Heavy duty tools+vehicles arrive Bosaso port for the Oil Exploration

[AfricaOwn]

Originally posted by Sakhar:

JB brother if we find something rest assured that we will share adequately with not only you but all the needy Somalis.

 

LOL..SL is not looking for anything from you guys. They want that recognition more then anything.

[N.O.R.F]

Excuse my layman like observation but I can't see any drilling equipment in the pics (trucks don't dig for oil). However, good luck with the exploration.

 

*puts helmet on*

[Fabregas]

^^ Who cares saxiib, the white people came!

[Thankful]

Drilling equipment? This is a major misconception that is continuously made. We are not drilling for oil or trying to extract it. Which is exactly why so many people are in favor of it. This is to simply EXPLORE WHETHER OR NOT THERE IS ACTUAL OIL AND OTHER SIGNIFICANT MINERAL DEPOSITS. That's it, you are right the drills to take oil out are larger. But they are not required. Plus there is still equipment on its way. Taking oil out will come at a much later time (maybe by another admin) considering there is proven to be any.

 

General Duke, for sure this is a very good development. I hear that in Bosasoo they've banned tint on windows of cars, and there are security check points all over. The security is improving Alhamdulilah, but there are many enemies out there from all over that are still determined to stop all this progress. Insha'Allah they won't be successful! Puntland has a huge border and coastline to protect!

 

With that being said, our elections must be held on time and there there will be no excuse for them not to be.

[N.O.R.F]

My bad. I thought the surveys had already been done.

[Miskiin-Macruuf-Aqiyaar]

Baasuukeyaal lagu weerararay booyad ay leedahay mid ka mid ah shirkaddaha Puntland ka baaraya shidaalka oo mareysay gudaha Boosaaso

 

Magaalada Boosaaso ee gobolka Bari oo ka mid ah magaaloyinka waaweyn ee maamulka Puntland ayaa waxaa xalay fiidnimadii ka dhacay weerar loo adeegsaday baasuukeyaal oo kooxo hubeysan oo aan la garaneynin ay la beegsadeen booyad ay leedahay mid ka mid ah sirkadaaha shidaalka iyo macdanta ka baaraya qeybo ka mid ah deegaanada Puntland oo dhexmareysay magaaladaasi Boosaaso.

 

Sida warku sheegayo baasuukeyaashan oo labo saalbo ahaa ayaa lala waayey booyada, waxaana mid ka mid ah labadaasi xabadood ee ka dhacda qoriga baasuukaha ku habsaday sandaqad ganacsi oo ku tiilay meel ka dambeysa halka ay booyadu mareysay, taasoo hase ahaatee xiligaasi xirneyd, wax dad ah oo ku dhex sugana aysan jirin, iyadoo xabadii kale baasuukaha aheydna ay ku dhacday meel banaan.

 

Ilaa hadda lama soo sheegin wax qasaare nafeed ah oo ka dhashay baasuukyshaasi lagu weeraray booyada ay laheyd mid ka mid ah shirkadaha shidaalka baaraya maamulka Puntland oo magaceeda lagu sheegay IMC, hase ahaatee qaar ka mid ah saraakiisha maamulkaasi ayaa sheegay iney ku raad joogaan kooxihii ka dambeeyey weerarkaasi oo ahaa mid si weyn looga hadal hayey magaalada Boosaaso.

 

Xigasho

[Miskiin-Macruuf-Aqiyaar]

Africa Oil Corp. equipment under attack in Somalia

 

Exploration equipment reportedly contracted by a Canada-based oil company undocked at the port of Bossaso Sunday, but emerging reports tell Garowe Online that disgruntled militia have already launched their first strike.

 

The equipment included construction trucks of the old variety, along with trucks transporting water and petroleum to a location east of Bossaso where Africa Oil Corp. has set up an operations camp in the self-governing Puntland province of northeastern Somalia.

 

A Bossaso port source privately told Garowe Online that some of the trucks were "old and looked to be in bad condition," but that the contractor had "repainted" the trucks to give them a newer look.

 

Photographs of the equipment were splashed across Puntland government-affiliated Web sites, showing older trucks being unloaded as heavily-armed soldiers kept watch.

 

Hassan "Allore" Osman, Puntland's oil minister, told the media that Africa Oil will begin exploration activities in the region soon – marking the first such endeavor to be undertaken in the lawless Horn of Africa country since the late 1980s when American and European companies collected exploration data.

 

The bold exploration effort – engineered under the leadership of Puntland President Adde Muse – has faced numerous political and security obstacles since its inception in mid-2005.

 

Violence

 

On Sunday night, three of the trucks that were unloaded from a container ship docked at the port of Bossaso underwent mechanical problems and became stuck inside Bossaso, witnesses reported.

 

The trucks reportedly stopped working somewhere between Hotel Panorama and the Golis telecommunications company headquarters.

 

At around 11:30pm local time, unidentified militiamen attacked the location where there were reports of an exchange of gunfire.

 

Emerging reports have indicated that the attackers successfully hit one of the trucks with a rocket launcher, setting the truck on fire.

 

It was also immediately unclear who the attacking militiamen were, but the strike comes on the heels of widespread reports that unhappy clans have organized militias to counter the Puntland-Africa Oil drive to dig for Somalia's unproven oil reserves.

 

In unrelated development, an armored vehicle traveling between Bossaso and the Africa Oil operations camp 90km east exploded yesterday, wounding five militiamen on board.

 

Medical sources confirmed that the wounded militiamen were transported to Bossaso under a shroud of secrecy and are being treated for their injuries.

 

The cause of the explosion could not be independently ascertained, but some reports indicated that the vehicle hit a landmine secretly planted along the vital road.

 

Other reports said one of the militiamen accidentally dropped a grenade inside the vehicle.

 

As reported by Garowe Online last week, Africa Oil and its partners in the government of Puntland have established a private militia force to safeguard the Canadian company's operations in Somalia.

 

The wounded men are part of that private militia, which remains untrained and ill-prepared to deal with the daunting security challenges ahead.

 

Challenges ahead

 

Exploration in Puntland is a nationally-sensitive topic across Somalia, as discord lingers within government halls in Mogadishu and Garowe, the capital of Puntland.

 

Most recently, Somali lawmaker Asha Abdalla openly criticized interim President Abdullahi Yusuf for endorsing the Puntland-Africa Oil deal.

