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Afren plcI2013 half-yearly results 1

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Afren plc (AFR LN)

Strong underlying operational performance; significantexploration success

London, 23 August 2013 - Afren plc (Afren or the Group), (LSE: AFR, FTSE 250 index), the independent

exploration and production company announces its Half-yearly Results for the six months ended 30 June 2013

and an update on its operations year-to-date 2013, in accordance with the reporting requirements of the EU

Transparency Directive. Information contained within this release is unaudited and is subject to further review.

2013 Half-yearly Results Summary

The first half of 2013 has been a period of notable success for Afren across all operational fronts. The period

saw record production (up 13 per cent.) principally from the Ebok and Okoro fields, offshore Nigeria. The

Groups financial results reflect the consolidation of First Hydrocarbon Nigeria Company Limited (FHN) following

the completion of the acquisition of an additional beneficial interest in FHN in the period and the early adoption

of IFRS 10(1)

. Post period end, Afren further increased its beneficial interest in FHN and commenced sales from

the Barda Rash field in the Kurdistan region of Iraq. On the exploration front, the oil discovery at OPL 310

opens a new oil basin in an under-explored region with targeted resources believed to be in excess of pre-drill

estimates (78 mmboe). We continue to make good progress on our exploration and appraisal (E&A) work

programme targeting opportunities across the portfolio.

Financial highlights

1H 2013 1H 2012 (restated(1)) Change

Realised oil price (US$/bbl) 104 109 (5%)

Net working interest production (boepd) 47,653 42,169 13%

Revenue (US$m) 797 778 2%

Gross profit (US$m) 377 411 (8%)

Profit before tax (US$m) 260 311 (16%)

Profit after tax (US$m) 62 102 (39%)

Normalised profit after tax (US$m)

112 119 (6%)

Operating cash flow (US$m)564 571 (1%)

(1) Prior period results have been restated to reflect the consolidation of FHN, following the adoption of IFRS 10 and IFRS 11. Furtherdetails are provided in Note 1 and Note 14 of the condensed financial statements

(2) From continuing operations, for further details see Note 13 of the condensed financial statements(3) See Note 4 of the condensed financial statements(4) Operating cash flow before movements in working capital

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Key Highlights

Strong operating cash flow driven by a 13 per cent. year-on-year increase in net production to 47,653 boepd;on track for full year guidance of 40,000 - 47,000 boepd

Continued E&A success

- Play opening discovery at OPL 310, offshore Nigeria

- DST programme at Simrit-2 on the Ain Sifni PSC, Kurdistan region of Iraq complete, with aggregate flowrates of 19,641 bopd achieved. Well being prepared for Extended Well Test operations

- Completion of drilling at Simrit-3. Multi-zone testing programme underway to confirm the resourcepotential and the eastern extent of the Simrit anticline

- Active exploration programme with ongoing Ogo-1 sidetrack and upcoming Ufon-1 well on OML 115 inNigeria

Active portfolio management

- Completion of farm-out (subject to Nigerian Ministerial Consent) of a 30 per cent. economic interest inOPL 310, offshore Nigeria, to Lekoil Limited

- Acquisition by FHN of 16.9 per cent. economic interest in OML 113. Synergies expected with OPL 310development

- Agreement for sale of CI-11 block and Lion Gas Plant for total consideration of US$26.5 million, ofwhich US$15.3 million will be settled in cash

- Proposed relinquishment of JDZ Block 1, Nigeria So Tom & Prncipe

Strong balance sheet and financial flexibility

- Cash at bank US$588 million (1H 2012: US$497 million); Net debt, excluding finance leasesUS$590 million (1H 2012: US$679 million). Full year capex guidance revised to US$650 million fromUS$620 million

Commenting today, Osman Shahenshah, Chief Executive of Afren plc, said:

Afren continued to deliver strong operational results during the first half of 2013. We recorded a year-on-year

increase in underlying net production of 13 per cent. principally from our green field developments offshore

Nigeria. Our exploration campaign continues to deliver results, following the play opening discovery announced

at OPL 310 offshore Nigeria, where further exploration drilling is ongoing. Elsewhere, we are continuing with

exploration drilling and testing operations at the Ain Sifni PSC in Kurdistan. With high quality production

underpinning both our strong financial position and exploration programme, we are well placed to realise

numerous growth opportunities over the remainder of this year.

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Analyst PresentationThere will be a presentation today to analysts at 09:00 BST at the Lincoln Centre, 18 Lincolns Inn Fields,London, WC2A 3ED.

The presentation will also be broadcast live at www.afren.com where the accompanying presentation will beavailable, and on playback from 14:00 BST.

For further information contact:

Pelham Bell Pottinger (+44 20 7861 3232)

James Henderson

Mark Antelme

Notes to Editors

Afren Plc

Afren is an independent upstream oil and gas exploration and production company listed on the main market of the LondonStock Exchange and a constituent of the Financial Times Stock Exchange Index of the leading 250 UK listed companies.

Afren has a portfolio of assets spanning the full cycle E&P value chain. Afren is currently producing from its assets inNigeria, Cte d'Ivoire and the Kurdistan region of Iraq and holds further exploration interests in Ghana, Nigeria, Cte d'Ivoire,the Kurdistan region of Iraq, Congo Brazzaville, the Joint Development Zone of Nigeria - So Tom & Prncipe, Kenya,Ethiopia, Madagascar, Seychelles, Tanzania and South Africa. For more information please refer towww.afren.com.
http://www.afren.com/http://www.afren.com/http://www.afren.com/http://www.afren.com/http://www.afren.com/

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Operations Review

Production to 1H 2013 (boepd)Workinginterest

Average grossproduction

Average netproduction

Okoro 50% 17,815 8,908

Ebok 100%/50%(1) 33,884 33,884

OML 26 45%(2)

4,267 1,920

CI-11 & LGP 47.96% / 100% 5,096 2,941

Total 61,062 47,653

(1) Pre/post cost recovery(2) Held through First Hydrocarbon Nigeria Company Limited (FHN), a subsidiary of Afren plc with a 60 per cent. beneficial holding as at

30 June 2013 and a 78 per cent. beneficial holding following the announcement of 5 July 2013

Note: All production data remains subject to reconciliation

Nigeria and other West Africa

Nigeria

Okoro

Gross production averaged 17,815 bopd at the Okoro field during the first half of 2013, representing a year-on-

year increase of 16 per cent. Following the successful discovery in early 2012, Afren and Partner Amni

International Petroleum Development Company Ltd. (Amni) commenced early development drilling at the Okoro

Further Field Development (previously referred to as the Okoro Field Extension) in July 2012, just six monthsfrom discovery, using the available wellhead slots on the existing Okoro platform. The Okoro 14 well, is

currently producing at stabilised rates of approximately 5,100 bopd.

The Partners have commenced the Front End Engineering Design (FEED) and development plans for the

fabrication of a new wellhead platform and production unit required for the full development of the Okoro Further

Field Development. The Okoro Further Field Development wellhead platform (WHP) will be a conventional four

pile platform with a single piece jacket and deck capable of accommodating wireline and coil tubing units. The

WHP will have 12 well slots capable of holding dual trees, which would enable the platform to host up to 24

wells. The Okoro Further Field Development platform will be located close to the existing Okoro Main wellhead

platform and the two will be bridge linked.

After careful consideration it was determined that it was not possible to upgrade the existing Okoro FPSO;

therefore a new Mobile Offshore Production Unit (MOPU), will be installed as close as possible to the OkoroFurther Field Development WHP and will be bridge linked.

Ebok

Gross production at the Ebok field was 33,884 bopd during the first half of the year, representing a year-on-year

increase of 16 per cent.

During the first half of 2013, and following the discovery in 2012, the Partners successfully drilled two producers

from the Ebok North Fault Block (Ebok NFB). The wells have been tied to the existing West Fault Block (WFB)

infrastructure. The Partners successfully drilled and brought on stream an additional producer in the WFB during

the period. A water injector at the NFB is planned in Q3 2013.

The Central Fault Block Extension platform will set sail for Nigeria in November 2013. The wells from this

platform will target reservoirs which contain approximately 38 mmbbls of 2P reserves.

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The Partners are looking at development options for the NFB, the most likely of which is to drill the development

wells from an extended WFB platform and produce through to the existing MOPU.

Okwok

The Partners commenced and completed drilling on the Okwok-11 side-track well during the first quarter of

2013. The well was drilled to a total measured depth of 3,997 ft and successfully encountered 95 ft of net oil

pay in the D2 reservoir. The D2 reservoir was successfully cored, logged and tested for reservoir continuity.The newly acquired data together with the results of the Okwok-10 well (encountering 72 ft of net oil pay in the

LD-1 reservoir) and Okwok-10 side-track well (encountering 89 ft of net oil pay in the LD-1B reservoir) will be

integrated into the field model and used to update the volumetric and optimised Field Development Plan (FDP)

prior to submission to the Nigerian authorities later this year.

