ERHC Energy Inc (ERHE)

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Addax Petroleum announces record third quarter 2008 results and 2009 capital budget
Monday November 10, 2008, 7:15 am EST
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<< - 61 per cent increase in Funds Flow From Operations to $539 million - 103 per cent increase in Net Income to $248 million - 2 per cent increase in Production to 131.3 Mbbl/d - $1.6 billion capital investment budget for 2009 >>


CALGARY, Nov. 10 /CNW/ - Addax Petroleum Corporation ("Addax Petroleum" or the "Corporation") (TSX:AXC and LSE:AXC), today announced its results for the quarter ended September 30, 2008. The financial results are prepared in accordance with Canadian GAAP and the reporting currency is US dollars. In addition, the Corporation outlined its capital investment budget and production outlook for 2009

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 September 30, 2008 and related Management's Discussion and Analysis. 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/.

A conference call and webcast will be held for analysts and investors today Monday, November 10, 2008 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 am pleased to report that robust operational performance in a record oil price environment has propelled Addax Petroleum to yet another quarter of record financial results. Our production levels continue to be solid and we expect a strong fourth quarter which will put us on track to achieve our full year guidance. During the third quarter, we also continued to expand Addax Petroleum's property portfolio with the addition of three new license interests. This new business activity is closely aligned with our dynamic exploration program which is ramping up significantly with seven exploration and appraisal wells in the fourth quarter. Looking into 2009 and given current volatility in commodity prices, we have set a prudent capital investment program in place which we expect to fund internally and which is designed to continue Addax Petroleum's profitable growth for all stakeholders."


Selected Financial Highlights

- Petroleum sales before royalties in the third quarter of 2008
amounted to $1,335 million, an increase of 44 per cent over petroleum
sales before royalties of $925 million in the third quarter of 2007.
This increase was primarily driven by a 48 per cent increase in the
average crude oil sales price in the third quarter of 2008 to $110.32
per barrel (/bbl) as compared to $74.31/bbl realized in the third
quarter of 2007, offset slightly by a 4 per cent decline in sales
volumes between the same periods. The Corporation still retains a
large oil inventory balance that is expected to decline further
before the end of the year.

- Funds Flow From Operations for the third quarter of 2008 increased 61
per cent to $539 million ($3.45 per basic share) compared to $335
million ($2.15 per basic share) in the third quarter of 2007.

- Net income in the third quarter of 2008 increased 103 per cent to
$248 million ($1.59 per basic share) compared to $122 million ($0.78
per basic share) in the corresponding period in 2007.

- Capital expenditures, excluding acquisition costs, increased by 72
per cent to $483 million in the third quarter of 2008 from $281
million in the third quarter of 2007. Development capital
expenditures in the quarter totaled $427 million, an increase of 71
per cent over development capital expenditure of $250 million in the
third quarter of 2007. Exploration and appraisal capital expenditures
totaled $56 million in the quarter, an increase of 81 per cent over
exploration and appraisal capital expenditures of $31 million in the
third quarter of 2007.

- Corporate and acquisition costs associated with new business
activities were $53 million in the third quarter of 2008 compared to
$78 million in the third quarter of 2007. New business activities
included the acquisition of two 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.

- At the end of the third quarter 2008, bank debt totaled $1,025
million and is consistent with the corresponding quarter in 2007.
Bank debt is drawn under two facilities that consist of a $1.6
billion senior secured reducing revolving facility (due January 2012)
and a $500 million senior unsecured revolving facility (due April
2010) which was underwritten during the third quarter of 2008.

The following table summarizes the selected financial highlights:

-------------------------------------------------------------------------
Selected third quarter financial
highlights Quarter ended
$ million unless otherwise September 30
stated 2008 2007 Change
-------------------------------------------------------------------------
Petroleum sales before royalties 1,335 925 44%
Average realized sales price,
$/bbl 110.32 74.31 48%
Sales volumes, MMbbl 11.9 12.4 -4%

Funds Flow From Operations 539 335 61%
Net income 248 122 103%

Weighted average common shares
outstanding (basic, millions) 156 155 1%
Funds Flow From Operations per
share ($/basic share) 3.45 2.15 60%
Earnings per share ($/basic
share) 1.59 0.78 104%

Weighted average common shares
outstanding (diluted, millions) 163 162 1%
Funds Flow From Operations per
share ($/diluted share) 3.30 2.06 60%
Earnings per share ($/diluted
share) 1.55 0.78 99%