 

MP Abdalla hails from Sanaag, a northern region etched between Puntland and the self-declared Republic of Somaliland.

 

In early 2006, Sanaag was the scene of fierce fighting between clan militia opposed to exploration and Puntland security forces. The violence forced Africa Oil's joint venture partner, Australian mining firm Range Resources, to suspend operations in Puntland.

 

But even with President Yusuf's endorsement, serious challenges lay ahead for any meaningful exploration effort in Puntland.

 

Many of the region's armed clans remain opposed to the exploration project, citing legitimate concerns including Puntland leader Muse's mismanagement of public funds and his negligent attitude towards the region's powerful clans.

 

Somalia has been mired in political turmoil and armed conflict since 1991, when the country's last effective ruler was ousted from power by clan warlords.

 

In December 2006, Ethiopian troops backing Yusuf's weak interim government invaded Somalia's southern regions to dislodge Islamist rulers from Mogadishu.

 

Remnants of that Islamist movement have been held responsible for guerrilla attacks targeting government troops and officials across the country since, including in Mogadishu and Bossaso.

 

Critics say Somalia needs a stable government and the return of order first before oil exploration can begin.

 

Nigeria, Africa's top producer of crude oil and one of the continent's strongest governments, has been witness to relentless rebel attacks on oil installations that have destabilized that part of West Africa.

 

Xigasho

[Jacaylbaro]

That is what i expected ........ should i expect more ?? ,,

 

Allah ha sahlo ..........

[Jacaylbaro]

Gaadhigii Xassan Daahir Afqudhac oo baasuuke lala helay,iyo Diyaano oo isna gurigiisii la qarxiyey

 

 

Warar caawa goor dhoweyd naga soo gaadhay magaalada Boosaaso ayaa waxay sheegayaan in qaraxyo isdaba joog ahi ay ka dhaceen magaalada Boosaaso,kuwaas oo lala beegsaday madaxweyne-ku-xigeenka Xassan Daahir Afqudhac iyo taliyaha ciidanka nabasugida PIS(Ashahaado la dirirka)Mr Diyaano.

 

Qaraxyadan oo aan ilaa hada aan cadayn cida wax ku noqotay ayaa waxa naloo sheegay in gaadhiga Xassan Daahir oo marayey wadada gasha madaxtooyada lala beegsaday qarax lagu sheegay inuu ahaa Baasuuke,isagoo lala helay gaadhigaas,mana cada cida saarnayd iyo cida wax ku noqotay toona.

 

Waxaa isna qarax kaas lamid ah lala helay guriga taliyaha ciidamada sirdoonka PL (PIS) Cisamaan Diyaano,iyadoo aan la soo sheegin inuu ku sugnaa guriga markaas iyo inkale,iyo cida wax ku noqotay toona.

 

Ciidanka ayaa xidhay wadadaas,oo hada aan cidna u ogolayn inay ogaadaan dadka wax ku noqday qaraxyadaas,iyadoo dhamaan la xidhay wadooyinka u dhow madaxtooyada.

 

Xaalada magaalada Boosaaso ayaa caawa ku jirta xaalad kacsan,iyadoo rasaas goos goos ah,iyo dhawaqa madaafiicda la maqlayo.

 

Waxaa sidoo kale xalay lala beegsaday qarax booyad ay leedahay shirkada shidaalka ka baadhaysa gobolka Bari,oo qalab badan kala soo degtay dekeda Boosaaso.

 

Wararka oo faahfaahsan ha ka fogaan Afnugaal.com.

 

 

Afnugaal News Desk

[Thankful]

Now that work has actually begun and those opposing it could do nothing to stop it. Expect far more negative articles written. It's the only thing they can do now.

[Jacaylbaro]

I told you something will happen ,, i didn't expect it will happen that soon but it happened and it will continue from there believe me. I don't want that region to fall in the same trouble that devosstated the South. This oil thing is a monkey business and who nations were demolished coz of it ,,,,,,,,,,,,,,

 

Allah ha sahlo lakin arimahaasi qaar imika la isku furfuro may ahayn but if you don't wanna listen then continue and don't cry later.

[Thankful]

The news is NONESENSE. There are people who want to flood negative news every chance they get. They even tried to say the President will extend his term, that Abdullahi Yusuf and he had a secret agreement. Complete lies, there is Peace in Puntland, there always has been. The area the trucks are headed are welcomed by the people. I agree there are many enemies from all over that want to end this.

 

What's monkey business is a so called country claiming to be a democracy and having their president extend his term by a year for absolutely no reason. Without even allowing any independant ELECTED body vote. You have no clue the damage it has done to your already weak cause.

[Jacaylbaro]

The area the trucks are headed are welcomed by the people

YES,,, With Bazukas and RBJ-7 ,,, what a welcome indeed.

 

 

The news is reported in your own sources sxb ,,, the same ones that posted the photos you are using here ............

[Jamster]

AFRICA OIL CORP.

(formerly Canmex Minerals Corporation)

CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2007 and 2006

 

Africa Oil Corp.

Annual Report

For the Year Ended December 31, 2007

To our Shareholders,

Africa Oil Corp. holds an 80% interest in two large oil exploration licenses encompassing the Dharoor and

Nogal Valleys in the state of Puntland in northern Somalia. Both blocks are considered world-class

exploration plays with petroleum systems geologically similar to and formerly contiguous with those in the

prolific oil producing Republic of Yemen. During the year, the Company made excellent progress

advancing its exploration efforts on these two highly prospective concessions.

Dharoor and Nogal Oil Exploration Projects, Puntland

A comprehensive seismic reprocessing program, including review and integration of all geophysical and

geological data, was successfully completed on the Nogal block. The data from the Nogal block were

more than sufficient to enable mapping of the block and prospect generation.

At the Dharoor block, previous seismic coverage was insufficient and, therefore, the Company

designed a comprehensive survey of approximately 2,600 kilometres of 2D data to cover the

prospective area of the concession. Invitations to bid were issued and the successful bidder was

IMC/Tesla of the UK and Canada. The contract was executed and the crew is currently mobilizing to

Puntland with recording scheduled to begin in May 2008.

A drill location was chosen on the Nogal block as the Company’s first exploration well. A drill rig was

sourced and signed with ETP of Indonesia to commence drilling in July, 2008. The contract is for 2

firm wells and 2 contingent wells.