The most likely development scenario for Okwok, which the Partnership is reviewing, comprises the installation

of a separate dedicated production processing platform tied back to, and sharing, the Ebok Floating Storage

Offloading vessel (FSO) located approximately 13 km to the west.

OML 115

Afren and Partner Oriental will commence drilling the Ufon South-1 well, the first exploration well on the block

towards the end of 2013. The Ufon structure has been selected (gross Pmean prospective resources of 65mmbbls) for drilling and is structurally and geologically analogous to the nearby Ebok and Okwok fields but with

significant deeper exploration potential.

OML 26

Following shareholder approval on 20 May 2013, Afren announced on 29 May that it had completed the

acquisition of an additional 10.4 per cent. beneficial interest in First Hydrocarbon Nigeria (FHN) for a total

consideration of US$37.05 million in cash. The acquisition (and adoption of IFRS 10) results in Afren

consolidating its holding of FHNs reserves and production as a subsidiary and further strengthens its position

onshore Nigeria. Post completion of the acquisition, Afrens independently audited net Proved and Probable

reserves from continuing operations have increased from 209.8 mmboe as at 31 December 2012 to 268.5

mmboe, representing an increase of approximately 28 per cent.

During the period, gross average production from the Ogini and Isoko fields was 4,267 bopd (subject to final

figures from the Operator). In order to optimise production from currently active wells, a new 5.2 mmscfd gaslift

compressor unit was procured in October 2012 and has been installed. The Partners have also procured - and

are in the process of installing - a new LACT unit and have ordered new export pumps. Post period end, the

Partners submitted the Ogini FDP on 29 July 2013, and are currently awaiting DPR approvals. The Ogini FDP

consists of the drilling of 37 production wells, the execution of 13 short-to-medium term work-overs, installing a

new 18" delivery line, two 50,000 bbl/d 3-Phase Separators as well as water treatment and disposal facilities.

The Ogini FDP drilling campaign is scheduled to commence in Q4 2013 and will be targeting peak production of

35,000 bbls/d from the Ogini field alone by 2016. The Isoko FDP submission is expected in Q4 2013.

An independent assessment of the reserve and contingent resource potential of the Ogini and Isoko fields for

FHN in March 2013 has estimated the gross remaining 2P oil reserves at the fields at 134.6 million barrels and

gross contingent resources at 68.0 million barrels (gross 2P & 2C reserves and resources 202.6 million barrels;

91.2 million barrels net to FHN) as at 31 December 2012. This represents a 231 per cent. increase on 2P

reserves previously carried by FHN and a 10 per cent. increase on previously carried 2P & 2C volumes as at 31

December 2011. In addition, significant upside potential of 144 mmboe also exists within the undeveloped

Aboh, Ovo and Ozoro discoveries, together with an estimated 615 mmboe gross unrisked prospective

resources defined across multiple prospects that will continue to be worked up in parallel to, and integrated with,

future development plans.

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OML 113

On 17 July 2013, FHN completed the acquisition of a 16.9 per cent. economic interest in OML 113 for a total

consideration of US$40 million. OML 113 is located offshore Nigeria, and is contiguous to the Afren operated

OPL 310 block. The Aje field located on OML 113 was initially discovered in 1996. Three (Aje-1, Aje-2 and Aje-

4) of the four wells drilled on the field have encountered oil and gas in various intervals across the Turonian,

Cenomanian and Albian sands, and two (Aje-1 and Aje-2) of the wells have comprehensively tested at

commercial rates. The JV Partners estimate the Pmean contingent resources to be 167 mmboe principallyrelated to the Aje field with an additional 205 mmboe of mean prospective resources on the block. The JV

Partners are considering drilling and commencement of early production on the Aje field with full field

development at a later stage likely in synergy with the recent discovery at OPL 310.

OPL 310

On 14 May 2013, Afren announced the completion of a farm-out agreement with Lekoil Limited (Lekoil)

(subject to Nigerian Ministerial Consent), in the OPL 310 licence. Under the terms of the farm out, Afren will

receive a total carry of up to US$50 million in respect of an exploration well drilled at the Ogo prospect and a

side-track well currently being drilled. Post farm-out, Afren will hold a 40 per cent. economic interest in the

licence once Afren and Optimum Petroleum Development Ltd, the named Operator, achieve cost recovery.

Afren provides technical assistance to Optimum in respect of Optimums obligations under a Technical

Assistance Agreement.

On 26 June 2013, Afren announced that the Ogo-1 well had encountered a significant light oil accumulation with

216 ft of net stacked pay. Following the discovery, the well was deepened to tag the crystalline basement and

reached a total measured depth of 10,648 ft. A comprehensive wireline logging programme was completed

post period end and is presently under evaluation. Following the conclusion of drilling operations at Ogo-1, the

Partners spudded a planned side-track, Ogo-1 ST, which is currently drilling ahead. The Ogo-1 ST is planned

to test both the down-dip extension of the Ogo discovery and test a new play of stratigraphically trapped

sediments that pinch-out onto the basement high.

In its most recent independent assessment, NSAI evaluated gross P50 unrisked prospective resources on OPL

310 at 476 mmboe.

OPL 907, 917

Afren is in the process of relinquishing its interests in OPL 907 and 917. The net assets in respect of thislicence were written-off in full at 31 December 2012.

Cte dIvoire

CI-11 and Lion Gas Plant

Average gross production during the period at CI-11 was 4,142 boepd, with the Lion gas plant processing

approximately 55.7 mmcfd of gas with yields of 459 bbls butane and 495 bcpd. During the period, Afren agreed

the sale of the CI-11 block and Lion Gas Plant to a third party for total consideration of US$26.5 million.

Completion of the transaction is expected in Q3 2013.

CI-01

Discussions are continuing with Petroci and the Cte dIvoire Governmenton the forward programme.

Nigeria So Tom & Prncipe JDZ

Block 1

In 2012, Total commissioned and completed drilling two appraisal wells on the block, the Obo-2 well and the

Enitimi-1 well, both encountering oil and gas pay, but at lower levels than pre-drill estimates.

It is anticipated that Afren will relinquish its interest in the licence in 2H 2013 and as such have decided to impair

the associated costs in 1H 2013.

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Congo Brazzaville

La Noumbi

The Kolo-1 well was spudded in late February 2013 and was drilled to a total depth of 4,472 ft, evaluating sands

in the Chela and Vandji formations. Wireline logs and borehole samples were taken to better understand

hydrocarbon shows encountered in the drilling process. Sands in the well were deemed wet and the well was

subsequently plugged and abandoned in April 2013.

Following completion of drilling operations at Kolo-1, the Operator commenced drilling on an independent

prospect, Kolo-2 in April 2013. The well was drilled to a total depth just below 1,969 ft and had oil shows in a

cored interval. Analysis of the core, log and MDT data suggested the interval had a high water content with

only minor light oil saturation, as such, the well was plugged and abandoned. The partnership has agreed to a

50 per cent. relinquishment of the block and is discussing a forward work programme.

Ghana

Keta Block

The Partners have progressed into the next two-year exploration phase. A 1,582 km2 3D seismic survey

completed in December 2012 is currently being processed. In April 2013, Afren received a fast-track cube from

the new 3D seismic which is currently being interpreted alongside a detailed processing review. A data trade

agreement has been made with Ophir for the Starfish-1 well, which was recently drilling in the nearby offshore

Accra block and has been declared a dry-hole. The new data will be interpreted along with the Nunya-1x

exploration well, to help define the next steps to be taken on the work-programme, which requires one

exploration well to be drilled by May 2014.

South Africa

Block 2B

Processing of the 686 km2of 3D seismic data acquired this year is progressing and results are expected during

Q3 2013.

Kurdistan region of Iraq

Barda Rash

Approximately 18,800 barrels of oil were held in storage during 1H 2013. Preliminary crude oil sales to the local

market have commenced with initial sales of 1,300 bopd achieved since 8 July 2013. Production is planned to

be initially ramped up to 5,000 as the surface facilities and well performance are stabilised and continuity ofsales monitored.

The Partners commenced drilling on the BR-5 well in March 2013 using the Romfor-23 drilling rig which is

currently drilling ahead at around 7,200 ft and commenced drilling the BR-4 in May using the Viking I-10 rig,

which is currently drilling ahead at around 10,200 ft. The wells will test the Cretaceous, Jurassic and Triassic

reservoirs previously identified on the structure.

Ain Sifni

During the first half of 2013, Operator Hunt Oil completed testing of the Simrit-2 well with aggregate flow rates of

19,641 bopd achieved from the planned Drill Stem Test (DST) programme. The well is currently being

completed for an Extended Well Test (EWT) in the Jurassic age, Mus/Adaiyah reservoirs. Produced crude is

expected to be trucked to local markets. The Simrit-3 well, exploring the eastern extent of the large scale Simritanticline reached a final maximum depth of 12,300 ft in the Triassic Kurra-Chine formation in 1H 2013

encountering hydrocarbon bearing intervals in the Cretaceous, Jurassic and Triassic reservoirs. A multi-zone

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testing programme is underway to confirm the resource potential of the well. Results from the tests are

expected to be available from the Operator shortly.

