2nd Quarter Results

 

TIDMAXC 
 
RNS Number : 3201W 
Addax Petroleum Corporation 
27 July 2009 
 
? 
 
 
Addax Petroleum announces RECORD PRODUCTION IN 
SECOND QUARTER 2009 results 
 
 
  *  Record quarterly production of 143.2 Mbbl/d 
  *  Funds Flow From Operations of $306 million 
  *  Net Income of $38 million 
 
Calgary, July 27, 2009 - /CNW/ - Addax Petroleum Corporation ("Addax Petroleum" 
or the "Corporation") (TSX: AXC and LSE: AXC), today announced its results for 
the quarter ended June 30, 2009.  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 Monday, July 27, 
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: "Record production performance and improved commodity 
prices have contributed to another quarter of strong operating cash flows and 
healthy netbacks.During the quarter, we saw a significant progression in the 
Kurdistan Region of Iraq through the commencement of crude oil exports from the 
Taq Taq licence area.  In addition, we were advised that the deepwater 
Pathfinder drillship should arrive in August to enable Addax Petroleum to 
commence exploration in the Deepwater Gulf of Guinea." 
 
 
"The highlight of the quarter was the offer received from Sinopec International 
Petroleum Exploration and Production Corporation to acquire all of the 
outstanding common shares of Addax Petroleum by way of a negotiated cash 
take-over bid for C$52.80 per common share.  Addax Petroleum's Board of 
Directors considered a number of factors when reviewing the offer and believes 
that the offer is fair to shareholders and is in the best interests of Addax 
Petroleum. As a result, the Board of Directors unanimously recommended that 
shareholders accept the offer and tender their shares accordingly.We believe 
that this offer appropriately reflects the value we have been able to create and 
will be beneficial for all stakeholders of Addax Petroleum, including our public 
shareholders, employees and the countries and communities in which we operate." 
 
 
Selected Financial Highlights 
 
 
The following table summarizes the selected financial highlights: 
 
 
+--------------------------------------------------+--------+--------+--------+ 
| Selected second quarter financial highlights     | Quarter ended as at      | 
|                                                  | June 30                  | 
+--------------------------------------------------+--------------------------+ 
| $ million unless otherwise stated                |   2009 |   2008 | Change | 
+--------------------------------------------------+--------+--------+--------+ 
|                                                  |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
| Petroleum sales before royalties                 |    735 |  1,493 |   -51% | 
| Average realized sales price, $/bbl              |  59.45 | 123.17 |   -52% | 
| Sales volumes, MMbbl                             |   12.4 |   12.2 |     2% | 
|                                                  |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
|                                                  |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
| Funds Flow From Operations                       |    306 |    521 |   -41% | 
| Net income                                       |     38 |    293 |   -87% | 
+--------------------------------------------------+--------+--------+--------+ 
|                                                  |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
| Weighted average common shares outstanding       |    157 |    156 |     1% | 
| (basic, millions)                                |   1.95 |   3.37 |   -42% | 
| Funds Flow From Operations per share ($/basic    |   0.24 |   1.88 |   -87% | 
| share)                                           |        |        |        | 
| Earnings per share ($/basic share)               |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
|                                                  |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
| Weighted average common shares outstanding       |    158 |    162 |    -2% | 
| (diluted, millions)                              |   1.90 |   3.22 |   -41% | 
| Funds Flow From Operations per share ($/diluted  |   0.24 |   1.83 |   -87% | 
| share)                                           |        |        |        | 
| Earnings per share ($/diluted share)             |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
|                                                  |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
| Total assets                                     |  5,761 |  4,540 |    27% | 
| Long-term debt, excluding convertible bonds      |  1,525 |    910 |    68% | 
+--------------------------------------------------+--------+--------+--------+ 
|                                                  |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
| Capital Expenditures - by Region                 |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
| Nigeria (excluding deepwater) & Cameroon         |    188 |    235 |   -20% | 
| Gabon                                            |     97 |    106 |    -8% | 
| Kurdistan Region of Iraq                         |      7 |      9 |   -22% | 
| Deepwater Nigeria & JDZ                          |      9 |      3 |   200% | 
| Corporate, acquisitions, farm-in and licence     |      1 |     16 |   -94% | 
| signature fees                                   |    302 |    369 |   -18% | 
| Total                                            |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
|                                                  |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
| Capital Expenditures - by Type                   |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
| Development                                      |    243 |    300 |   -19% | 
| Exploration & appraisal                          |     58 |     53 |     9% | 
| subtotal                                         |    301 |    353 |   -15% | 
| Corporate, acquisitions, farm-in and licence     |      1 |     16 |   -94% | 
| signature fees                                   |    302 |    369 |   -18% | 
| Total                                            |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
 