However, during the last few weeks, the security situation in Somalia has deteriorated and there has

been a corresponding decrease in stability. While this situation is not directly affecting operations in

the Nogal area, the Company considers it prudent to delay the start of the drilling program and give

the Puntland Government freedom to deal with the situation effectively. We are continuing to work

closely with the Puntland Government and will reinstate the drilling campaign as soon as possible. In

the meantime, operations in the Dharoor region are unaffected and recording of the seismic program

will commence in May as planned.

While we are disappointed in having to delay our drilling program, it is a minor setback and should not

prevent us from satisfying our commitments and fulfilling our obligations under the Production Sharing

Agreements. The first exploration period lasts until January, 2010 and, as a result, we have ample

time to drill the two wells committed during that initial period. We remain very excited at the prospect

of applying lessons learned in Yemen to these world class basins and optimistic that our program will

be successful.

Corporate

The Company’s name change to Africa Oil Corp. became effective August 20, 2007. The Company now

trades on the TSX Venture Exchange under the symbol “AOI”.

The Company has added another key member to its technical team. Mr. Paul Colyer has joined the

Company as Drilling Manager. Mr. Colyer, considered one of the top drilling managers in the industry,

brings over 35 years of experience to the Company. Mr. Colyer has spent the greater part of his career at

Occidental Petroleum and has drilled and managed drill programs in both Yemen and Somalia.

In addition, Mr. Darren Moulds was appointed Chief Financial Officer of the Company effective March 31,

2008. Mr. Moulds brings to Africa Oil nine years of financial experience in the oil and gas sector. He is a

United States Certified Public Accountant (Illinois) and a graduate of the University of Saskatchewan

where he obtained a bachelor of commerce degree. Mr. Moulds replaces Ian Gibbs, who has resigned to

focus on his full-time role as CFO of Tanganyika Oil Company Ltd.

The Company looks forward to a successful venture in Puntland and will continue as well to review other

opportunities in Africa and beyond as part of an aggressive growth strategy.

On Behalf of the Board

Richard Schmitt

President and CEO

April 25, 2008

- 2 -

AFRICA OIL CORP.

(Formerly Canmex Minerals Corporation)

MANAGEMENT’S DISCUSSION AND ANALYSIS

(Amounts expressed in United States dollars unless otherwise indicated)

For the YEARS ENDED December 31, 2007 AND 2006

On August 20, 2007, the Company changed its name from Canmex Minerals Corporation to Africa Oil

Corp.

Management’s discussion and analysis (“MD&A”) focuses on significant factors that have affected

Africa Oil Corp. and its subsidiaries (the “Company” or “AOC”) and such factors that may affect its

future performance. In order to better understand the MD&A, it should be read in conjunction with

the Company’s audited consolidated financial statements for the years ended December 31, 2007 and

2006 and related notes thereto.

The financial information in this MD&A is derived from the Company’s consolidated financial

statements which are prepared in accordance with Canadian generally accepted accounting principles.

The significant accounting policies are outlined within Note 3 to the consolidated financial statements

of the Company.

The effective date of this MD&A is April 28, 2008.

Additional information about the Company and its business activities is available on SEDAR at

www.sedar.com.

GENERAL

Africa Oil Corp. (“AOC”) is a Canadian-based company whose common shares are traded on the TSX

Venture Exchange under the symbol “AOI”. The Company is an international oil and gas exploration

and development company based in Canada with oil and gas interests in Somalia.

During the first quarter of 2007, AOC entered into Production Sharing Agreements (“PSAs”) and Joint

Venture Agreements acquiring an 80% interest in licenses covering an area of 81,000 square

kilometers in the highly prospective Dharoor Valley and Nogal Valley Blocks in the state of Puntland in

northern Somalia. These blocks are considered world-class exploration plays with a petroleum system

identical to and formerly contiguous with those within the Republic of Yemen.

AOC acquired its 80% participating interest in the blocks from Range Resources Ltd. (“Range”), a

public company listed on the Australian Stock Exchange. As consideration for its participating

interest, the Company paid Range $5,000,000 and assumed the obligation to solely fund $22,750,000

of joint venture costs on each of the blocks ($45,500,000 in total for both blocks) during the

exploration period. In the event that a commercial discovery is declared on a block prior to AOC

spending $22,750,000, AOC shall be deemed to have earned its interest in the block and the Company

and Range will be responsible for future expenditures on the block in proportion to their respective

working interests. In the event that AOC does not fund the required $22,750,000 during the two

three-year exploration periods, the Company’s interest in the block would be forfeited. An additional

$3,500,000 will be payable to Range upon commencement of commercial production.

- 3 -

OPERATIONS UPDATE

Drilling Rig Contract

Subsequent to year end, AOC entered into a contract for a drilling rig to begin drilling in its Puntland

concessions in 2008. The contract covers the drilling of two wells with an option to drill two additional

wells.

The contracted 2,000 Horse-power rig is a new package being constructed in the Shengli fabrication plant

in Dongying, China. The rig is scheduled for shipment in mid May, 2008 and will mobilize in Jebel Ali,

Dubai.

AOC has decided to delay the start of its 2008 drilling programme due to the deteriorating security

situation in Somalia and as a result is working with the contractor to delay the delivery of the contracted

drilling rig.

Seismic Program

In the Nogal Block, AOC has acquired all of the more than 4,000 kilometres of good quality 2D data

which was recorded in the late 1980's. This has enabled the Company to work up an inventory of drilling

prospects from which the first two well locations will be selected.

At the Dharoor Block, existing seismic data is believed to be insufficient and as such, the Company has

finalised a contract for shooting approximately 2,600 kilometres of 2D seismic. The seismic crew is

expected to commence acquisition in Puntland in early May 2008.

