations regarding future operations. A live webcast of the presentations will be made available and the Capital Markets Day presentation materials will be available on the Corporation's website at http://www.addaxpetroleum.com prior to the event. Interested attendees are encouraged to contact any of the individuals listed at the end of this announcement in order to register in advance.

Reader Advisory Regarding Forward-Looking Information

Certain statements contained in this news release, including statements related to future capital expenditures, business strategy and goals, future commodity prices, reserves and resources estimates, drilling plans, development plans and schedules, future seismic activity, production levels and sources of growth thereof, results of exploration activities and dates that areas may come on-stream, royalties payable, contingent liabilities and statements that contain words such as may, will, would , could, should, anticipate, believe, intend, expect, plan, estimate, budget, outlook, propose, project, and statements relating to matters that are not historical fact constitute forward-looking information within the meaning of applicable Canadian securities legislation.

Forward-looking information is subject to known and unknown risks and uncertainties attendant with oil and gas operations, and other factors, which include, but are not limited to: imprecision of reserves and resources estimates; ultimate recovery of reserves; commodity prices; general economic, market and business conditions; industry capacity; competitive action by other companies; refining and market margins; the ability to produce and transport crude oil and natural gas to markets; weather and climate conditions; results of exploration and development drilling and other related activities; fluctuation in interest rates and foreign currency exchange rates; ability of suppliers to meet commitments; actions by governmental authorities, including increases in taxes; decisions or approvals of administrative tribunals; changes in environmental and other regulations; international political events; and expected rates of return. More specifically, production may be affected by exploration success, start-up timing and success, facility reliability, reservoir performance and natural decline rates, water handling and drilling progress. Capital expenditures may be affected by cost pressures associated with new capital projects, including labour and material supply, project management, drilling rig rates and availability and seismic costs.

In this news release the Corporation has made assumptions with respect to the following:

- prices for oil and natural gas; - oil and gas reserve and resource quantities and the discounted present value of future net cash flows from these reserves and the ultimate recoverability of reserves; - timing and amount of future production, forecasts of capital expenditures and the sources of financing thereof; - the amount, nature, timing and effects of capital expenditures; - plans for drilling wells and the timing and location thereof; - expectations regarding the negotiation and performance of contractual rights; - operating and other costs; - business strategies and plans of management; - anticipated benefits and enhanced shareholder value resulting from prospect development and acquisitions; and - treatment under the fiscal terms of Production Sharing Contracts and governmental regulatory regimes.

The Corporation's actual results could differ materially from those anticipated in these forward-looking statements if the assumptions underlying them prove incorrect, or if one or more of the uncertainties or risks described above materializes. Risk factors are discussed in greater detail in filings made by Addax Petroleum with the Canadian provincial securities commissions.

Readers are strongly cautioned that the above list of factors affecting forward-looking information is not exhaustive. Further, forward- looking statements are made as at the date they are given and, except as required by applicable law, Addax Petroleum does not intend, and does not assume any obligation, to update any forward-looking statements, whether as a result of new information or otherwise. The forward-looking statements contained in this new release are expressly qualified by this advisory.

Non-GAAP Measures

Addax Petroleum defines Funds Flow From Operations or FFFO as net cash from operating activities before changes in non-cash working capital. Management believes that in addition to net income, FFFO is a useful measure as it demonstrates Addax Petroleum's ability to generate the cash necessary to repay debt or fund future growth through capital investment. Addax Petroleum also assesses its performance utilizing Operating Netbacks which it defines as the per barrel pre-tax profit margin associated with the production and sale of crude oil and is calculated as the average realized sales price less royalties and operating expenses, on a per barrel basis. FFFO and Operating Netback are not recognized measures under Canadian GAAP. Readers are cautioned that these measures should not be construed as an alternative to net income or cash flow from operating activities determined in accordance with Canadian GAAP or as an indication of Addax Petroleum's performance. Addax Petroleum's method of calculating these measures may differ from other companies and accordingly, it may not be comparable to measures used by other companies.

For further information: Mr. Michael Ebsary, Chief Financial Officer, Tel.: +41(0)22-702-94-03, michael.ebsary@addaxpetroleum.com; Mr. Craig Kelly, Investor Relations, Tel.: +41(0)22-702-95-68, craig.kelly@addaxpetroleum.com; Mr. Chad O'Hare, Investor Relations, Tel.: +41(0)22-702-94-10, chad.o'hare@addaxpetroleum.com; Ms. Marie-Gabrielle Cajoly, Press Relations, Tel.: +41(0)22-702-94-44, marie-gabrielle.cajoly@addaxpetroleum.com; Mr. Nick Cowling, Press Relations, Tel.: +1-416-934-80-11, nick.cowling@cossette.com; Mr. Mark Antelme, Press Relations, Tel.: +44(0)20-3178-6242, mark.antelme@pelhampr.com

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