NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION

FOR IMMEDIATE RELEASE

27 January 2015

Afren plc

Review of Capital Structure

Afren plc ("Afren" or the "Company") provides an update regarding the review of its capital structure, liquidity and funding requirements announced on 20 January 2015. 

In light of the significant dislocation in the industry and related financing markets resulting from the rapid decline in oil prices, the Board has been reviewing the funding and liquidity requirements of the business and seeking to address how it manages the overall leverage position of the Company. 

The Company had a cash balance of approximately US$235 million at 31 December 2014.  Liquidity available to the Company is significantly lower as a result of restricted and segregated cash balances in place to address operational requirements.  The Company's near term cash flow is also impacted by capital expenditure incurred in late 2014 before operational changes had been implemented to adapt to the current lower oil price environment. 

As previously announced, Afren has initiated negotiations with the lenders of the US$300m Ebok debt facility with a view to obtaining a deferral of the US$50m amortisation payment due on 31 January 2015.

In addition, the Board is considering whether to utilise a 30 day grace period under its 2016 bonds with respect to US$15m of interest due on 1 February 2015 while the review of the capital structure and funding alternatives is completed. 

These actions are being taken to protect the immediate liquidity position of the Company while it seeks funding to address its additional requirements.  

The Company has been advised that an ad hoc committee of its largest bond holders has been formed.  The Company has initiated discussions with the advisers to the committee regarding the immediate liquidity and funding needs of the business.

The Board has reviewed its business plan with the aim of minimising its funding requirements in the current oil price environment to focus on the development of the Company's core assets in Nigeria.  Assuming the Company's current debt structure remains unchanged, there is an equity funding requirement which is likely to be significant and in excess of the Company's current market capitalisation.  New funds will be required to meet interest and principal repayments, working capital and a reduced capital expenditure programme.  The Company will be having discussions with its existing stakeholders and new third party investors regarding recapitalising the Company.

The Board is implementing efficiency and cost optimisation measures to improve its liquidity position.  Alvarez & Marsal has been engaged to provide services as Chief Restructuring Officer.

Afren continues to be in discussions with SEPLAT Petroleum Development Company plc ("Seplat") regarding a possible combination with Afren.

There can be no certainty that an offer will be made or as to the terms of any offer.

Afren notes that in accordance with Rule 2.6(a) of the Code, by no later than 5.00 p.m. on 30 January 2015, Seplat must either announce a firm intention to make an offer for Afren under Rule 2.7 of the Code or announce that it does not intend to make an offer for Afren, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies.  This deadline can be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code.

Further announcements will be made in due course.

The contents of this announcement will be available at www.Afren.com.  The content of the aforementioned website is not incorporated into and does not form part of this announcement.

Enquiries:

Notes to Editors

Afren is an independent upstream oil and gas exploration and production company listed on the main market of the London Stock Exchange and a constituent of the Financial Times Stock Exchange 250 Index. Afren has a portfolio of assets spanning the full cycle E&P value chain. Afren is currently producing from its assets in Nigeria and the Kurdistan region of Iraq and holds further exploration interests in Nigeria, Ghana, Côte d'Ivoire, the Kurdistan region of Iraq, Congo Brazzaville, Kenya, Ethiopia, Madagascar, Seychelles, Tanzania and South Africa. For more information please refer to www.afren.com.

Notices

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities whether pursuant to this announcement or otherwise.

The distribution of this announcement in jurisdictions outside the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities law of any such jurisdiction.

Disclaimer and cautionary note on forward looking statements and notes on certain other matters

Certain statements in this announcement are not historical facts and are or are deemed to be "forward-looking". The Company's prospects, plans, financial position and business strategy, and statements pertaining to the capital resources, future expenditure for development projects and results of operations, may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology including, but not limited to; "may", "expect", "intend", "estimate", "anticipate", "plan", "foresee", "will", "could", "may", "might", "believe" or "continue" or the negatives of these terms or variations of them or similar terminology. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. These forward-looking statements involve a number of risks, uncertainties and other facts that may cause actual results to be materially different from those expressed or implied in these forward-looking statements because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond Afren's ability to control or predict. Forward-looking statements are not guarantees of future performances.

Factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected include, but are not limited to, the following: risks relating to changes in political, economic and social conditions in the countries in which Afren operates; future prices and demand for the Company's products; global oil production; trends in the oil & gas industry and domestic and international oil & gas market conditions; risks in oil & gas operations; future expansion plans and capital expenditures; the Company's relationship with, and conditions affecting, the Company's partners and regulators; competition; weather conditions or catastrophic damage; risks relating to law, regulations and taxation in the countries in which Afren operates, including laws, regulations, decrees and decisions governing the oil & gas industry, the environment and currency and exchange controls and their official interpretation by governmental and other regulatory bodies and by the courts; and risks relating to global economic conditions and the global economic environment. Additional risk factors are as described in the Company's annual report.

Forward-looking statements are made only as of the date of this announcement. The Company expressly disclaims any obligation or undertaking to release, publicly or otherwise, any updates or revisions to any forward-looking statement contained in this announcement to reflect any change in its expectations or any change in events, conditions, assumptions or circumstances on which any such statement is based unless so required by applicable law.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.