Selected Annual Information

Year ended Year ended Year ended

December 31 December 31 December 31

2007 2006 2005

Statement of Operations Data

Interest income 3 54,134 1 74,698 27,020

Net earnings (loss) 1,163,590 (782,915) (433,868)

Data per Common Share

Basic and diluted earnings (loss) per share

($/share) 0.07 ( 0.06) ( 0.07)

Balance Sheet Data

Net working capital 17,807,961 5,786,342 2,478,036

Total assets 25,035,587 5,823,228 2,825,159

Long term liabilities - - -

- 4 -

Selected Quarterly Information

Financial Data for 8

Quarters

Three months ended Dec 31 Sept 30, Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,

2007 2007 2007 2007 2006 2006 2006 2006

Interest Income ($'000) 9 6 121 112 2 5 49 50 63 1 3

Net earnings (loss) ($'000) (241) 656 783 (34) (767) 33 ( 19) (30)

Basic and diluted earnings

(loss) per share ($) (0.02) 0.04 0.05 0 .00 (0.06) 0.00 0.00 0 .00

The Company recorded a net loss of $241,000 during the fourth quarter of 2007 as a result of

increased expenditures for additional staff costs, consulting and travel costs in connection with the

Company’s progress on the 2008 exploration plan. Expenses will continue to increase through 2008

as the Company employ’s additional staff following the first quarter 2007 signing of the Dharoor

Valley and Nogal Valley Production Sharing Agreements and the gearing up for planned exploration

activities during 2008.

Positive earnings during the second and third quarter of 2007 were due to recognized exchange gains,

mostly attributable to the Company’s large Canadian dollar cash position during these periods and the

strengthening of the Canadian dollar versus the US dollar.

The $767,000 loss incurred during the fourth quarter of 2006 was mainly due to $671,531 of stock

based compensation charges during the quarter combined with increased employment related costs

due to increased head count.

RESULTS OF OPERATIONS

Year ended Year ended

December 31, 2007 December 31, 2006

Profit (loss) for the period 1,163,590 (782,915)

Less: exchange gain 2,546,989 3,915

Profit (loss) before foreign exchange (1,383,399) (786,830)

Before exchange gains and losses the Company incurred a $1,383,399 loss during the year ended

December 31, 2007. Total expenses were $1,737,533 during 2007, compared to $961,528 during the

2006. The increase in expenses relates primarily to increased salary, stock based compensation and

travel expenses. Expenses are expected to increase during 2008 as the Company begins actively

exploring for oil in Somalia.

The Company is currently a non-revenue generating international oil and gas company with interests

in exploration stage oil properties. Accordingly, losses are expected to continue.

- 5 -

OIL AND GAS INTEREST

December 31, 2006

Acquisition

Geological and

Geophysical Total Total

Somalia 5,500,000 1,369,106 6,869,106 -

December 31, 2007

AOC incurred geological and geophysical expenses relating to purchasing and reinterpreting previously

acquired seismic data on the Dharoor Valley and Nogal Valley blocks.

LIQUIDITY AND CAPITAL RESOURCES

As at December 31, 2007, the Company had cash of $18.1 million and working capital of $17.8 million

as compared to cash of $2.9 million and working capital of $5.8 million at December 31, 2006. The

increase of $12.0 million in working capital during the year is primarily due to $17 million net private

placement proceeds being offset by the $5.0 million payment to Range as consideration for the

Company’s participating interest in the Dharoor Valley and Nogal Valley Blocks and $500,000 paid to

the Somalia government for annual bonuses as required under the Production Sharing Agreements.

On April 3, 2007 and April 5, 2007, AOC closed two tranches of a private placement consisting of an

aggregate 4.0 million common shares of the Company at a price of CAD$5.00 per share, for gross

proceeds of CAD$20.0 million. These funds will be used to explore the Dharoor Valley and Nogal

Valley Blocks in the state of Puntland in northern Somalia under the terms of the PSAs and for general

corporate purposes.

The Company’s current working capital position may not provide it with sufficient capital resources to

meet its minimum work obligations for the initial three year exploration period under the PSAs,

participation agreement and for general corporate purposes. To finance its future acquisition,

exploration, development and operating costs, AOC may require financing from external sources,

including from the sale of equity and debt securities. There can be no assurance that such financing

will be available to the Company or, if available, that it will be offered on terms acceptable to AOC.

FINANCIAL INSTRUMENTS

The carrying amount of financial instruments comprising cash and cash equivalents, term deposits,

accounts receivable and accounts payable and accrued liabilities approximate their fair value due to

the immediate or short-term nature of these items.

RELATED PARTY TRANSACTIONS

The Company has entered into transactions with a related party, which were measured at the

exchange amounts. The Company paid $153,962 (2006 - $58,196) to a private corporation owned by

the former President and Director of the Company, pursuant to a services agreement.

DISCUSSION OF PROPOSED TRANSACTIONS

The Company is currently evaluating new business opportunities but none that are considered to be

probable to close in the immediate future.

- 6 -

OUTSTANDING SHARE DATA

As at April 25, 2008, the Company had 17,542,812 common shares outstanding and 857,100 stock

options outstanding under its stock based compensation plan.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements.

Changes in Functional Currency and Accounting Policies

As a result of its increased focus on international oil and gas operations, the Company adopted the US

dollar as its reporting currency during the year ended December 31, 2006. All opening assets and

liabilities were translated into US dollars using the exchange rate in effect on January 1, 2006. For

comparative purposes, historical financial statements and notes thereto up to and including December

31, 2006 have been restated into US dollars as if the Company had adopted the US dollar as its

reporting currency for those periods.

The change in the reporting currency for the prior periods resulted in a currency translation

adjustment of $183,266 as at December 31, 2006, which is reflected in accumulated other

comprehensive income, a separate component of shareholders’ equity.

Prior to January 1, 2007, the Company’s functional currency was Canadian dollars. Due to the

Company’s participating interest in the Dharoor Valley and Nogal Valley PSAs, and the associated

increase in United States dollar denominated expenditures, the United States dollar was adopted as

the functional currency of the Company effective January 1, 2007.

New Accounting Pronouncements

The Company adopted the full cost method of accounting for its oil and gas interests during 2006. In

accordance with Accounting Guideline 16 (AcG 16) issued by the CICA, all costs relating to the

exploration for and development of oil and gas reserves are capitalized in country-by-country cost

centres and charged against income as set out below. Capitalized costs include expenditures for

geological and geophysical surveys, concession acquisition, drilling exploration and development

wells, gathering and production facilities and other development expenditures.

Capitalized costs along with estimated future capital costs to develop proved reserves are depleted on

a unit-of-production basis using estimated proved oil and gas reserves. Costs of acquiring and

evaluating unproved properties are excluded from costs subject to depletion until it is determined

whether proved reserves are attributable to the properties or impairment occurs. Unproved properties

are evaluated for impairment on at least an annual basis. If an unproved property is considered to be

impaired, the amount of the impairment is added to costs subject to depletion.