Operator Hunt Oil spudded the Maqlub-1 well testing the high potential Maqlub structure in June 2013. The

drilling programme is expected to last 110 days followed by drilling at Maqlub-2. The Maqlub structure is

located adjacent to the Barda Rash PSC and will be testing the Cretaceous, Jurassic and Triassic reservoirs.

Afren East Africa Exploration

Kenya

Block 1

Processing of the new 1,900 km 2D grid has been completed and interpretation is underway. The seismic is

showing faulting and evidence of a working petroleum system. Initial mapping should be completed by early

September and will guide well location selection for anticipated drilling in 2014. Afren have traded for well data

in the area and are purchasing additional local well data from the National Oil Corporation of Kenya.

Blocks L17 & L18

Afren completed processing of the 120 km onshore 2D seismic in June 2013 and on the 1,006 km2

offshore 3D

seismic in July 2013. Data is currently being interpreted to refine previous leads across the acreage. The

regional Mombasa high structure has remained as a viable target for near-shore or onshore drilling. Further

advanced processing of the 3D (AVO Analysis) began in mid-July and will complete in September. This work

should help de-risk the offshore prospects in preparation for a two well drilling programme.

Block 10A

On 1 March 2013, the Operator Tullow Oil announced the temporary suspension of the Paipai-1 exploration

well. The well, which was drilled to a total depth of 13,960 ft, encountered light hydrocarbon shows across a 180

ft thick gross sandstone interval. This sandstone is overlain by a 656 ft thick source rock which forms aneffective regional top seal. The Partners have agreed to return to Paipai for testing at a later date dependent on

rig availability. Current work on the block includes further evaluation of the well results and a passive seismic

programme to better define basement.

Tanzania

Tanga Block

Following completion of a 620 km23D seismic survey in January 2013, Afren received final processing of the

dataset in early July and subsequently initiated advanced seismic analysis (AVO). Initial interpretation of the 3Dhas highlighted structures with conforming amplitudes. Afren and its Partners have identified a rig to drill the

deeper water Mkonge-1 prospect (previously Calliope) and have a Letter of Intent (LOI) in place with the rig

contractor. Drilling is expected on the prospect in Q1 2014, which is the first of two wells expected to be drilled

on the block in 2014.

Seychelles

Areas A & B

In Q1 2013, Afren completed a major 3D seismic programme, the first 3D survey to be conducted in the

Seychelles. The programme consisted of two surveys in Afrens licence areas. The first 3D survey wasconducted in the southern portion of the licence over the Bonit prospect and covered 600 km2. The second

survey was in the northern section of the licence area and covered an area of 2,775 km2. The new 3D seismic

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combined with existing 2D data are being processed by the Partners to assess in detail the Tertiary, Cretaceous

and Jurassic prospectivity. Fast-Track versions of the datasets have now been received and final processing

should be available in September 2013.

Madagascar

Block 1101

In June 2013, Afren ran a successful fieldtrip across the block with OMNIS, the state oil and gas company,

viewing exposures of the probable reservoir targets. Additional 2D seismic acquisition and a shallow borehole

coring programme are planned for Q3 2013 to enhance our subsurface understanding ahead of exploration

drilling. The borehole effort would further assess reservoir quality, perform petrophysical and geochemical

analysis to infer burial depth and search for heavy oil deposits near a known oil show.

Ethiopia

Blocks 7 & 8

Operator New Age plans to spud the El Kuran-3 well in early September. The drilling programme is expected to

last 45 days and will test the reservoir productivity in the Adigrat and Hamanlei zones, targeting 100 mmbbls of

gross prospective resources. Previous drilling on the block at the El Kuran-1 identified gas shows in the Adigrat

and a potential oil zone in the Hamanlei.

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Exploration and appraisal drilling schedule

Country Asset

EffectiveWorkingInterest

Grossprospect

size mmboe E&A wells / activity Timing

Wells completed - 2013

Kurdistanregion of Iraq

Ain Sifni 20% Discovery Simrit-2, EWT operations tocommence Completed


Ain Sifni 20% TBCSimrit-3 well complete. Multi-zone testing programmeunderway Completed

Kenya Block 10A 20% 100Suspended pending re-evaluation Completed

Nigeria Okwok 70%/56%(1)

AppraisalOkwok appraisal drillingcomplete. FDP submission to

follow Completed

CongoBrazzaville

La Noumbi 14% -Abandonednon-commercialdiscovery Completed

New well spuds - 2013


Ain Sifni 20% 661Maqlub-1 well spudded June2013

2H 2013

Nigeria OPL 310 40%(2)

202 Ogo-1 side-track well 2H 2013

Ethiopia Blocks 7 & 8 30% 100 El Kuran-3 well 2H 2013

Nigeria OML 115 100%/50%(1)

65 Ufon South-1 well 2H 2013

(1) Pre/post cost recovery(2) Following the announcement of the farm-out to Lekoil Limited (Lekoil) on 14 May 2013, subject to Nigerian Ministerial consent.

Economic interest post Afren and Optimum achieving cost recovery.

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Finance Review

1. Result for the period (1)

Revenue

Revenue for the period from continuing operations was US$797 million, of which US$21 million was generated

by FHN (1H 2012: US778 million, of which US$25 million related to FHN). The increase in revenue is largely

driven by increased production from the development of the Ebok field, offshore Nigeria. Working interest

production from continuing operations for the period increased from 39,044 boepd (including FHN) to 44,712

boepd in 1H 2013.

In 1H 2013, the Group realised an average oil price from continuing operations of US$103.6/bbl (1H 2012:

US$108.8/bbl), before all royalties and hedging. The average Brent price for the period was US$110/bbl (1H

2012:US$112/bbl).

Gross profit

Gross profit for the period from continuing operations was US$377 million (1H 2012: US$411 million) whichreflects the higher DD&A charge on oil and gas assets in the period, due to increased production, and a higher

level of royalties paid on Ebok. The DD&A charge in 1H 2013 was US$195 million, an increase of 7 per cent.

compared to 1H 2012. Of this, US$2 million related to OML 26.

Profit for the period

Profit after tax from continuing operations was US$62 million (1H 2012: US$102 million), the decrease on the

prior period being impacted by impairment charges, non-recurring administrative expenses and losses on

derivative financial instruments arising from the inclusion of FHNs results for the period . The impairment

charge of US$5 million largely relates to the write-off of costs of drilling the Kola 1 and Kola 2 wells at La

Noumbi, Congo Brazzaville. In addition to this, the Groups interest in JDZ was impaired in advance of the

expected relinquishment, which is reflected in the share of joint venture loss of US$25 million in the financialstatements.

These increases have been offset by lower finance costs charged to the income statement (total finance costs

in the period were US$69 million, of which US$31 million was capitalised; 1H 2012: total finance costs of US$76

million, of which US$18 million was capitalised). Administrative expenses for the period were US$27 million,

compared to US$15 million in 1H 2012. The increase principally relates to share options and other non-

recurring share based expenses.

During the period, the Group recognised a loss of US$27 million from derivative financial instruments (1H 2012:

US$15 million), relating to crude oil hedging contracts, as the oil price in the period averaged consistently above

the hedged price, and mark-to-market losses on interest rate swaps.

The income tax charge for the period was US$198 million, of which US$126 million related to deferred tax (1H2012: charge of US$209 million, of which US$159 million related to deferred tax). The Groups effective tax rate

has increased as a result of greater losses incurred in corporate entities in which the related tax losses have not

been recognised as deferred tax assets or which cannot be offset against taxable profits. During the second

half of 2013 we will continue discussions with the Nigerian Tax Authorities to finalise our tax returns from

previous periods, including discussions over the applicable tax rate. Whilst a range of outcomes are possible,

we continue to believe the taxation provisions held remain sufficient.

(1) Notes on basis of preparation:During the period ended 30 June 2013, Afren adopted IFRS 10 which resulted in achange in accounting policy for consolidating its investees. 1H 2012 and year ended 31 December 2012 comparativeinformation have been restated accordingly. Further information is provided in Note 1 to the condensed financialstatements.In addition, in May 2013, Afrens holding companies for the CI-11 and Lion Gas Plant assets in Cote dIvoire wereclassified as held for sale. Further information is provided in Note 13 to the condensed financial statements.

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The profit for the period from discontinued operations in Cote dIvoire of US$16 million largely relates to the

partial release of creditors no longer expected to crystallise.

Hedging and hedging strategy

At 30 June 2013, crude oil hedges covering approximately 1.9 million barrels are in place for the period 1 July

2013 to 31 December 2013, providing minimum floor prices on these volumes of between US$80-US$90/bbl.As in prior periods, the policy of the Group is to protect its minimum cash flow requirement against a downturn in

oil prices. As such the maximum amount of working interest Afren would seek to protect with these

arrangements is between 20-30 per cent. of estimated production for a rolling period of up to 24 months

forward.