Total assets 4,895 3,613 35%
Long-term debt, excluding
convertible bonds 1,025 1,025 0%

Capital Expenditures - by Region
Nigeria (excluding deepwater)
& Cameroon 333 199 67%
Gabon 128 64 100%
Kurdistan Region of Iraq 8 13 -38%
Deepwater Nigeria & JDZ 14 5 180%
Corporate, acquisitions, farm-in
and license signature fees 53 78 -32%
Total 536 359 49%

Capital Expenditures - by Type
Development 427 250 71%
Exploration & appraisal 56 31 81%
Subtotal 483 281 72%
Corporate, acquisitions, farm-in
and license signature fees 53 78 -32%
Total 536 359 49%
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-------------------------------------------------------------------------
Selected first nine months
financial highlights Nine months ended
$ million unless otherwise September 30
stated 2008 2007 Change
-------------------------------------------------------------------------
Petroleum sales before royalties 3,982 2,305 73%
Average realized sales price,
$/bbl 109.82 67.27 63%
Sales volumes, MMbbl 36.1 34.3 5%

Funds Flow From Operations 1,532 885 73%
Net income 781 302 159%

Weighted average common shares
outstanding (basic, millions) 156 155 1%
Funds Flow From Operations per
share ($/basic share) 9.83 5.70 72%
Earnings per share ($/basic
share) 5.01 1.94 158%

Weighted average common shares
outstanding (diluted, millions) 163 158 3%
Funds Flow From Operations per
share ($/diluted share) 9.48 5.59 70%
Earnings per share ($/diluted
share) 4.90 1.94 153%

Total assets 4,895 3,613 35%
Long-term debt, excluding
convertible bonds 1,025 1,025 0%


Capital Expenditures - by Region
Nigeria (excluding deepwater)
& Cameroon 829 541 53%
Gabon 300 138 117%
Kurdistan Region of Iraq 24 63 -62%
Deepwater Nigeria & JDZ 20 10 100%
Corporate, acquisitions, farm-in
and license signature fees 72 84 -14%
Total 1,245 836 49%


Capital Expenditures - by Type
Development 970 563 72%
Exploration & appraisal 203 189 7%
Subtotal 1,173 752 56%
Corporate, acquisitions, farm-in
and license signature fees 72 84 -14%
Total 1,245 836 49%
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Selected New Business Highlights

- The third quarter of 2008 continued an active new business program
for Addax Petroleum with the addition of two new exploration license
areas to the Corporation's property portfolio and the increase of the
Corporation's 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 for the third quarter of 2008 include the
following:

Gabon

- Addax Petroleum acquired a 50 per cent interest in, and
operatorship of, the Gryphon Marin license area. The Gryphon Marin
license area covers a gross area of 2,409,200 acres (9,750 km(2))
and is immediately north of Addax Petroleum's Etame Marin license,
offshore Gabon. As part of the acquisition, Addax Petroleum is
inheriting a full suite of seismic data including approximately
3,900 km(2) of modern 3D seismic and 2,100 km of 2D seismic. Addax
Petroleum's interest in Gryphon Marin is subject to two separate
options held by a third party which could reduce Addax Petroleum's
interest to 23.5 per cent for approximately 44 per cent of the
gross license area. The Gryphon Marin license area is also subject
to a 10 per cent back-in right held by the Government of Gabon for
any development areas. The Gryphon Marin license area is in an
exploration period ending in November 2009 and carries a
commitment to drill two wells;

Kurdistan Region of Iraq

- Addax Petroleum acquired a 33.33 per cent interest in the Sangaw
North Production Sharing Contract ("PSC"), effective September
2008. The Sangaw North license area is operated by Sterling Energy
plc ("Sterling") and is located approximately 80 kilometres
southeast of Addax Petroleum's Taq Taq license. The Sangaw North
PSC is subject to an assignment to the Korean National Oil
Corporation which, when completed, will reduce Addax Petroleum's
interest to 26.67 per cent. In addition, the Kurdistan Regional
Government has the right to require that at a future date a
government nominated entity be assigned 25 per cent which, if
exercised, will further reduce Addax Petroleum's interest to 20
per cent. Under the terms of the acquisition, the consideration
from Addax Petroleum comprises the reimbursement of Sterling's
past costs as well as the funding of seismic acquisition and the
drilling of an exploration well;

Joint Development Zone ("JDZ")

- Addax Petroleum was awarded an additional 7.2 per cent
participating interest in Block 4 of the JDZ. The award was made
as a result of arbitration proceedings by a panel of the London
Court of International Arbitration which confirmed that Addax
Petroleum is entitled to the 7.2 per cent additional interest for
no additional monetary consideration beyond the $18 million
previously paid by Addax Petroleum. The award increases Addax
Petroleum's interest in Block 4 to 45.5 per cent; and,

Gulf of Guinea Shallow Water (Nigeria and Cameroon)

- 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 commercialise 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.