The Company engages independent reservoir engineers in order to determine its share of reserves.

Proceeds from the sale or farm-out of oil and gas interests are offset against the related capitalized

costs and any excess of net proceeds over capitalized costs is included in operations. Gains or losses

from the sale or farm-out of oil and gas interests in the producing stage are recognized only when the

effect of crediting the proceeds to capitalized costs would result in a change of 20 percent or more in

the depletion rate.

- 7 -

The net amount at which oil and gas interests are carried is subject to a cost recovery test (the

“ceiling test”). The ceiling test is a two-stage process which is performed at least annually. The first

stage is a recovery test whereby undiscounted estimated future cash flows from proved reserves at oil

and gas prices in effect at the balance sheet date (“forecast prices”) plus the cost of unproved

properties less any impairment is compared to the net book value of the oil and gas interests to

determine if the assets are impaired. An impairment loss exists if the net book value of the oil and gas

interests exceeds such undiscounted estimated cash flows. The second stage determines the amount

of the impairment loss to be recorded. The impairment is measured as the amount by which the net

book value of the oil and gas interests exceeds the future estimated discounted cash flows from

proved plus probable reserves at the forecast prices. Any impairment is recorded as additional

depletion cost.

The following summarizes recent accounting pronouncements and the potential impact on the

Company:

Financial Instrument - Recognition and Measurement, Hedging and Comprehensive Income

In January 2005, the Canadian Institute of Chartered Accountants (“CICA”) released the new

Handbook Section 3855, “Financial Instruments –Recognition and Measurement” and Section 1530,

“Comprehensive Income”, effective for the interim periods and year ends for fiscal years commencing

on or after January 1, 2007 on a prospective basis. The Company adopted these standards starting on

January 1, 2007 on a prospective basis. As required by the new standards, prior periods have not

been restated, except to reclassify the foreign currency translation adjustment balance as described

under Comprehensive Income.

Section 3855 establishes standards for the recognition and measurement of all financial instruments,

provides a characteristics-based definition of a derivative financial instrument, provides criteria to be

used to determine when a financial instrument should be recognized, and provides criteria to be used

when a financial instrument is to be extinguished. Section 1530 establishes standards for reporting

comprehensive income. These standards require that an enterprise present comprehensive income

and its components in a separate financial statement that is displayed with the same prominence as

other financial statements.

The Company is not a counter-party to any derivative contracts nor does it believe that it has any

embedded derivatives. Should the Company enter into any such contracts in the future it will account

for them under these new standards.

Financial Instruments - Disclosure

In December 2006, the AcSB issued Section 3862 as a new accounting standard on disclosures about

financial instruments. Section 3862 must be implemented no later than the first reporting period in

the first fiscal year beginning on or after October 1, 2007.

Section 3862 places an increased emphasis on disclosures about the risks associated with both

recognized and unrecognized financial instruments and how those risks are managed.

The additional disclosures will be evaluated by the Company.

- 8 -

Accounting Changes

In July 2006 the CICA issued revised Section 1506, Accounting Changes.

The main features are as follows:

Voluntary changes in accounting policy are made only if they result in the financial statements

providing reliable and more relevant information.

· Changes in accounting policy are applied retrospectively unless doing so is impracticable.

· Prior period errors are corrected retrospectively.

· New disclosures are required in respect of changes in accounting policies, changes in

accounting estimates and correction of errors.

The revised Section applies to interim and annual financial statements relating to fiscal years

beginning on or after January 1, 2007. The requirements of this new section are being addressed as

circumstances dictate.

Capital Disclosures

In December 2006, the CICA issued a new accounting standard on disclosures about capital. Section

1535, Capital Disclosures, must be implemented no later than the first reporting period in the first

fiscal year beginning on or after October 1, 2007. Section 1535 requires an entity to disclose

information about its objectives; policies and processes for managing capital, as well as its compliance

with any externally imposed capital requirements. The Section requires entities to describe and

provide quantitative data about what they manage as capital. The Company is analyzing the

additional disclosure requirements and will address these issues at or on October 1, 2007.

International Financial Reporting Standards

Canadian generally accepted accounting principles for publicly accountable enterprises are expected

to be replaced with International Financial Reporting Standards (IFRSs) for periods commencing

January 1, 2011. The Company will address the impact of the adoption of IFRSs as and when the

transition requirements become more clearly defined. It is possible that the adoption of IFRS will have

a material impact on the Company’s financial statements.

Assessing Going Concern

In June 2007, CICA Section 1400 was amended to include requirements for management to assess

and disclose an entity’s ability to continue as a going concern. This section applies to interim and

annual periods beginning on or after January 1, 2008

RISK FACTORS

The Company is subject to various risks and uncertainties, including, but not limited to, those listed

below.

International Operations

AOC participates in oil and gas projects located in emerging markets, including Somalia. Oil and gas

exploration, development and production activities in these emerging markets, including Somalia, are

subject to significant political and economic uncertainties which may adversely affect the Company's

operations. Uncertainties include, but are not limited to, the risk of war, terrorism, expropriation,

nationalization, renegotiation or nullification of existing or future concessions and contracts, the

imposition of international sanctions, a change in crude oil or natural gas pricing policies, a change in

taxation policies, and the imposition of currency controls. These uncertainties, all of which are beyond

the Company’s control, could have a material adverse effect on AOC’s business, prospects and results

of operations. In addition, if legal disputes arise related to oil and gas concessions acquired by the

Company, AOC could be subject to the jurisdiction of courts other than those of Canada. The

Company’s recourse may be very limited in the event of a breach by a government or government

- 9 -

authority of an agreement governing a concession in which AOC acquires an interest. The Company

may require licenses or permits from various governmental authorities to carry out future exploration,

development and production activities. There can be no assurance that AOC will be able to obtain all

necessary licenses and permits when required.

Uncertainty of Title

Although the Company conducts title reviews prior to acquiring an interest in a concession, such

reviews do not guarantee or certify that an unforeseen defect in the chain of title will not arise that

may call into question AOC’s interest in the concession. Any uncertainty with respect to one or more

of AOC’s concession interests could have a material adverse effect on the Company’s business,

prospects and results of operations.

The Company has been made aware that other entities have made claims concerning areas covered

by the Company's concessions. The Company believes that there is no merit to any of these claims.