2. Financing and capital structure

Operating cash flow

Operating cash flow before movements in working capital was US$564 million in 1H 2013 (1H 2012: US$571

million), of which US$446 million has been used to fund the Groups investment in development, appraisal andexploration activities as well as fund the purchase of the Groups additional equity investment in FHN.

Financing

In March 2013, the Group successfully renegotiated the terms of its Ebok Reserve Based Lending Facility, with

14 international banks involved in the syndication of a new facility which significantly extends the maturity of the

Groups debt. Repayments of the new US$300 million facility begin in January 2015.

Gross debt at 30 June 2013 was US$1,178 million, excluding finance leases. Cash at bank at 30 June 2013

was US$588 million, resulting in net debt (excluding finance leases) of US$590 million (30 June 2012: cash of

US$497 million; net debt of US$679 million).

Subsequent to the period end, the Group repaid its US$50 million unsecured facility.

3. Development, appraisal and exploration activities

The Group invested US$130 million in exploration and appraisal activities in 1H 2013 (1H 2012: US$91 million).

The main areas of expenditure being Nigeria (including US$42 million for further drilling on Okwok, US$10

million of pre-drilling activities on OML115 and US$6 million for drilling on OPL310), testing and drilling at Ain

Sifni in the Kurdistan region of Iraq (US$19 million), and seismic and other pre-drilling activities in East Africa

(total of US$36 million on Seychelles Areas A&B, South Africa Block 2B, Tanga Block in Tanzania, and Ethiopia

Blocks 7 and 8).

Expenditure on oil and gas assets was US$202 million, largely related to the continued development ofproducing wells and facilities upgrades at Ebok (US$142 million) and further drilling at Barda Rash (US$56

million).

4. Related party transactions

Related party transactions are disclosed in Note 11 of the condensed financial information. There have been no

material changes to the level or nature of related party transactions since the last annual report.

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5. Principal risks to 2013 performance

The Directors do not consider that the principal risks and uncertainties of the Group have changed since the

publication of the Annual Report and Accounts for the year ended 31 December 2012. The principal risks faced

by Afren relate to: operational risk relating to field delivery, exploration failure, environmental and safety

incidents, and unfulfilled work / PSC obligations; external risks being geo-political risk, security incidents, host

community action and oil price volatility; strategic risk including exposure to bribery and corruption, managinggrowth and the loss of key employees; and financial risk including changes to taxation and other legislative

changes, and treasury management.

A detailed explanation of these risks can be found on pages 28 to 31 of the 2012 Annual Report and Accounts

which is available atwww.afren.com.

6. Going concern

As stated in Note 1 to the condensed financial information, the Directors are satisfied that the Group has

sufficient resources to continue in operation for the foreseeable future, being a period of not less than twelve

months from the date of this report. Accordingly, they continue to adopt the going concern assumption inpreparing the condensed financial information.

7. Financial outlook and strategy

Our financial strategy continues to be to achieve a balance of operational cash flow with longer-term financing to

support the Groups on-going appraisal and development activities.
http://www.afren.com/http://www.afren.com/http://www.afren.com/http://www.afren.com/

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Responsibility Statement

The Directors confirm that to the best of their knowledge:

a) the condensed set of financial statements has been prepared in accordance with IAS 34 Interim

Financial Reporting;

b) the interim management report includes a fair review of the information required by DTR 4.2.7R(indication of important events during the first six months and description of principal risks anduncertainties for the remaining six months of the year); and

c) the interim management report includes a fair review of the information required by DTR 4.2.8R(disclosure of related parties transactions and changes therein).

By order of the Board,

Osman Shahenshah Darra ComynChief Executive Group Finance Director23 August 2013 23 August 2013

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Independent review report to Afren plc

We have been engaged by the company to review the condensed set of financial statements in the half-yearly

financial report for the six months ended 30 June 2013 which comprises the statement of comprehensive

income, the balance sheet, the cash flow statement, the statement of changes in equity, and related Notes 1 to15. We have read the other information contained in the half-yearly financial report and considered whether it

contains any apparent misstatements or material inconsistencies with the information in the condensed set of

financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements

(UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the

Entity issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the

company those matters we are required to state to it in an independent review report and for no other purpose.

To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the

company, for our review work, for this report, or for the conclusions we have formed.

Directors responsibilitiesThe half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors

are responsible for preparing the half-yearly financial report in accordance with the Disclosure and

Transparency Rules of the United Kingdoms Financial Conduct Authority.

As disclosed in Note 1, the annual financial statements of the group are prepared in accordance with IFRSs as

adopted by the European Union. The condensed set of financial statements included in this half-yearly financial

report has been prepared in accordance with International Account ing Standard 34, Interim Financial

Reporting, as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the

half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland)

2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the

Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of

making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical

and other review procedures. A review is substantially less in scope than an audit conducted in accordance

with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain

assurance that we would become aware of all significant matters that might be identified in an audit.

Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of

financial statements in the half-yearly financial report for the six months ended 30 June 2013 is not prepared, in

all material respects, in accordance with International Accounting Standard 34 as adopted by the European

Union and the Disclosure and Transparency Rules of the United Kingdoms Financial Conduct Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

23 August 2013

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Condensed consolidated statement of comprehensive incomeSix months ended 30 June 2013

Restated(1)

Restated(1)

6 months to

6 months to Year to

30 June 2013 30 June 2012 31 December 2012Unaudited Unaudited Unaudited

Notes US$m US$m US$m

Continuing operations

Revenue 796.8 778.4 1,571.4Cost of sales (419.5) (367.7) (780.9)

Gross profit 377.3 410.7 790.5Administrative expenses (26.9) (15.1) (55.1)Other operating expenses

derivative financial instruments (26.6) (15.4) (60.2)

impairment of exploration and evaluation assets 9 (4.6) (12.2) (15.0)

Operating profit 319.2 368.0 660.2Investment revenue 1.8 0.4 1.6Finance costs 2 (38.0) (58.1) (90.8)

Other gains and (losses)

foreign currency gains 1.6 0.7 0.1fair value of financial liabilities and financial assets 0.9 (0.1) (2.5)

Share of joint venture (loss)/profit 12 (25.1) - 0.3

Profit before tax from continuing operations 260.4 310.9 568.9

Income tax expense 5 (198.0) (209.0) (380.0)

Profit after tax from continuing operations 62.4 101.9 188.9

Discontinued operations

Profit for the period from discontinued operationsattributable to equity holders of Afren plc 13 16.1 (1.5) (2.1)

Profit for the period 78.5 100.4 186.8

Attributable to:

Equity holders of Afren plc 79.6 100.7 198.4

Non-controlling interests (1.1) (0.3) (11.6)

78.5 100.4 186.8

Gain/(loss) on revaluation of available-for-saleinvestment 0.4 - (0.9)

Total comprehensive income for the period 78.9 100.4 185.9

Attributable to:Equity holders of Afren plc 80.0 100.7 197.5

Non-controlling interests (1.1) (0.3) (11.6)

78.9 100.4 185.9

Earnings per share from continuing activities

Basic 3 5.8c 9.5c 18.6 c

Diluted 3 5.5c 9.1c 17.7 c

Earnings per share from all activities

Basic 3 7.4c 9.4c 18.4 c

Diluted 3 6.9c 9.0c 17.6 c

(1) Restated due to the adoption of IFRS 10 and IFRS 11, as described in Note 1 and Note 14

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Condensed consolidated balance sheetAs at 30 June 2013

Restated(1)

Restated(1)

30 June 2013

30 June 2012 31 December 2012

Unaudited Unaudited UnauditedNotes US$m US$m US$m

Assets

Non-current assets

Intangible oil and gas assets 1,013.0 764.9 851.3

Property, plant and equipment 1,880.7 1,803.2 1,853.0

Goodwill 115.2 115.2 115.2

Prepayments and advances to partners 77.0 - 88.4

Derivative financial instruments - 1.3 -

Available for sale investments 2.9 - 0.9

Investments in joint ventures 1.1 7.3 7.8

3,089.9 2,691.9 2,916.6

Current assetsInventories 80.7 60.6 94.4

Trade and other receivables 229.6 276.4 326.1

Prepayments and advances to partners 19.8 - 7.4

Cash and cash equivalents 587.7 496.8 598.7

917.8 833.8 1,026.6

Assets of disposal group classified as held for sale 13 47.9 - -

Total assets 4,055.6 3,525.7 3,943.2

Liabilities

Current liabilities

Trade and other payables (365.9) (337.0) (485.3)

Borrowings 7 (77.0) (208.3) (216.4)

Current tax liabilities (175.3) (82.6) (156.4)Obligations under finance lease (19.9) (18.7) (19.3)

Derivative financial instruments 8 (30.0) (14.0) (31.3)

(668.1) (660.6) (908.7)

Liabilities of disposal group classified as held forsale 13 (50.6) - -

Net current assets 247.0 173.2 117.9

Non-current liabilities

Deferred tax liabilities (603.6) (385.1) (477.6)

Provision for decommissioning (28.9) (33.8) (39.4)