Selected Exploration and Appraisal Highlights

- During the third quarter of 2008, Addax Petroleum continued to
progress the exploration program within its property portfolio
through a seismic acquisition campaign onshore Gabon and Cameroon,
appraisal work in the Kurdistan Region of Iraq and preparation work
for exploration wells to be spudded in the fourth quarter.

- Exploration and appraisal highlights for the third quarter of 2008
include the following:

Gulf of Guinea Shallow Water (Nigeria and Cameroon)

- In the Iroko license area, Addax Petroleum has continued analysis
on the core and fluid samples from the exploration well drilled in
the second quarter of 2008. In addition, 3D seismic was acquired
in the third quarter of 2008 and is currently being processed;

- Addax Petroleum is planning to enter the next exploration period
in the Ngosso license, as the current period will expire in the
first quarter of 2009. This next exploration period includes a
commitment to drill one exploration well and to acquire additional
3D seismic data on the prospective northern part of the license
area. The seismic acquisition campaign is planned to commence in
the fourth quarter of 2008 and it is anticipated to be completed
in the first quarter of 2009; and,

- The Corporation continued site preparation for the Okaka
exploration well and the Adanga North Graben exploration well in
the OML124 and OML123 license areas, respectively.

Gabon

- Addax Petroleum completed a 2D seismic acquisition campaign on the
Maghena license area and commenced a 2D seismic acquisition on the
Epaemeno license which is expected to be completed in the fourth
quarter of 2008. In addition, ongoing seismic interpretation and
processing continues on the Remboué and Maghena license areas;
and,

- The Corporation continued site preparation for the Andok
exploration well in the Maghena license area.

Kurdistan Region of Iraq

- Through the Taq Taq Operating Company ("TTOPCO"), a joint venture
between Addax Petroleum and Genel Enerji A.S., Addax Petroleum
imported a second, larger drilling rig (Kurdistan-1) and commenced
the drilling of the TT-10 appraisal well in the third quarter of
2008;

- Since the end of the third quarter of 2008, the Corporation also
announced the successful appraisal of the Eocene Pila Spi
formation in the Taq Taq field with the TT-11 well. The TT-11 well
was spudded in early September 2008 and reached a total depth of
1,000 metres in early October 2008 encountering a gross oil column
of 52 metres with a flow test of 470 bbl/d; and,

- There has also been ongoing 3D seismic interpretation and
extensive core analysis studies for the Taq Taq field as well as
site preparation for the drilling of the Kewa Chirmila exploration
well during the third quarter of 2008.

Gulf of Guinea Deep Water (Nigeria and JDZ)

- During the third quarter of 2008, Addax Petroleum continued to
conduct technical studies evaluating the exploration prospect
drilling locations of its deep water licenses.

Selected Operational Highlights

- Average gross working interest oil production in the third quarter of
2008 was 131,320 barrels per day (bbl/d) representing an increase of
approximately 2 per cent over the 2007 average production of 128,160
bbl/d. Average oil production in the third quarter of 2008 included
103,630 bbl/d from Nigeria and 27,690 bbl/d from Gabon compared to a
2007 third quarter average production level of 104,510 bbl/d and
23,650 bbl/d, respectively.

- Development project highlights in the third quarter of 2008 include:

Nigeria

- drilled five successful development wells which included two oil
production and two appraisal wells in OML123 and one oil
production well in OML126;

- placed a total of two new wells on production in the quarter,
representing one of the five development wells drilled in the
quarter and one drilled in a previous quarter;

- performed three workovers in OML124;

- approximately 8,000 bbl/d was shut-in at Oron West South (OML123)
due to facility constraints associated with contractor delays in
the installation of new pipelines. Partial production from Oron
West South commenced early in the fourth quarter of 2008; and

- continued preparation of the Kita Marine and Antan field
development plans.