+--------------------------------------------------+--------+--------+--------+ 
| Selected first half year financial highlights    | Half year ended as at    | 
|                                                  | June 30                  | 
+--------------------------------------------------+--------------------------+ 
| $ million unless otherwise stated                |   2009 |   2008 | Change | 
+--------------------------------------------------+--------+--------+--------+ 
|                                                  |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
| Petroleum sales before royalties                 |  1,311 |  2,647 |   -50% | 
| Average realized sales price, $/bbl              |  51.52 | 109.58 |   -53% | 
| Sales volumes, MMbbl                             |   25.4 |   24.2 |     5% | 
+--------------------------------------------------+--------+--------+--------+ 
|                                                  |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
| Funds Flow From Operations                       |    582 |    987 |   -41% | 
| Net income                                       |     43 |    533 |   -92% | 
+--------------------------------------------------+--------+--------+--------+ 
|                                                  |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
| Weighted average common shares outstanding       |    157 |    156 |     1% | 
| (basic, millions)                                |   3.71 |   6.38 |   -42% | 
| Funds Flow From Operations per share ($/basic    |   0.28 |   3.42 |   -92% | 
| share)                                           |        |        |        | 
| Earnings per share ($/basic share)               |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
|                                                  |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
| Weighted average common shares outstanding       |    158 |    162 |    -2% | 
| (diluted, millions)                              |   3.59 |   6.11 |   -41% | 
| Funds Flow From Operations per share ($/diluted  |   0.27 |   3.35 |   -92% | 
| share)                                           |        |        |        | 
| Earnings per share ($/diluted share)             |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
|                                                  |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
| Total assets                                     |  5,761 |  4,540 |    27% | 
| Long-term debt, excluding convertible bonds      |  1,525 |    910 |    68% | 
+--------------------------------------------------+--------+--------+--------+ 
|                                                  |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
| Capital Expenditures - by Region                 |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
| Nigeria (excluding deepwater) & Cameroon         |    470 |    496 |    -5% | 
| Gabon                                            |    248 |    172 |    44% | 
| Kurdistan Region of Iraq                         |     25 |     16 |    56% | 
| Deepwater Nigeria & JDZ                          |     22 |      6 |   267% | 
| Corporate, acquisitions, farm-in and licence     |    (1) |     19 |  -105% | 
| signature fees                                   |    764 |    709 |     8% | 
| Total                                            |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
|                                                  |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
| Capital Expenditures - by Type                   |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
| Development                                      |    580 |    543 |     7% | 
| Exploration & appraisal                          |    185 |    147 |    26% | 
| subtotal                                         |    765 |    690 |    11% | 
| Corporate, acquisitions, farm-in and licence     |    (1) |     19 |  -105% | 
| signature fees                                   |    764 |    709 |     8% | 
| Total                                            |        |        |        | 
+--------------------------------------------------+--------+--------+--------+ 
 
 
 