Borrowings 7 (1,101.3) (967.6) (943.6)

Obligations under finance leases (88.1) (107.9) (98.1)

Other payables - (43.5) (43.5)

Derivative financial instruments 8 (17.1) (7.3) (9.8)

(1,839.0) (1,545.2) (1,612.0)

Total liabilities (2,557.7) (2,205.8) (2,520.7)

Net assets 1,497.9 1,319.9 1,422.5

Equity

Share capital 18.9 18.9 18.9

Share premium 923.0 919.8 920.3

Other reserves 7.9 (5.7) 6.9

Merger reserve 179.4 179.4 179.4

Retained earnings 346.0 167.5 265.4

Total equity attributable to parent company 1,475.2 1,279.9 1,390.9

Non-controlling interest 22.7 40.0 31.6

Total equity 1,497.9 1,319.9 1,422.5


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Condensed consolidated cash flow statementSix months ended 30 June 2013

Restated(1)

Restated(1)

6 months to

6 months to Year to

30 June 2013 30 June 2012 31 December 2012Unaudited Unaudited Unaudited

US$m US$m US$m

Operating profit for the period from continuing operations 319.2 368.0 660.2

Operating profit for the period from discontinued operations 18.2 0.1 3.1

Operating profit for the period from continuing and discontinuedoperations 337.4 368.1 663.3

Depreciation, depletion and amortisation 200.6 186.9 380.1

Unrealised losses/(gains) on derivative financial instruments 6.0 (1.7) 20.0

Impairment charge on exploration and evaluation assets 4.6 12.2 15.0

Share based payments charge 15.8 5.3 29.4

Operating cash-flows before movements in working capital 564.4 570.8 1,107.8

Decrease/(increase) in trade and other operating receivables 45.4 (98.8) (251.9)(Decrease)/increase in trade and other operating payables (74.2) 50.5 124.2

Decrease in inventory (crude oil) 8.2 25.4 6.0

Tax paid (52.2) (7.0) (11.7)

Net cash generated by operating activities 491.6 540.9 974.4

Purchases of property, plant and equipment (182.6) (196.6) (394.5)

Acquisition of participating interest in licences in Kurdistanregion of Iraq - (190.2) (190.2)

Exploration and evaluation expenditure (201.4) (105.3) (138.0)

Investment in subsidiary - additional shares purchased from thirdparties (65.4) - -

Cash received on disposal of equipment of discontinuedoperations - 1.2 1.3

Decrease/(increase) in inventories - spare parts and materials 2.5 (18.9) (18.7)

Investment revenue 1.1 - 0.5

Net cash used in investing activities (445.8) (509.8) (739.6)

Issue of ordinary share capitalshare based plan exercises 2.6 1.6 2.2

Issue of ordinary share capitalnon-controlling interests - - 1.8

Net proceeds from borrowings 26.4 390.9 397.4

Repayment of borrowings and finance leases (26.0) (222.9) (271.0)

Deferred considerationfinance cost paid - (9.7) (9.7)

Interest and financing fees paid (57.2) (49.0) (111.0)

Net cash (used in)/provided by financing activities (54.2) 110.9 9.7

Net (decrease)/increase in cash and cash equivalents (8.4) 142.0 244.5

Cash and cash equivalents at beginning of the period 598.7 353.9 353.9

Effect of foreign exchange rate changes 0.9 0.9 0.3

Cash and cash equivalents at end of period 591.2 496.8 598.7

Cash and cash equivalents at end of period - continuingoperations 587.7 496.8 598.7

Cash and cash equivalents at end of period - from discontinuedoperations 3.5 - -



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Condensed consolidated statement of changes in equityAs at 30 June 2013

Sharecapital

Share

premiumaccount

Otherreserves

Mergerreserve

Retainedearnings

Attributableto equity

holders ofparent

Non-

controllingInterest

Totalequity

US$m US$m US$m US$m US$m US$m US$m US$m

Group

At 1 January 2012 18.7 918.1 26.4 179.4 64.7 1,207.3 - 1,207.3

Effect of change in accountingpolicy (Note 1) - - (36.7) - (2.5) (39.2) 37.7 (1.5)

At 1 January 2012 as restated 18.7 918.1 (10.3) 179.4 62.2 1,168.1 37.7 1,205.8

Issue of share capital 0.2 1.7 - - - 1.9 - 1.9

Share based payments - - 9.0 - - 9.0 2.6 11.6

Transfer to retained earnings - - (4.4) - 4.4 - - -

Exercise of warrants - - - - 0.2 0.2 - 0.2

Net profit for the period - - - - 100.7 100.7 (0.3) 100.4

Balance at 30 June 2012 18.9 919.8 (5.7) 179.4 167.5 1,279.9 40.0 1,319.9

Issue of share capital - 0.5 - - - 0.5 - 0.5


Reserves transfer on exerciseof options, awards and LTIP - - (0.2) - 0.2 - - -

Net profit for the period - - - - 97.7 97.7 (11.3) 86.4

Gain/(loss) on change in non-

controlling interest - - 2.1 - - 2.1 (1.1) 1.0Other comprehensive expensefor the period - - (0.9) - - (0.9) - (0.9)Balance at 31 December2012 18.9 920.3 6.9 179.4 265.4 1,390.9 31.6 1,422.5

Issue of share capital - 2.7 - - - 2.7 - 2.7


Transfer to retained earnings - - (1.0) - 1.0 - - -

Change in equity ownership ofsubsidiary - - (14.9) - - (14.9) (8.9) (23.8)

Net profit for the period - - - - 79.6 79.6 (1.1) 78.5Other comprehensive profit forthe period - - 0.4 - - 0.4 - 0.4

Balance at 30 June 2013 18.9 923.0 7.9 179.4 346.0 1,475.2 22.7 1,497.9

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Notes to the half-yearly financial statementsSix months ended 30 June 2013

1. Basis of accounting and presentation of financial information

The condensed Group interim financial statements, comprised of Afren plc (Afren) and its subsidiaries(together, the Group), have been prepared in accordance with International Accounting Standard (IAS) 34,

Interim Financial Reporting, as adopted by the International Accounting Standards Board (IASB).

Accordingly, certain information and note disclosures normally included in annual financial statements prepared

in accordance with International Financial Reporting Standards (IFRS), as issued by the IASB, have been

omitted or condensed as is normal practice. The condensed Group interim financial statements are unaudited,

and do not constitute statutory accounts as defined in sections 435(1) and (2) of the Companies Act 2006.

Statutory accounts for the year ended 31 December 2012 were published and copies of which have been

delivered to Companies House. The report of the auditors on those accounts was unqualified, did not include a

reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report,

and did not contain any statement under sections 498(2) or (3) of the Companies Act 2006.

Changes in accounting policyWith the exception of the early adoption of IFRS 10, IFRS 11, IFRS 12, IAS 27 (revised), IAS 28 (revised) and

the adoption of IFRS 13, the same accounting policies, presentation and methods of computation have been

followed in these condensed Group interim financial statements as were applied in the preparation of the

Group's financial statements for the year ended 31 December 2012. These interim financial statements should

be read in conjunction with the Groups consolidated financial statements for the year ended 31 December

2012. Details of the changes in accounting policies arising from the adoption of IFRS 10 and IFRS 11 are

discussed below. IFRS 12 relates to the disclosure of interests in other entities, and IFRS 13 establishes a

single framework for measuring fair value, replacing guidance previously included in other standards. Neither

IFRS 12 nor IFRS 13 has had a significant impact on the financial statements of the Group.

IFRS 10 Consolidated Financial Statements and IAS 27 Separate Financial StatementsIFRS 10 replaces the parts of the previously existing IAS 27 which dealt with consolidated financial statements.

As a result of adopting IFRS 10, and to ensure compliance with that standard, the Group has changed its

accounting policy for determining whether it consolidates its investees. IFRS 10 requires consideration of

whether the Group has power over an investee, exposure or rights to variable returns from its involvement with

the investee and ability to use its power to affect those returns. In particular, IFRS 10 explicitly requires that the

Group consolidates investees on the basis of de facto circumstances that give it power over the investee

irrespective of the Groups shareholding. Under previous accounting standards the Groups accounting policy

determined consolidation of investees primarily on the basis of its legal shareholding.

In accordance with the transitional provisions of IFRS 10, the Group reassessed the consolidation conclusion for

its investees at 1 January 2013. As a consequence, the Group has changed its conclusion in respect of its

investment in FHN, which was previously accounted for as an associate using the equity method. Althoughprior to May 2013 the Group owned less than half of the voting rights of the investee, the Directors have

determined that under IFRS 10 the Group has had the power to direct the relevant activities of the investee.

This is because the Group has held more voting rights of FHN than other vote holders and the Group had the

ability to cast the majority of votes at shareholder meetings due to non-attendance by some shareholders.

Accordingly, the Group has applied acquisition accounting to its original investment at 21 October 2010 as if the

investee had been consolidated from that date.