Gabon

- drilled six successful development wells onshore of which four
were oil production wells in the Addax Petroleum operated Tsiengui
field in the Maghena license area and two were oil production
wells in the Tsiengui West field in the Awoun license area;

- placed a total of four new wells on production in the Tsiengui
field in the quarter of which three were drilled in the quarter
and one was drilled in the previous quarter;

- three wells were put on gas lift in conjunction with the start of
injection into the gas cap for pressure support in the Tsengui
field. While production from the Tsiengui field has been somewhat
lower than expected, new wells brought on production are expected
to offset the decline from existing producers;

- the third-party operator of the Awoun license continues with the
development of the Koula field with production start-up expected
towards mid 2009; and,

- continued ongoing surface facilities development at the onshore
Addax Petroleum operated Tsiengui and Obangue fields, the onshore
third party operated Koula field, the offshore third party
operated Ebouri field and continued with the extension of the
Corporation's onshore oil export pipeline system.

Kurdistan Region of Iraq

- an early production system has been installed and commissioned,
and TTOPCO is targeting to commence commercial oil production
attributable to Addax Petroleum's working interest in the fourth
quarter of 2008; and,

- existing production facilities are being expanded in the fourth
quarter of 2008 with a further capacity increase planned in 2009.

- Operating netbacks in the third quarter of 2008 increased 50 per
cent to $82.43/bbl compared to $54.94/bbl in the third quarter of
2007. Unit operating expenses in the third quarter of 2008
increased to $8.12/bbl, an increase of 29 per cent over the 2007
level of $6.29/bbl, due to cost inflation pressures 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.

The following table summarizes selected operational information:

-------------------------------------------------------------------------
Selected third quarter Quarter ended
operational highlights September 30
2008 2007 Change
-------------------------------------------------------------------------
Quarter average gross working
interest oil production (Mbbl/d)
Nigeria (offshore) 95.8 96.1 0%
Nigeria (onshore) 7.8 8.4 -7%
Nigeria sub-total 103.6 104.5 -1%

Gabon (offshore) 6.5 6.3 3%
Gabon (onshore) 21.2 17.4 22%
Gabon sub-total 27.7 23.7 17%

Total 131.3 128.2 2%

Prices, expenses and netbacks
($/bbl)
Average realized sales price 110.32 74.31 48%
Operating expenses 8.12 6.29 29%
Operating netback 82.43 54.94 50%
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-------------------------------------------------------------------------
Selected first nine months Nine months ended
operational highlights September 30
2008 2007 Change
-------------------------------------------------------------------------
Quarter average gross working
interest oil production (Mbbl/d)
Nigeria (offshore) 98.9 95.0 4%
Nigeria (onshore) 7.4 7.2 3%
Nigeria sub-total 106.3 102.2 4%

Gabon (offshore) 6.8 6.3 8%
Gabon (onshore) 21.3 14.0 52%
Gabon sub-total 28.1 20.3 38%

Total 134.4 122.5 10%

Prices, expenses and netbacks
($/bbl)
Average realized sales price 109.82 67.27 63%
Operating expenses 8.58 6.58 30%
Operating netback 82.00 49.81 65%
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Dividend

During the third quarter of 2008, 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 November 7, 2008 which is payable on December 11, 2008 to shareholders of record on November 27, 2008. In accordance with Canada Revenue Agency Guidelines, dividends paid by the Corporation during the period are eligible dividends.

Outlook

The Corporation has completed its budget outlook for the remainder of 2008 and for 2009. Addax Petroleum's budgeting process is continually driven by the strategy of reinvesting free cash flow generated from producing operations and the approach is to adjust the capital program in light of prevailing oil prices in order to achieve this without recourse to additional financing. The Corporation believes that this philosophy of funding its capital expenditures with internally generated cash flow, augmented from time to time with the use of existing debt facilities, will retain balance sheet strength and the financial flexibility to expand the Corporation's operations and property portfolio. The Corporation seeks to reinvest internally generated funds on an economic basis, balanced between development and exploration activities.