 
  *  Petroleum sales before royalties in the second quarter (Q2) of 2009 amounted to 
  $735 million, a decrease of 51 per cent over petroleum sales before royalties of 
  $1,493 million in Q2 2008. The decrease in petroleum sales before royalties was 
  primarily driven by a 52 per cent decrease in the average crude oil sales price 
  in Q2 2009 to $59.45 per barrel (/bbl) as compared to $123.17/bbl realized in Q2 
  2008, offset partially by a 2 per cent increase in sales volumes between the 
  same periods. 
  *  Funds Flow From Operations for Q2 2009 decreased 41 per cent to $306 million 
  ($1.95 per basic share) compared to $521 million ($3.37 per basic share) in Q2 
  2008, largely the result of lower crude oil prices as referred to above. 
  *  Net income in Q2 2009 decreased 87 per cent to $38 million ($0.24 per basic 
  share) compared to $293 million ($1.88 per basic share) in the corresponding 
  period in 2008. 
  *  Capital expenditures decreased by 18 per cent to $302 million in Q2 2009 from 
  $369 million in Q2 2008. Development capital expenditures totaled $243 million 
  in the second quarter, a decrease of 19 per cent over development capital 
  expenditures of $300 million in Q2 2008. Exploration and appraisal capital 
  expenditures increased to $58 million in the quarter, an increase of 9 per cent 
  over exploration and appraisal capital expenditures of $53 million in Q2 2008. 
 
  *  At the end of Q2 2009, bank debt increased to $1,525 million due to the planned 
  use of debt to fund the excess of capital expenditures versus funds generated 
  during the quarter. Debt is drawn under two facilities that consist of a $1.6 
  billion senior secured reducing revolving borrowing base facility (of which $1.3 
  billion can be drawn as debt) and a $500 million senior unsecured revolving 
  facility. 
 
 
 
Selected Operational Highlights 
 
 
The following table summarizes selected operational information: 
+----------------------------------------------+---------+--------+---------+ 
| Selected second quarter operational          | Quarter ended              | 
| highlights                                   | June 30                    | 
|                                              |                            | 
+----------------------------------------------+----------------------------+ 
|                                              |    2009 |   2008 |  Change | 
+----------------------------------------------+---------+--------+---------+ 
| Quarter average gross working interest oil production (Mbbl/d)            | 
+---------------------------------------------------------------------------+ 
| Nigeria (offshore)                           |    97.5 |   98.5 |     -1% | 
| Nigeria (onshore)                            |     5.8 |    7.0 |    -17% | 
| Nigeria sub-total                            |   103.3 |  105.5 |     -2% | 
+----------------------------------------------+---------+--------+---------+ 
|                                              |         |        |         | 
+----------------------------------------------+---------+--------+---------+ 
| Gabon (offshore)                             |     7.5 |    7.0 |      7% | 
| Gabon (onshore)                              |    20.4 |   20.4 |      0% | 
| Gabon sub-total                              |    27.9 |   27.4 |      2% | 
+----------------------------------------------+---------+--------+---------+ 
|                                              |         |        |         | 
+----------------------------------------------+---------+--------+---------+ 
| Kurdistan                                    |    12.0 |      - |     n/a | 
+----------------------------------------------+---------+--------+---------+ 
|                                              |         |        |         | 
+----------------------------------------------+---------+--------+---------+ 
| Total                                        |   143.2 |  132.9 |      8% | 
+----------------------------------------------+---------+--------+---------+ 
|                                                                           | 
+---------------------------------------------------------------------------+ 
| Prices, expenses and netbacks ($/bbl)                                     | 
+---------------------------------------------------------------------------+ 
| Average realized sales price                 |   59.45 | 123.17 |    -52% | 
| Operating expenses                           |    7.95 |   9.55 |    -17% | 
| Operating netback                            |   38.98 |  91.14 |    -57% | 
+----------------------------------------------+---------+--------+---------+ 
 