Following the conclusion that FHN should be consolidated from 21 October 2010, Afren applied the transitional

requirements of IFRS10, and restated the balance sheet as at 1 January 2012. These condensed financial

statements present restated comparative periods to include the consolidation of FHN as a subsidiary. The

effects of the change in accounting policy on the restated periods are presented in Note 14.

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1. Basis of accounting and presentation of financial informationcontinued

IFRS 11 Joint ArrangementsAs a result of adopting IFRS 11, and to ensure compliance with that standard, the Group has changed itsaccounting policy for its interests in joint ventures. Entities over which the Group exercises joint control are now

accounted for using the equity method, whereas they were previously proportionately consolidated. The Grouphas applied IFRS 11 retrospectively, in accordance with the transitional provisions, therefore 2012 results havebeen restated accordingly. On transition, the Group has collapsed the proportionally consolidated net assetvalue into a single investment. This change was not material. The effects of the change in accounting policy onthe restated periods are presented in Note 14.

Accounting policy for goodwillAs a result of the adoption of IFRS 10, the Group consolidates FHNs financial statements, which includegoodwill. Therefore, the Group has adopted the following accounting policy for goodwill:

Goodwill arising in a business combination is recognised as an asset at the date that control is acquired.Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirers previously held equ ity interest (if any) in

the entity over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilitiesassumed. Goodwill is not amortised but is reviewed for impairment at least annually.

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

2. Finance costs

Restated(1)

6 months to

6 months to

30 June 2013 30 June 2012

US$m US$m

Bank interest payable 4.7 9.7

Borrowing costs amortisation and facility fees 14.5 17.9

Interest on finance lease 3.4 4.4

Interest on loan notes 44.4 38.8

Corporate facility interest payable 1.3 1.3

Unwinding of discount on decommissioning and deferred consideration 0.9 4.0

69.2 76.1Less: capitalised interest (31.2) (18.0)

38.0 58.1


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3. Earnings per share

Period ended 30 June

Restated(1)

2013

2012

From continuing and discontinued operations

Basic 7.4c 9.4c

Diluted 6.9c 9.0c

From continuing operations

Basic 5.8c 9.5c

Diluted 5.5c 9.1c

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

Profit for the period used in the calculation of the basic and diluted earnings per sharefor continuing and discontinued operations (US$m) 79.6 100.7

Result for the period from discontinued operations (US$m) 16.1 (1.5)

Profit used in the calculation of the basic and diluted earnings per share from continuingoperations (US$m) 63.5 102.2

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

Weighted average number of ordinary shares used in the calculation of basicearnings per share 1,088,811,128 1,074,928,695

Effect of dilutive potential ordinary shares:

Share based payments schemes 60,049,344 44,998,849

Warrants 198,443 207,224

Weighted average number of ordinary shares used in the calculation of dilutedearnings per share 1,149,058,915 1,120,134,768


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4. Reconciliation of profit after tax to normalised profit after tax

6 months to 6 months to

30 June 201330 June 2012

Notes US$m US$m

Profit after tax from continuing operations 62.4 101.9

Unrealised losses/(gains) on derivative financial instruments(1)

6.0

(1.7)

Share based payment charge 15.8 5.3

Foreign exchange gains (1.6) (0.7)

Share of joint venture losses 12 25.1 -

Impairment of exploration and evaluation assets 4.6 12.2

Finance costs on settlement of borrowings - 1.8

Normalised profit after tax from continuing operations 112.3 118.8

(1) Excludes realised losses on derivative financial instruments of US$20.6 million (30 June 2012: US$17.1 million loss).

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

managements view more accurately reflects the Groups underlying financial performance. This may not be

comparable to similarly titled measures reported by other companies.

5. Taxation

6 months to 6 months to

30 June 2013 30 June 2012US$m US$m

UK corporation tax - -

Overseas corporation tax 72.0 50.2

Total current tax 72.0 50.2

Deferred tax charge 126.0 158.8

198.0 209.0

The Groups effective tax rate has increased as a result of greater losses incurred in corporate entities in whichthe related tax losses have not been recognised as deferred tax assets or which cannot be offset againsttaxable profits.

During the second half of 2013 we will continue discussions with the Nigerian Tax Authorities to finalise our taxreturns from previous periods, including discussions over the applicable tax rate. Whilst a range of outcomesare possible, we continue to believe the taxation provisions held remain sufficient.

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6. Operating segments

For management purposes, the Group currently operates in three geographical markets which form the basis of

the information evaluated by the Groups chief operating decision maker: Nigeria and other West Africa, East

Africa and Kurdistan Region of Iraq. Unallocated operating expenses, assets and liabilities relate to the general

management, financing and administration of the Group. Assets in Cote dIvoire which have been classified asheld for sale (Note 13) are included in the Nigeria and other West Africa segment for management purposes but

have been deducted in a separate column in the segmental analysis below to enable reconciliation to the

income statement and balance sheet.

Nigeria andother West

Africa East AfricaKurdistan

Region of Iraq Unallocated Held for sale Consolidated

US$m US$m US$m US$m US$m US$m

Six months to June 2013

Sales revenue by origin 818.1 - - - (21.3) 796.8

Operating gain/(loss) before derivativefinancial instruments 368.6 (0.1) (0.3) (4.2) (18.2) 345.8

Derivative financial instruments losses (15.3) - - (11.3) - (26.6)

Segment result 353.3 (0.1) (0.3) (15.5) (18.2) 319.2

Finance costs (38.0)

Other gains and losses - fair value of financialassets & liabilities 0.9

Other gains and losses - share of joint ventureloss (25.1) (25.1)

Other gains and losses - forex and investmentrevenue 3.4

Profit from continuing operations before tax 260.4

Income tax expense (198.0)

Profit from continuing operations after tax 62.4

Loss from discontinued operations 16.1

Profit for the period 78.5

Segment assetsnon-current 1,831.6 307.3 841.3 120.2 (10.5) 3,089.9

Segment assetscurrent 681.8 7.3 29.2 236.9 (37.4) 917.8

Segment liabilities (1,634.9) (39.9) (25.5) (857.4) 50.6 (2,507.1)

Capital additionsoil and gas assets 145.8 - 86.5 - - 232.3

Capital additionsexploration and evaluation 99.4 36.7 18.6 11.6 - 166.3

Capital additionsother 1.1 0.7 0.4 1.3 - 3.5

Depletion, depreciation and amortisation (199.8) - (0.3) (0.5) - (200.6)

Share of joint venture loss (25.1) - - - - (25.1)

Exploration costs write-off (4.6) - - - - (4.6)

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6. Operating segments continued



Region of Iraq Unallocated Held for Sale Consolidated

US$m (1) US$m (1) US$m (1) US$m (1) US$m (1) US$m (1)

ear to December 2012 (Restated) (1)

Sales revenue by origin 1,611.2 - - - (39.8) 1,571.4

Operating gain/(loss) before derivativefinancial instruments 709.5 (1.2) (0.1) 15.3 (3.1) 720.4

Derivative financial instruments losses (60.2) - - - - (60.2)

Segment result 649.3 (1.2) (0.1) 15.3 (3.1) 660.2


Other gains and losses - fair value of financialassets & liabilities (2.5)


Share of profit of joint venture 0.3


Income tax expense (380.0)

Profit from continuing operations after tax 188.9

Loss from discontinued operations (2.1)


Segment assetsnon-current 1,779.3 277.1 736.1 124.1 - 2,916.6

Segment assetscurrent 692.0 2.6 13.5 318.5 - 1,026.6

Segment liabilities (1,541.0) (63.9) (12.8) (903.0) - (2,520.7)


Capital additionsexploration and evaluation 152.2 67.4 25.0 0.7 - 245.3

Capital additionsother 1.4 - 1.4 2.8 - 5.6

Depletion, depreciation and amortisation (378.0) - (0.5) (1.6) - (380.1)

Exploration costs write-off (14.9) (0.1) - - - (15.0)


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6. Operating segments continued



Region of Iraq Unallocated Held for sale Consolidated

US$m (1) US$m (1) US$m (1) US$m (1) US$m (1) US$m (1)

Six months to June 2012 (Restated) (1)

Sales revenue by origin 796.4 - - - (18.0) 778.4

Operating gain/(loss) before derivativefinancial instruments 394.4 (0.3) (0.3) (10.3) (0.1) 383.4

Derivative financial instruments losses (15.4) - - - - (15.4)

Segment result 379.0 (0.3) (0.3) (10.3) (0.1) 368.0


Other gains and losses - fair value of financialassets & liabilities (0.1)



Income tax expense (209.0)Profit from continuing operations after tax 101.9

Loss from discontinued operations (1.5)


Segment assetsnon-current 1,786.6 228.1 642.7 34.5 - 2,691.9

Segment assetscurrent 665.9 3.1 9.7 155.1 - 833.8

Segment liabilities (1,241.2) (43.5) (6.7) (914.4) - (2,205.8)


Capital additionsexploration and evaluation 62.3 17.7 11.2 - - 91.2

Capital additionsother 0.6 - 0.6 0.7 - 1.9

Depletion, depreciation and amortisation (186.0) - - (0.9) - (186.9)

Exploration costs write-off (12.1) (0.1) - - - (12.2)


7. Borrowings

Ebok facility

On 22 March 2013, Afren signed a new US$300 million Ebok facility which has a three-year term and bears

interest at Libor plus 4.0-4.8 per cent. The new facility replaces the previous facility of approximately US$185

million. The new extended facility will be used to fund on-going capital expenditure and general corporate

requirements including Group loans.