- Selected highlights for 2008 include:

Production Guidance

- working interest gross oil production from Nigeria and Gabon is
expected to average approximately 136 to 140 Mbbl/d, in line with
the previous guidance range. Average production for October 2008
was in excess of 140 Mbbl/d;

Capital Expenditure Estimate

- the Corporation's capital expenditure estimate for 2008 is $1,602
million, excluding new business acquisition considerations, farm-
in fees and license signature fees, relative to its previously
reported full year estimate of $1,615 million;

- estimated development capital expenditures amount to $1,294
million split 74 per cent to Nigeria and the remaining 26 per cent
to Gabon. Development drilling is the largest item, accounting for
$790 million or 61 per cent of the development estimate; and,

- estimated 2008 exploration and appraisal capital expenditures
amount to $302 million, resulting in four discoveries to date in
2008 (44 per cent success rate) and the pursuit of extensive
seismic programs to build the Corporation's resources base.
Expenditures are split $145 million in Nigeria (excluding the
deepwater license areas) and Cameroon, $51 million in the
deepwater Gulf of Guinea and the JDZ, $50 million in Gabon and $56
million for the highly successful appraisal of Taq Taq.
Addax Petroleum's capital expenditure budget for 2009 totals $1,600 million. The Corporation expects to fund this capital budget from internally generated cash flow plus the receipt in early 2009 of certain expected year-end working capital items based on an estimated $60 per barrel Brent oil price together with the 2009 production guidance.

In particular, the Corporation's development budget for 2009 includes 54 development wells, comprised of 23 oil production wells in Nigeria (18 at OML123 and five at OML126, both offshore) and 31 in Gabon (five oil production and two gas/water injection wells at Maghena, 18 oil production and four gas/water injection wells at Panthere, both onshore, and two oil production wells at Etame, offshore). Addax Petroleum's drilling strategy is intended to strengthen and maintain production at plateau levels on the existing producing assets in Nigeria and allow for continued production growth in Gabon through the ongoing development of Addax Petroleum-operated onshore fields. The Corporation will reinvest the cash flow generated from this production base into an ambitious exploration and appraisal program to accelerate the Corporation's reserves and resources additions. Addax Petroleum's exploration and appraisal budget for 2009 includes the drilling of up to 12 wells in all regions of operations, including the Corporation's first deepwater exploration well.


- Selected highlights for 2009 include:

Production Guidance

- working interest gross oil production in 2009 is expected to
average between 140 and 145 Mbbl/d, an increase of up to 7 per
cent over 2008;

- oil production from Nigeria is expected to show modest growth
averaging between 108 and 112 Mbbl/d. The expected production from
Nigeria includes further increases from OML123 plus relatively
flat production from OML124, partially offset by declines from
OML126 which were originally anticipated in 2007;

- oil production from Gabon is expected to average between 31 and 34
Mbbl/d. The expected production from Gabon consists of continued
growth from the Corporation's onshore license areas while
maintaining production levels from the offshore license area; and,

- production guidance for 2009 does not include any oil production
from the Kurdistan Region of Iraq. The Corporation, together with
its partners Genel Enerji and the Kurdistan Regional Government,
plans to conclude its export pipeline studies in 2009 and complete
the second and third stages of the early production system to
enable total production capacity of up to 60 Mbbl/d.

Budgeted Capital Expenditure

- the Corporation's capital expenditure budget for 2009 is $1,600
million, excluding new business acquisition considerations, farm-
in fees and license signature fees;

- budgeted development capital expenditures amount to $1,251 million
split 68% per cent to Nigeria, 27% to Gabon and the remaining 5%
to the Kurdistan Region of Iraq. Development drilling is the
largest item, accounting for $734 million or 59 per cent of the
development budget; and,

- budgeted exploration and appraisal capital expenditures amount to
$345 million including $173 million in Nigeria (excluding the
deepwater license area) and Cameroon, $50 million in deepwater
Nigeria and the JDZ, $86 million in Gabon and $36 million in the
Kurdistan Region of Iraq. The Corporation plans to drill 12
exploration and appraisal wells in 2009 including three in
Nigeria, one in Cameroon, five in Gabon, one in Deepwater Gulf of
Guinea and two in the Kurdistan Region of Iraq.