Accordingly, the Company proposes to proceed with its exploration and development program as

previously disclosed

Competition

The petroleum industry is intensely competitive in all aspects including the acquisition of oil and gas

interests, the marketing of oil and natural gas, and acquiring or gaining access to necessary drilling

and other equipment and supplies. AOC competes with numerous other companies in the search for

and acquisition of prospects.

Risks Inherent in Oil and Gas Exploration and Development

AOC’s business is subject to all of the risks and hazards inherent in businesses involved in the

exploration for, and the acquisition, development, production and marketing of, oil and natural gas,

many of which cannot be overcome even with a combination of experience and knowledge and careful

evaluation. The risks and hazards typically associated with oil and gas operations include fire,

explosion, blowouts, sour gas releases, pipeline ruptures and oil spills, each of which could result in

substantial damage to oil and natural gas wells, production facilities, other property, the environment

or personal injury.

Capital Requirements

To finance its future acquisition, exploration, development and operating costs, AOC may require

financing from external sources, including from the sale of equity and debt securities. There can be no

assurance that such financing will be available to the Company or, if available, that it will be offered

on terms acceptable to AOC. If additional financing is raised through the issuance of equity or

convertible debt securities, control of the Company may change and the interests of shareholders in

the net assets of AOC may be diluted. If unable to secure financing on acceptable terms, AOC may

have to cancel or postpone certain of its planned exploration and development activities and may not

be able to take advantage of acquisition opportunities.

OUTLOOK

AOC continues to invest in exploration activities related to the Dharoor Valley and Nogal Valley Blocks

in Puntland, Somalia. Reprocessing of seismic data from the Nogal Valley block has commenced and

acquisition of 2D data in the Dharoor Valley block will begin over the next few months. Soon after

completion of the seismic program, a drilling rig is expected to be mobilized into the area to

commence exploration drilling. The timing of the Company’s exploration activities will be dependant

upon security considerations in Puntland, Somalia. We are very excited at the prospect of applying

lessons learned in Yemen to these world class basins and optimistic that our program will be

successful.

- 10 -

Forward Looking Statements

This MD&A may contain forward-looking statements and information. Forward-looking statements are

statements that are not historical fact and are generally identified by words such as believes,

anticipates, expects, estimates or similar words suggesting future outcomes. By their nature, forwardlooking

statements and information involve assumptions, inherent risks and uncertainties, many of

which are difficult to predict, and are usually beyond the control of management, that could cause

actual results to be materially different from those expressed by these forward-looking statements

and information. Risks and uncertainties include, but are not limited to, risk with respect to general

economic conditions, regulations and taxes, civil unrest, corporate restructuring and related costs,

capital and operating expenses, pricing and availability of financing and currency exchange rate

fluctuations. Readers are cautioned that the assumptions used in the preparation of such information,

although considered reasonable at the time of preparation, may prove to be imprecise and, as such,

undue reliance should not be placed on forward-looking statements.

The Company does not undertake to update or re-issue the forward-looking statements and

information that may be contained herein, whether as a result of new information, future events or

otherwise.

KPMG LLP

Chartered Accountants

PO Box 10426 777 Dunsmuir Street

Vancouver BC V7Y 1K3

Canada

Telephone (604) 691-3000

Fax (604) 691-3031

Internet www.kpmg.ca

KPMG LLP, a Canadian limited liability partnership is the Canadian

member firm of KPMG International, a Swiss cooperative.

AUDITORS' REPORT TO THE SHAREHOLDERS

We have audited the consolidated balance sheets of Africa Oil Corp. (formerly Canmex Minerals

Corporation) as at December 31, 2007 and 2006 and the consolidated statements of operations and

deficit, comprehensive income, shareholders’ equity and cash flows for the years then ended. These

financial statements are the responsibility of the Company's management. Our responsibility is to

express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those

standards require that we plan and perform an audit to obtain reasonable assurance whether the

financial statements are free of material misstatement. An audit includes examining, on a test basis,

evidence supporting the amounts and disclosures in the financial statements. An audit also includes

assessing the accounting principles used and significant estimates made by management, as well as

evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the

financial position of the Company as at December 31, 2007 and 2006 and the results of its operations

and its cash flows for the years then ended in accordance with Canadian generally accepted

accounting principles.

KPMG LLP (signed)

Chartered Accountants

Vancouver, Canada

April 16, 2008

1

AFRICA OIL CORP.

(Formerly Canmex Minerals Corporation)

Consolidated Balance Sheets

(Expressed in United States dollars)

December 31, 2007 and 2006

2007 2006

(Restated

- note 2)

Assets

Current assets:

Cash and cash equivalents $ 18,141,474 $ 2,949,333

Term deposits - 2,831,889

Accounts receivable 25,007 35,929

Due from related parties (note 9) - 2,554

Prepaid expenses - 3,523

18,166,481 5,823,228

Oil and gas interest 6,869,106 -

$ 25,035,587 $ 5,823,228

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable and accrued liabilities $ 358,520 $ 27,579

Due to related party (note 9) - 9,307

358,520 36,886

Shareholders’ equity:

Share capital (note 6) 28,496,473 11,492,546

Contributed surplus 1,394,497 671,289

Deficit (5,030,637) (6,194,227)

Accumulated other comprehensive income (183,266) (183,266)

24,677,067 5,786,342

Nature of operations (note 1)

Commitments and contingencies (note 5)

Subsequent event (note 5)

$ 25,035,587 $ 5,823,228

See accompanying notes to consolidated financial statements.

Approved on behalf of the Board:

“Richard Schmitt” Director “Cameron Bailey” Director

2

AFRICA OIL CORP.

(Formerly Canmex Minerals Corporation)

Consolidated Statements of Operations and Deficit

(Expressed in United States dollars)

Years ended December 31, 2007 and 2006

2007 2006

Expenses:

Project investigation $ - $ 64,854

Salaries and benefits 333,250 -

Stock-based compensation 761,300 671,531

Travel 252,853 -

Management fees 153,962 58,196

Office and general 108,373 108,200

Professional fees 64,576 46,999

Stock exchange and filing fees 63,219 11,748

1,737,533 961,528

Other income:

Interest and other income (354,134) (174,698)

Foreign exchange gain (2,546,989) (3,915)

(2,901,123) (178,613)

Earnings (loss) for the year 1,163,590 (782,915)

Deficit, beginning of year (6,194,227) (5,411,312)

Deficit, end of year $ (5,030,637) $ (6,194,227)

Earnings (loss) per share:

Basic $ 0.07 $ (0.06)

Diluted 0.07 (0.06)

Weighted average number of shares outstanding:

Basic 16,219,097 12,945,775

Weighted 16,503,559 12,945,775

See accompanying notes to consolidated financial statements.