During the period FHN 113, a subsidiary of Afren, utilised a US$34 million facility for the acquisition of a 9 per

cent. interest in the OML 113 licence. The facility bears interest at Libor plus 9 per cent. and has a two-year

term.

The SOCAR loan of US$50 million was repaid on 5 July 2013 in accordance with the agreement.

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8. Fair valuesThe financial instruments on the Afren balance sheet are measured at either fair value or amortised cost. Set

out below is a comparison by category of carrying amounts and fair values of all the Groups financial

instruments. The measurement of fair value can sometimes be subjective. For financial instruments carried at

fair value, the different valuation methods are called hierarchies. Afren currently only has level 2 fair value

items, which are described below;

Carrying amount Fair value

30 June 2013 30 June 2013

US$m US$m

Financial liabilities

Derivative financial instrumentsLevel 2 (47.1) (47.1)

BorrowingsEbok RBL (178.6) (170.6)

BorrowingsSocar (50.0) (50.7)

Loan notes (781.8) (971.3)(1,057.5) (1,239.7)

Level 2 fair values are measured using inputs (other than quoted prices from active markets) that are

observable for the asset or liability either directly or indirectly. Okoro commodity call options and Ebok

commodity deferred put options are valued using the forward oil price curve.

The fair value of bank borrowings (including loan notes), which are recognised at amortised cost in the balance

sheet, have been determined by discounting future cash outflows relating to the borrowings. Senior loan notes

have been discounted at 12-13 per cent. All other borrowings have been discounted at 10 per cent.

Cash and cash equivalents, trade and other receivables, trade creditors, other creditors and accruals have been

excluded from the above analysis as their fair values are equal to the carrying values.

9. Impairment charge on exploration and evaluation assetsThe charge during the period relates to Afrens share of costs for drilling Kola 1 and Kola 2 on the La Noumbi

licence in Congo Brazzaville. Both wells were drilled in the period and following the conclusion that the wells

were unsuccessful, they were plugged and abandoned.

During the period the costs associated with Afrens interest in JDZ Block 1 were impaired, further details are

provided in Note 12.

10. Contingent liabilitiesIn addition to the contingent liabilities in the annual report for the year ended 31 December 2012, the Group

entered into further letters of credit during the period totalling US$13 million in respect of East Africa related

exploration activity.

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11. Related partiesThe following table provides the total amount of transactions which have been entered into with related parties

during the six months ended 30 June 2013 and 2012.

Amounts owedSale of goods/services Purchase of goods/services to/(by) related parties

Six months Six months Six months Six months

ended ended ended ended As at As at

30 June 2013 30 June 2012 30 June 2013 30 June 2012 30 June 2013 30 June 2012

US$ m US$ m US$ m US$ m US$ m US$ m

St John Advisors Ltd - - 0.1 0.1 - -

STJ Advisors LLP - - 0.1 0.1 - -

St John Advisors Ltd and STJ Advisors LLP are the contractor companies for the consulting services of John St.

John, a Non-Executive Director of Afren, for which they receive fees, including contingent completion and

success fees, from the Company. Both St John Advisors and STJ Advisors LLP also receive monthly retainersof 18,000 and 36,000 under contracts which started from 27 June 2008 and 15 December 2011 respectively.

The contracts have a twelve month period which automatically continues unless terminated by either party.

12. Share of joint ventureDuring the period, the Group recognised a loss from its share in joint ventures of US$25.1 million. The loss

comprises the write-off of the Groups interest in joint ventures of US$7.7 million and impairment of amounts

receivable from the joint venture of US$17.4 million. This predominantly relates to the impairment of exploration

and evaluation assets in respect of JDZ Block 1. It is anticipated that the Groupsinterest in the licence will be

relinquished in the second half of 2013 and therefore the associated costs have been impaired.

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13. Non-current assets held for sale and discontinuedoperations

The assets and liabilities related toAfren Cote dIvoire Limited and Lion GPL SA, which hold Afrens interest in

the CI-11 block and Lion Gas Plant, have been classified as held for sale following the signing of an agreement

to sell the entities to a third party on 16 May 2013. Consideration for the sale is US$26.5 million, subject toworking capital adjustments, of which US$15.3 million will be settled in cash and the balance of US$11.2 million

settled through the assumption of certain liabilities. Completion of the transaction is expected in the second half

of 2013.

Assets of disposal group classified as held for sale

30 June 2013

US$m

Property, plant and equipment 10.5

Trade and other receivables 30.8Inventories 3.1

Cash and cash equivalents 3.5

47.9

Liabilities of disposal group classified as held for sale

30 June 2013

US$m

Trade and other payables (40.0)

Provision for decommissioning (10.6)

(50.6)

An analysis of the result from discontinued operations is presented below:

Six months to Six months to

30 June 2013 30 June 2012

US$m US$m

Revenue 21.3 18.0

Expenses (3.3) (18.1)

Profit before tax from discontinued operations 18.0 (0.1)

Taxation (1.9) (1.4)

Profit after tax from discontinued operations 16.1 (1.5)

An analysis of the cash flows from discontinued operations is presentedbelow:

Six months to Six months to

30 June 2013 30 June 2012

US$m US$m

Cash flow from operating activities 2.7 15.9

Cashflow from investing activities (0.1) (0.1)

Cashflow from financing activities - -

2.6 15.8

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14. Effect of change in accounting policiesAs discussed in Note 1, the financial performance and position of the Group has been restated for the six

months ended 30 June 2012 and the year ended 31 December 2012 to reflect the adoption of IFRS 10 and

IFRS 11. The quantitative impact on the prior period financial statements of adopting these standards is set out

in the following tables. The adoption of IFRS 10 has resulted in the consolidation of FHN as a subsidiary in all

comparative periods restated. The adoption of IFRS 11 has had an effect on the accounting for Afrens two joint

ventures held through Afren Global Energy Resources Limited and Dangote Energy Equity Resources Limited.

Adjustments to the consolidatedbalance sheet

31 December2012 as

previouslystated

Adoptionof IFRS 10

Adoptionof IFRS 11

31 December2012 asrestated

US$m US$m US$m US$m

Assets

Intangible oil and gas assets 875.9 0.9 (25.5) 851.3

Property, plant and equipment 1,703.8 149.2 - 1,853.0Goodwill - 115.2 - 115.2

Derivative financial instruments 10.4 (10.4) - -

Investments 16.6 (15.7) - 0.9

Investments in joint ventures - - 7.8 7.8

Trade and other receivables 262.7 46.8 16.6 326.1

Cash and cash equivalents 524.8 73.9 - 598.7

Liabilities

Trade and other payables (429.2) (57.2) 1.1 (485.3)

Current borrowings (189.4) (27.0) - (216.4)

Current tax liabilities (155.8) (0.6) - (156.4)

Derivative financial instruments - current (14.0) (17.3) - (31.3)

Deferred tax liabilities (383.9) (93.7) - (477.6)

Provision for decommissioning (36.7) (2.7) - (39.4)Non-current borrowings (823.9) (119.7) - (943.6)

Derivative financial instruments - non-current (6.7) (3.1) - (9.8)

Other payables - (43.5) - (43.5)

Equity

Other reserves 35.9 (29.0) - 6.9Retained earnings 272.9 (7.5) - 265.4

Non-controlling interest - 31.6 - 31.6

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14. Effect of change in accounting policies continued

Adjustments to the consolidated cash flowstatement

31 December2012 as

previously statedAdoption

of IFRS 10Adoption

of IFRS 11

31December

2012restated

US$m US$m US$m US$m

Operating profit for the period from continuingand discontinued operations 675.4 (11.8) (0.3) 663.3

Depreciation, depletion and amortisation 374.4 5.7 - 380.1Unrealised losses on derivative financialinstruments 6.7 13.3 - 20.0Impairment charge on exploration and evaluationassets 19.7 - (4.7) 15.0

Share based payments charge 17.3 12.1 - 29.4

Increase in trade and other operating receivables (231.3) (20.6) - (251.9)

Increase in trade and other operating payables 78.6 45.6 - 124.2

Purchases of property, plant and equipment (389.6) (4.9) - (394.5)

Exploration and evaluation expenditure (136.7) (6.0) 4.7 (138.0)

Issue of subsidiary's share capital to non-controlling interest - 1.8 - 1.8

Net proceeds from borrowings 403.4 (6.0) - 397.4

Repayment of borrowings and finance leases (264.2) (6.8) - (271.0)

Interest and financing fees paid (101.0) (10.0) - (111.0)