+----------------------------------------------+---------+--------+---------+ 
| Selected first half year operational         | Half year ended            | 
| highlights                                   | June 30                    | 
|                                              |                            | 
+----------------------------------------------+----------------------------+ 
|                                              |    2009 |   2008 |  Change | 
+----------------------------------------------+---------+--------+---------+ 
| Quarter average gross working interest oil production (Mbbl/d)            | 
+---------------------------------------------------------------------------+ 
| Nigeria (offshore)                           |    97.9 |  100.4 |     -2% | 
| Nigeria (onshore)                            |     5.7 |    7.2 |    -21% | 
| Nigeria sub-total                            |   103.6 |  107.6 |     -4% | 
+----------------------------------------------+---------+--------+---------+ 
|                                              |         |        |         | 
+----------------------------------------------+---------+--------+---------+ 
| Gabon (offshore)                             |     7.1 |    7.0 |      1% | 
| Gabon (onshore)                              |    20.8 |   21.4 |     -3% | 
| Gabon sub-total                              |    27.9 |   28.4 |     -2% | 
+----------------------------------------------+---------+--------+---------+ 
|                                              |         |        |         | 
+----------------------------------------------+---------+--------+---------+ 
| Kurdistan                                    |     7.5 |      - |     n/a | 
+----------------------------------------------+---------+--------+---------+ 
|                                              |         |        |         | 
+----------------------------------------------+---------+--------+---------+ 
| Total                                        |   139.0 |  136.0 |      2% | 
+----------------------------------------------+---------+--------+---------+ 
|                                                                           | 
+---------------------------------------------------------------------------+ 
| Prices, expenses and netbacks ($/bbl)                                     | 
+---------------------------------------------------------------------------+ 
| Average realized sales price                 |   51.52 | 109.58 |    -53% | 
| Operating expenses                           |    8.22 |   8.81 |     -7% | 
| Operating netback                            |   34.05 |  81.78 |    -58% | 
+----------------------------------------------+---------+--------+---------+ 
 
 
 
 
  *  Average gross working interest oil production in Q2 2009 was 143,240 barrels per 
  day (bbl/d) representing an increase of approximately 8 per cent over the 2008 
  average production of 132,880 bbl/d. Nigeria 
-    average oil production from Nigeria in Q2 2009 was 103,290 bbl/d, compared 
  to a Q2 2008 average production level of 105,500 bbl/d; 
-    drilled four new development wells which included three oil production 
  wells in OML123 and one oil production well in OML126; 
-    lower production in Q2 2009 was primarily attributed to a gas constraint in 
  gas-lift and the deferred start-up and completion of new production wells, both 
  in the OML123 licence area; and, 
-    completed drilling the OK-19 (Okwori East) exploration well in the OML126 
  licence area,offshore Nigeria, where the well was plugged and abandoned as a dry 
  hole. Gabon 
-    average oil production in Q2 2009 from Gabon was 27,910 bbl/d, compared to 
  a Q2 2008 average production level of 27,390 bbl/d; 
-    drilled six new development wells in the Addax Petroleum operated Panthere 
  licence area, onshore Gabon; 
-    placed a total of seven new oil production wells on production in the 
  quarter of which five were drilled in the quarter and two were drilled in the 
  previous quarter; 
-    completed the commissioning at the new Obangue East Central Processing 
  Facility in Q2 2009 with the installation of gas compressors and the 
  commissioning of a second train with a test separator; 

     and, 
-    completed drilling the Ajomba Main exploration well in the Gryphon Marin 
  licence area, offshore Gabon, where the well was plugged and abandoned as a dry 
  hole. Kurdistan Region of Iraq 
-    average oil production in Q2 2009 from Kurdistan increased to 12,050 bbl/d 
  due to the commencement of international crude oil exports from the Taq Taq 
  licence area on June 1, 2009; 
-    obtained approval from the Kurdistan Regional Government for the Taq Taq 
  full field development plan; 
-    continued expansion of the on-site processing facilities to increase 
  capacity up to 70 Mbbl/d in late 2009; and, 
-    continued to drill the Kewa Chirmila exploration prospect which is expected 
  to reach target depth in Q3 2009. Gulf of Guinea Deep Water (Nigeria and JDZ) 
-    Addax Petroleum previously announced that it signed an agreement with a 
  subsidiary of Transocean Ltd. for the provision and operation of the Deepwater 
  Pathfinder drillship to commence its exploration drilling campaign in the 
  Deepwater Gulf of Guinea. Addax Petroleum expects to receive delivery of the 
  Deepwater Pathfinder in August 2009 and intends to commence the consecutive 
  drilling of four wells, the first of which being the Kina prospect in Block 4 of 
  the Joint Development Zone; and, 
-    Sinopec JDZ Block 2 Limited has notified the Joint Development Authority of 
  its intent to commence its exploration drilling in August 2009 on JDZ Block 2, 
  where Addax Petroleum holds a 14.3 per cent interest. · Operating netbacks in Q2 2009 decreased 57 per cent to $38.98/bbl compared to 
  $91.14/bbl in Q2 2008. Unit operating expenses in Q2 2009 decreased to 
  $7.95/bbl, a decrease of 17 per cent over the 2008 level of $9.55/bbl due to 
  savings from fewer workovers and a drag reducer no longer being required in 
  Nigeria to improve oil flow following the installation of a larger 14" pipeline, 
  offset partially by additional pipeline maintenance, increased security costs 
  and higher personnel related costs. 
 