Consolidated Statements of Comprehensive Income

(Expressed in United States dollars)

Years ended December 31, 2007 and 2006

2007 2006

Other comprehensive income:

Impact of reporting currency change $ - $ (5,905)

Earnings (loss) for the year 1,163,590 (782,915)

Comprehensive income for the year $ 1,163,590 $ (788,820)

See accompanying notes to consolidated financial statements.

3

AFRICA OIL CORP.

(Formerly Canmex Minerals Corporation)

Consolidated Statements of Shareholders’ Equity

(Expressed in United States dollars)

Years ended December 31, 2007 and 2006

2007 2006

Share capital:

Balance, beginning of year $ 11,492,546 $ 8,066,951

Exercise of warrants (note 6(a)) - 3,425,595

Private placement, net (note 6(a)) 16,872,350 -

Exercise of options 131,577 -

Balance, end of year 28,496,473 11,492,546

Contributed surplus:

Balance, beginning of year 671,289 (242)

Stock-based compensation (note 6(b)) 761,300 671,531

Exercise of options (38,092) -

Balance, end of year 1,394,497 671,289

Accumulated other comprehensive income

Balance, beginning of year (183,266) (177,361)

Impact of reporting currency change (note 2) - (5,905)

Balance, end of year (183,266) (183,266)

Deficit:

Balance, beginning of year (6,194,227) (5,411,312)

Earnings (loss) for the year 1,163,590 (782,915)

Balance, end of year (5,030,637) (6,194,227)

Total shareholders’ equity $ 24,677,067 $ 5,786,342

See accompanying notes to consolidated financial statements.

4

AFRICA OIL CORP.

(Formerly Canmex Minerals Corporation)

Consolidated Statements of Cash Flows

(Expressed in United States dollars)

Years ended December 31, 2007 and 2006

2007 2006

Cash provided by (used in):

Operations:

Earnings (loss) for the year $ 1,163,590 $ (782,915)

Stock-based compensation, an item not affecting cash 761,300 671,531

Unrealized foreign exchange gain (2,546,989) -

Changes in non-cash operating working capital:

Accounts receivable and prepaid expenses 14,445 (12,005)

Due from related parties 2,554 (1,127)

Accounts payable and accrued liabilities 330,941 (323,056)

Due to related parties (9,307) 4,101

(283,466) (443,471)

Investments:

Investment in oil and gas interests (6,869,106) -

Term deposit 2,831,889 (88,176)

(4,037,217) (88,176)

Financing:

Common shares issued, net of issuance costs of $476,037 16,965,835 3,425,595

Effect of exchange rate changes on cash and cash equivalents

denominated in foreign currency 2,546,989 4,096

Increase in cash and cash equivalents 15,192,141 2,898,044

Cash and cash equivalents, beginning of year 2,949,333 51,289

Cash and cash equivalents, end of year $ 18,141,474 $ 2,949,333

Supplementary information:

Interest paid $ - $ -

Income taxes paid - -

See accompanying notes to consolidated financial statements.

AFRICA OIL CORP.

(Formerly Canmex Minerals Corporation)

Notes to Consolidated Financial Statements

(Expressed in United States dollars unless otherwise indicated)

Years ended December 31, 2007 and 2006

5

1. Nature of operations:

The Company changed its name from Canmex Minerals Corporation to Africa Oil Corp. on August 20, 2007.

Africa Oil Corp. (collectively with its subsidiaries, AOC or the Company), was incorporated on March 29,

1993 under the laws of British Columbia and is an international oil and gas exploration and development

company based in Canada with oil interests in Somalia.

AOC participates in oil and gas projects located in emerging markets, including Somalia. Oil and gas

exploration, development and production activities in these emerging markets, including Somalia, are

subject to significant uncertainties which may adversely affect the Company’s operations. Uncertainties

include, but are not limited to, the risk of war, terrorism, expropriation, nationalization, renegotiation or

nullification of existing or future concessions and contracts, the imposition of international sanctions, a

change in crude oil or natural gas pricing policies, a change in taxation policies, and the imposition of

currency controls. These uncertainties, all of which are beyond the Company’s control, could have a

material adverse effect on AOC’s business, prospects and results of operations. In addition, if legal disputes

arise related to oil and gas concessions acquired by the Company, AOC could be subject to the jurisdiction

of courts other than those of Canada. The Company’s recourse may be very limited in the event of a breach

by a government or government authority of an agreement governing a concession in which AOC acquires

an interest. The Company may require licenses or permits from various governmental authorities to carry

out future exploration, development and production activities. There can be no assurance that AOC will be

able to obtain all necessary licenses and permits when required.

These consolidated financial statements have been prepared on the basis that the Company will continue as

a going concern and thereby realize its assets and discharge its liabilities in the normal course of business.

The Company incurred losses before exchange gains and losses of $1,383,399 and $786,830, respectively

from continuing operations during the years ended December 31, 2007 and 2006 and currently does not

have any operating assets that generate revenues. Consequently, the Company’s ability to continue as a

going concern is dependent on the Company’s ability to discover economically recoverable resources and

obtain additional financing if, as and when required, and, ultimately, the attainment of profitable operations.

These consolidated financial statements do not give effect to adjustments that would be necessary to the

carrying values and classifications of assets and liabilities should the Company be unable to continue as a

going concern.

2. Change in functional and reporting currency:

During the year ended December 31, 2006, the Company changed its reporting currency from Canadian

dollars to United States dollars as this reporting currency is more suitable for the Company’s investors and

other users of the financial statements as a result of the Company’s increased focus on international oil and

gas operations. In making this change in reporting currency, the Company has followed the

recommendations of the Emerging Issues Committee (EIC) of the Canadian Institute of Chartered

Accountants (CICA), set out in EIC-130, Translation Method when the Reporting Currency Differs from the

Measurement Currency or there is a Change in the Reporting Currency.

AFRICA OIL CORP.