The following table summarizes the Corporation's current oil production
guidance and capital expenditure budget for 2008 and 2009:

-------------------------------------------------------------------------
2008 and 2009 Outlook Highlights
2008 2009 Change
-------------------------------------------------------------------------
Oil Production Guidance, Mbbl/d
Nigeria 106 to 111 108 to 112 1 - 2%
Gabon 28 to 31 31 to 34 10 - 11%
Total 136 to 140 140 to 145 3 - 4%

Capital Expenditure Budget - by
Region, $ million
Nigeria (excluding deepwater)
& Cameroon 1,101 1,028 -7%
Gabon 388 425 10%
Deepwater Nigeria & JDZ 51 50 -2%
Kurdistan Region of Iraq 56 93 66%
Corporate 6 4 -33%
Total 1,602 1,600 0%

Capital Expenditure Budget - by
Type, $ million
Development 1,294 1,251 -3%
Exploration & appraisal 302 345 14%
Corporate 6 4 -33%
Total 1,602 1,600 0%
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In addition, Addax Petroleum has compiled a contingent capital investment
budget totalling approximately $850 million, some of which could be invested
in 2009 should the prevailing oil prices exceed the levels anticipated by the
base $1.6 billion capital investment budget. The contingent capital budget
includes approximately $300 million for identified exploration targets, with
the balance for development projects.

Analyst Conference Call

Financial analysts are invited to participate in a conference call and
webcast today Monday, November 10, 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 3416
Toll-free (Canada and the U.S): 800 733 7560
Toll-free (U.K.): 00 800 2288 3501
Toll-free (Switzerland): 00 800 2288 3501

A replay of the call will be available at [phone] or (877) 289
8525, passcode 21277906 followed by the number sign until Wednesday, November
26, 2008.
Investors are invited to listen to the live webcast of the presentation
via the following link:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2465980
The presentation slides for the above will be available prior to the
conference call and webcast on Addax Petroleum's website at
www.addaxpetroleum.com.
Legal Notice - Forward-Looking Statements

Certain statements in this press release constitute forward-looking statements under applicable securities legislation. Such statements are generally identifiable by the terminology used, such as "may", "will", "should", "could", "would", "anticipate", "believe", "intend", "expect", "plan", "estimate", "budget", "outlook" or other similar wording. Forward-looking information includes, but is not limited to, reference to business strategy and goals, future capital and other expenditures, reserves and resources estimates, drilling plans, construction and repair activities, the submission of development plans, seismic activity, production levels and the sources of growth thereof, project development schedules and results, results of exploration activities and dates by which certain areas may be developed or may come on-stream, royalties payable, financing and capital activities, contingent liabilities, environmental matters and government approvals. By its very nature, such forward looking information requires Addax Petroleum to make assumptions that may not materialize or that may not be accurate. This forward-looking information is subject to known and unknown risks and uncertainties, assumptions and other factors, which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such information. Such assumptions and factors include, but are not limited to: imprecision of reserves and resources estimates, ultimate recovery of reserves, prices of oil and natural gas, general economic, market and business conditions; industry capacity; competitive action by other companies; fluctuations in oil prices; refining and marketing margins; the ability to produce and transport crude oil and natural gas to markets; the ability to market and sell natural gas under its production sharing contracts; the effects of weather and climate conditions; the results of exploration and development drilling and related activities; fluctuations in interest rates and foreign currency exchange rates; the 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; risks attendant with oil and gas operations, both domestic and international; international political events; expected rates of return; and other factors, many of which are beyond the control of Addax Petroleum. More specifically, production may be affected by such factors as exploration success, production 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. These factors are discussed in greater detail in filings made by Addax Petroleum with the Canadian provincial securities commissions.

Readers are cautioned that the foregoing list of important factors affecting forward-looking information is not exhaustive. Furthermore, the forward-looking information contained in this press release is made as of the date of this press release and, except as required by applicable law, Addax Petroleum does not undertake any obligation to update publicly or to revise any of the included forward-looking information, whether as a result of new information, future events or otherwise. The forward-looking information contained in this press release is expressly qualified by this cautionary statement.

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 this measure may differ from other companies and accordingly, it may not be comparable to measures used by other companies.

For further information

For additional information, please contact: Mr. Michael Ebsary, Chief Financial Officer, Tel.: [phone], [e-mail]
Mr. Craig Kelly, Investor Relations, Tel.: [phone], [e-mail]
Mr. Chad O'Hare, Investor Relations, Tel.: [phone], chad.o'[e-mail]
Ms. Marie-Gabrielle Cajoly, Press Relations, Tel.: [phone], [e-mail]
Mr. Nick Cowling, Press Relations, Tel.: [phone], [e-mail]
Mr. James Henderson, Press Relations Tel.: [phone], [e-mail]
Mr. Alisdair Haythornthwaite, Press Relations, Tel.: [phone], [e-mail]