Selected New Business Highlights 
 
 
  *  New business highlights for Q2 2009 include the following: 
 
Gabon 
-    Addax Petroleum agreed to fund an exploration well in the Ogueyi licence 
area located on the eastern edge of the Port Gentil basin, onshore Gabon, with 
the potential to earn a 50% interest in the licence. The Azango prospect in the 
Ogueyi licence area was drilled during the quarter and was plugged and 
abandoned. 
Dividend Declaration 
 
 
During Q2 2009, the Corporation paid a dividend of CDN$0.10 per share.  The 
Board of Directors of the Corporation declared a dividend of CDN$0.10 per share 
on July 24, 2009 which is payable on August 27, 2009 to shareholders of record 
on August 13, 2009.  In accordance with Canada Revenue Agency Guidelines, 
dividends paid by the Corporation during the period are eligible dividends. 
 
 
Recent Developments 
 
 
In July 2009, Addax Petroleum announced that Mirror Lake Oil and Gas Company 
Limited ("Mirror Lake"), an indirect wholly-owned subsidiary of Sinopec 
International Petroleum Exploration and Production Corporation ("SIPC"), 
commenced its offer for Addax Petroleum (the "Offer") and mailed the Offer and 
take-over bid circular (the "Offer Documentation") as well as the Addax 
Petroleum directors' circular, containing the Addax Petroleum board's unanimous 
recommendation to accept the Offer, to Addax Petroleum shareholders. On June 24, 
2009, SIPC and Addax Petroleum reached an agreement for Mirror Lake to make an 
offer to acquire all of Addax Petroleum's outstanding common shares for C$52.80 
per common share in an all-cash transaction. The Offer is subject to a number of 
conditions including valid acceptances by holders of not less than 66 2/3 per 
cent of Addax Petroleum shares on a fully diluted basis and receipt of certain 
regulatory approvals, including the government of The People's Republic of 
China.  The Offer is expected to close in the third quarter of 2009. 
 
 
In July 2009, Addax Petroleum announced that it received a letter from the 
Minister of Natural Resources of the Kurdistan Regional Government (the "KRG") 
and has confirmation from SIPC that receipt of this letter satisfies the 
condition to the Offer for Addax Petroleum dated July 9, 2009 made by 
Mirror Lake. 
 
 
Outlook 
 
 
Addax Petroleum's 2009 approved capital expenditure budget was set at 
approximately $1.6 billion but, as previously indicated, this plan was based on 
an assumed average Brent Crude price of $60/bbl for 2009.Management continues to 
adjust the capital program with the goal of balancing expenditures against 
internally generated funds over the full year.  The current full year capital 
expenditure plan is approximately $1.3 billion, although Addax Petroleum 
continues to review incremental capital expenditure investment opportunities if 
oil prices remain at or higher than those experienced in the latter part of Q2 
2009.The Corporation's production outlook for 2009 continues to be in line with 
previous guidance provided.  Excluding oil production from the Kurdistan Region 
of Iraq, Addax Petroleum expects annual average working interest gross oil 
production for 2009 to be between 132 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 Unaudited Consolidated 
Financial Statements for the quarter ended June 30, 2009 and related 
Management's Discussion and Analysis. Copies of these documents may be obtained 
via www.sedar.com, www.londonstockexchange.com and the Corporation's 
website, www.addaxpetroleum.com. 
 