Net increase in cash and cash equivalents 232.4 12.4 (0.3) 244.5Cash and cash equivalents at beginning of theperiod 291.7 62.2 - 353.9

Effect of foreign exchange rate changes 0.7 (0.4) - 0.3

Cash and cash equivalents at end of period 524.8 74.2 (0.3) 598.7

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Adjustments to the consolidatedincome statement

Year ended31 December

2012 aspreviously

stated

Adoptionof IFRS

10

Adoptionof IFRS

11

Disposalgroup

held forsale

Year ended31

December2012 asrestated

US$m US$m US$m US$m US$m

Revenue 1,498.8 112.4 - (39.8) 1,571.4

Cost of sales (742.6) (70.8) - 32.5 (780.9)

Administrative expenses (34.6) (19.9) (5.0) 4.4 (55.1)

Other operating expenses:

derivative financial instruments (31.2) (29.0) - - (60.2)service fees receivable fromassociate company 4.7 (4.7) - - -

impairment of exploration andevaluation assets (19.7) - 4.7 - (15.0)

Investment revenue - 1.6 - - 1.6

Finance costs (72.8) (18.5) - 0.5 (90.8)

Other gains and (losses)foreign currency gains - (0.9) - 1.0 0.1gain on derivative financialinstruments - options over shares inassociate company 0.2 (0.2) - - -

Share of joint venture profit - - 0.3 - 0.3Dilution gain on investment inassociate company 0.8 (0.8) - - -Share of profit/(loss) of associatecompany (6.9) 6.9 - - -

Income tax expense (390.8) 7.3 - 3.5 (380.0)

Profit for the period 203.4 (16.6) - - 186.8Attributable to:

Equity holders of Afren plc 203.4 (5.0) - - 198.4

Non-controlling interests - (11.6) - - (11.6)

203.4 (16.6) - - 186.8


Basic 18.7 (0.1) - - 18.6

Diluted 17.9 (0.2) - - 17.7Earnings per share from all activities

Basic 18.7 (0.3) - - 18.4

Diluted 17.9 (0.3) - - 17.6

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Adjustments to the consolidatedbalance sheet

30 June 2012 aspreviously

statedAdoption

of IFRS 10Adoption

of IFRS 1130 June 2012

as restated

US$m US$m US$m US$m

Assets

Intangible oil and gas assets 792.8 - (27.9) 764.9Property, plant and equipment 1,658.3 144.9 - 1,803.2

Goodwill - 115.2 - 115.2

Derivative financial instruments 13.7 (12.4) - 1.3

Investments in associates 22.0 (22.0) - -Investments in joint ventures - - 7.3 7.3

Inventories 59.7 0.9 - 60.6

Trade and other receivables 219.2 38.6 18.6 276.4

Cash and cash equivalents 443.7 53.2 (0.1) 496.8

Liabilities

Trade and other payables (323.1) (16.0) 2.1 (337.0)Current borrowings (201.5) (6.8) - (208.3)

Derivative financial instruments - current (6.7) (7.3) - (14.0)

Deferred tax liabilities (288.8) (96.3) - (385.1)

Provision for decommissioning (31.2) (2.6) - (33.8)

Non-current borrowings (824.7) (142.9) - (967.6)

Derivative financial instruments - non-current (7.6) 0.3 - (7.3)

Other payables - (43.5) - (43.5)

Equity

Other reserves 29.0 (34.7) - (5.7)

Retained earnings 169.5 (2.0) - 167.5

Non-controlling interest - 40.0 - 40.0

Adjustments to the consolidated cash flow statement30 June 2012 as

previously statedAdoption of

IFRS 1030 June 2012

restated

US$m US$m US$m

Operating profit for the period from continuing anddiscontinued operations 363.9 4.2 368.1

Depreciation, depletion and amortisation 181.1 5.8 186.9

Unrealised losses on derivative financial instruments (3.2) 1.5 (1.7)

Share based payments charge 4.3 1.0 5.3

Increase in trade and other operating receivables (75.5) (23.3) (98.8)

Increase in trade and other operating payables 35.5 15.0 50.5

Purchases of property, plant and equipment (190.4) (6.2) (196.6)Exploration and evaluation expenditure (103.5) (1.8) (105.3)(Increase)/decrease in inventories - spare parts andmaterials (18.0) (0.9) (18.9)

Interest and financing fees paid (44.8) (4.2) (49.0)

Net increase in cash and cash equivalents 150.9 (8.9) 142.0

Cash and cash equivalents at beginning of the period 291.7 62.2 353.9

Effect of foreign exchange rate changes 1.1 (0.2) 0.9


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Adjustments to the consolidatedincome statement

Period ended30 June 2012as previously

statedAdoption of

IFRS 10

Disposalgroup held

for sale

Periodended

30June 2012as restated

US$m US$m US$m US$m

Revenue 771.7 24.7 (18.0) 778.4

Cost of sales (375.6) (7.9) 15.8 (367.7)

Administrative expenses (13.4) (3.9) 2.2 (15.1)

Other operating expenses

derivative financial instruments (9.1) (6.3) - (15.4)service fees receivable from associatecompany 2.5 (2.5) - -

Investment revenue 0.1 0.3 - 0.4

Finance costs (49.1) (9.2) 0.2 (58.1)

Other gains and (losses)

foreign currency gains 1.1 (0.3) (0.1) 0.7

Share of profit/(loss) of associate company 0.2 (0.2) - -Income tax expense (215.9) 5.5 1.4 (209.0)

Profit for the period from discontinuedoperations - - (1.5) (1.5)

Profit for the period 100.2 0.2 - 100.4

Equity holders of Afren plc 100.2 0.5 - 100.7

Non-controlling interests (0.3) - (0.3)

100.2 0.2 - 100.4


Basic 9.3 0.2 - 9.5Diluted 9.0 0.1 - 9.1Earnings per share from all activities

Basic 9.3 0.1 - 9.4Diluted 9.0 - - 9.0

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15. Post balance sheet events

FHN further acquisition

On 5 July 2013, Afren announced the acquisition of an additional 23.3 per cent. of the outstanding share capital

of FHN from a combination of Capital Alliance Energy Nigeria Limited (CAPE), Earl Act Global Investments

Limited and other FHN shareholders (excluding any related parties) for a total consideration of US$105.4 million

with US$22 million payable on the first anniversary and US$22 million on the second anniversary, in each caseto CAPE. Following this transaction, Afren held a 78 per cent. beneficial interest in FHN. On 5 July 2103, Afren

also announced that it has entered into a put/call option with Earl Act Global Investments Limited for an

additional 18,299,993 FHN shares (representing a further 12.5 per cent. of the outstanding share capital of

FHN) at a price of US$3.32 per share. These options may only be exercised after 24 months and for a period of

6 months thereafter.

Redemption of convertible loan note

On 5 July 2013 the Group redeemed convertible loan notes issued by FHN in 2011. US$50m of senior

unsecured unsubordinated convertible notes were issued by FHN in September 2011 to fund ongoing

development activities. The loan notes could have been converted to shares in FHN at any time from the date of

issue until maturity (2017) in minimum tranches of US$5 million, at a conversion price of US$1.85 per share,which equated to approximately 27 million FHN shares. If not previously repaid or redeemed, the notes would

be redeemed by FHN at maturity at a premium of 200 per cent. of the par value of the notes. The notes were

redeemed for US$62.5 million. At 30 June 2013, the liability component of the convertible notes had a value of

US$56.3 million in the Afren group balance sheet and US$2.5 million was included in other equity reserves.

Repayment of borrowings

The SOCAR loan of US$50 million was repaid on 5 July 2013 in accordance with the terms of the agreement.

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Advisors and Company Secretary

Company Secretary and Registered Office

Shirin Johri & Elekwachi Ukwu

Afren plc

Kinnaird House

1 Pall Mall East

London SW1Y 5AU

Legal Advisers

White & Case LLP

5 Old Broad Street

London EC2N 1DW

www.whitecase.com

Sponsor and Joint Broker

Bank of America Merrill Lynch

2 King Edward Street

London EC1A 1HQ

www.ml.com

Dr Ken Mildwaters

Walton House

25 Bilton Road

Rugby CV22 7AG

Joint Broker

Morgan Stanley20 Bank Street

London E14 4AD

www.morganstanley.com

Principal Bankers

HSBC Bank PLC60 Queen Victoria Street

London EC4N 4TR

www.hsbc.co.uk

Auditors

Deloitte LLP

Chartered Accountants and Registered

Auditors

2 New Street Square

London EC4A 3BZ

www.deloitte.com

Financial PR Advisers

Pelham Bell Pottinger

5th Floor

Holborn Gate

330 High Holborn

London

WC1V 7QD

www.pelhambellpottinger.co.uk

Registrars

Computershare Investor Services PLC

PO Box 82, The Pavilions

Bridgwater Road

Bristol BS99 7NH

www.computershare.com
http://www.deloitte.com/http://www.deloitte.com/http://www.deloitte.com/

Documents

Afren 1H13