 
Additional Documents 
 
 
Management's Discussion & Analysis for the six months ended 30 June 2009 
 
http://www.rns-pdf.londonstockexchange.com/rns/3201W_1-2009-7-27.pdf 
 
 
Consolidated Financial Statements 
 
http://www.rns-pdf.londonstockexchange.com/rns/3201W_-2009-7-27.pdf 
 
 
Responsibility Statement 
 
http://www.rns-pdf.londonstockexchange.com/rns/3201W_2-2009-7-27.pdf 
 
 
Analyst Conference Call 
 
 
Financial analysts are invited to participate in a conference call today Monday, 
July 27, 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 3414                          | 
+----------------------------------------+----------------------------------------+ 
| Toll-free (Canada and the US):         | 1 800 733 7571                         | 
+----------------------------------------+----------------------------------------+ 
| Toll-free (UK):                        | 00 800 2288 3501                       | 
+----------------------------------------+----------------------------------------+ 
| Toll-free (Switzerland):               | 00 800 2288 3501                       | 
+----------------------------------------+----------------------------------------+ 
 
 
A replay of the call will be available at [phone] or [phone], 
passcode 21296236# until Thursday, August 27, 2009. 
 
 
Reader Advisory Regarding Forward-Looking Information 
 
 
Certain statements contained in this news release, including statements related 
to future capital expenditures, financing and capital activities, 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, 
construction projects, contingent liabilities and government approvals, 
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. In this news release, 
forward-looking information and statements include: Addax Petroleum's capital 
expenditures budget and associated anticipated production, anticipated cost 
controls, future commodity prices, and access to future financing and liquidity, 
income tax and other contingent liabilities, major capital projects and ongoing 
contractual obligations and commitments. 
 
 
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 the termination of the Support Agreement between 
Addax Petroleum and SIPC (as defined herein), including a termination under 
circumstances that could require Addax Petroleum to pay a $300 million 
termination fee to the Offeror, the risk that the Offer (as defined herein) may 
not be completed in a timely manner or at all, which may adversely affect Addax 
Petroleum's business and price of its common shares, the potential adverse 
effect on Addax Petroleum's business, properties and operations because of 
certain covenants in the Support Agreement, increases in costs resulting from 
the expenses related to the Offer, the inability to retain and, if 
necessary, attract key employees, particularly in light of the Offer, risks 
related to diverting management's attention from ongoing business operations, 
the risk that Addax Petroleum may be subject to litigation in connection with 
the Offer, the failure to satisfy the conditions to complete the Offer, 
the failure of the Offer to be completed for any reason, the effect of the 
announcement of the Support Agreement on Addax Petroleum's operating results and 
business generally, including the risk that Addax Petroleum may be subject to 
litigation should those relationships deteriorate, 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, gas and 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, Addax Petroleum 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; 
  *  approvals for petroleum exports from the Kurdistan Regional Government; and, 
  *  treatment under the fiscal terms of Production Sharing Contracts and 
  governmental regulatory regimes. 
 
 
 
Addax Petroleum'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 news 
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 and/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 Generally Accepted Accounting Principles 
("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 additional information, please contact: 
+-----------------------------------+--------------------------------------------+ 
| Mr. Michael Ebsary                | Ms. Marie-Gabrielle Cajoly                 | 
| Chief Financial Officer           | Press Relations                            | 
| Tel.: [phone]        | Tel.: [phone]                 | 
| [e-mail] | [e-mail]  | 
| Mr. Craig Kelly                   | Mr. Nick Cowling                           | 
| Investor Relations                | Press Relations                            | 
| Tel.: [phone]        | Tel.: [phone]                   | 
| [e-mail]    | [e-mail]                  | 
| Mr. Chad O'Hare                   | Mr. Mark Antelme                           | 
| Investor Relations                | Press Relations                            | 
| Tel.: [phone]        | Tel.: [phone]                 | 
| chad.o'[e-mail]    | [e-mail]                  | 
+-----------------------------------+--------------------------------------------+ 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 IR EAEXXALLNEFE