(Formerly Canmex Minerals Corporation)

Notes to Consolidated Financial Statements

(Expressed in United States dollars unless otherwise indicated)

Years ended December 31, 2007 and 2006

6

2. Change in functional and reporting currency (continued):

Using this method, all consolidated assets and liabilities have been translated using the exchange rate at the

balance sheet dates, while shareholders’ equity has been translated using the historical rates of exchange in

effect on the dates of the corresponding transactions. The consolidated statements of operations and deficit

and cash flows have been translated using the prevailing average exchange rates for the periods. Any

resulting exchange differences due to this translation were included in shareholders’ equity as cumulative

translation adjustments. On adoption of Handbook Section 1530, Comprehensive Income (see note 4), the

comparative financial statements have been restated to classify the cumulative translation adjustment within

accumulated other comprehensive income.

Prior to January 1, 2007, the Company’s functional currency was Canadian dollars. Due to the Company’s

participating interest in the Dharoor Valley and Nogal Valley PSAs, and the associated increase in United

States dollar denominated expenditures, the United States dollar was adopted as the functional currency of

the Company effective January 1, 2007. At December 31, 2007 the Company’s cash balance includes $13.2

million (Canadian dollars) with the remainder of the aggregate held in United States dollars

3. Significant accounting policies:

These consolidated financial statements have been prepared in accordance with accounting principles

generally accepted in Canada, which include the following:

(a) Basis of consolidation:

The consolidated financial statements include the accounts of the Company and its wholly owned

subsidiaries.

All intercompany transactions and balances have been eliminated.

(b) Term deposits:

Term deposits consist of highly liquid investments, having maturity dates of three to twelve months

when purchased and are recorded at the lower of cost and quoted market value.

© Foreign currency translation:

The Company’s functional and reporting currency is United States dollars.

Monetary assets and liabilities denominated in foreign currencies are translated into U.S. dollars at

exchange rates prevailing at the balance sheet date and non-monetary assets and liabilities are

translated at rates in effect on the date of the transaction. Revenues and expenses are translated at the

average rate of exchange in effect during the period other than depreciation which is translated at

historical rates. Exchange gains or losses arising from translation are included in operations.

AFRICA OIL CORP.

(Formerly Canmex Minerals Corporation)

Notes to Consolidated Financial Statements

(Expressed in United States dollars unless otherwise indicated)

Years ended December 31, 2007 and 2006

7

3. Significant accounting policies (continued):

(d) Oil and gas interests:

The Company follows the full cost method of accounting for its oil and gas interests. In accordance with

Accounting Guideline 16 (AcG 16) issued by the CICA, all costs relating to the exploration for and

development of oil and gas reserves are capitalized in country-by-country cost centres and charged

against income as set out below. Capitalized costs include expenditures for geological and geophysical

surveys, concession acquisition, drilling exploration and development wells, gathering and production

facilities and other development expenditures.

Capitalized costs along with estimated future capital costs to develop proved reserves are depleted on a

unit-of-production basis using estimated proved oil and gas reserves. Costs of acquiring and evaluating

unproved properties are excluded from costs subject to depletion until it is determined whether proved

reserves are attributable to the properties or impairment occurs. Unproved properties are evaluated for

impairment on at least an annual basis. If an unproved property is considered to be impaired, the

amount of the impairment is added to costs subject to depletion.

The Company engages independent reservoir engineers in order to determine its share of reserves and

resources.

Proceeds from the sale or farm-out of oil and gas interests are offset against the related capitalized

costs and any excess of net proceeds over capitalized costs is recorded in the statement of operations.

Gains or losses from the sale or farm-out of oil and gas interests in the producing stage are recognized

only when the effect of crediting the proceeds to capitalized costs would result in a change of 20

percent or more in the depletion rate.

The net amount at which oil and gas interests are carried is subject to a cost recovery test (the ceiling

test). The ceiling test is a two-stage process which is performed at least annually. The first stage is a

recovery test whereby undiscounted estimated future cash flows from proved reserves at oil and gas

prices in effect at the balance sheet date (forecast prices) plus the cost of unproved properties less any

impairment is compared to the net book value of the oil and gas interests to determine if the assets are

impaired. An impairment loss exists if the net book value of the oil and gas interests exceeds such

undiscounted estimated cash flows. The second stage determines the amount of the impairment loss to

be recorded. The impairment is measured as the amount by which the net book value of the oil and gas

interests exceeds the future estimated discounted cash flows from proved plus probable reserves at the

forecast prices. Any impairment is recorded as additional depletion cost.

AFRICA OIL CORP.

(Formerly Canmex Minerals Corporation)

Notes to Consolidated Financial Statements

(Expressed in United States dollars unless otherwise indicated)

Years ended December 31, 2007 and 2006

8

3. Significant accounting policies (continued):

(e) Stock-based compensation:

The Company has a stock option plan as described in note 6(b). The Company uses the fair value

method, utilizing the Black-Scholes option pricing model, for valuing stock options granted to directors,

officers, consultants and employees. The estimated fair value is recognized over the applicable vesting

period, except for stock options granted to consultants which are expensed immediately, as stockbased

compensation expense and an increase to contributed surplus. When the stock options are

exercised, the proceeds received and the applicable amounts recorded in contributed surplus are

credited to share capital.

(f) Income taxes:

The Company accounts for income taxes using the asset and liability method. Under this method,

future income tax assets and liabilities are determined based on differences between the financial

statement carrying values of assets and liabilities and their respective income tax bases (temporary

differences), and losses carried forward. Future income tax assets and liabilities are measured using

the tax rates expected to be in effect when the temporary differences are likely to reverse. The effect

on future income tax assets and liabilities of a change in tax rates is included in operations in the period

in which the change is substantively enacted. The amount of future income tax assets recognized is

limited to the amount of the benefit that is more likely than not to be realized.

(g) Earnings (loss) per share:

Earnings (loss) per share is calculated using the weighted average number of common shares

outstanding during the year. For all periods presented, loss attributable to common shareholders are

the same as reported net earnings (loss). For calculating diluted earnings (loss) per share, the treasury

stock method is used for the purposes of determining the common share equivalents with respect to

outstanding stock options and warrants to be included in the weighted average number of common

shares outstanding, if dilutive. For the year ended December 31, 2006, dilutive loss per share is the

same as basic loss per share, as the effect of the outstanding share options would be anti-dilutive.

(h) Use of estimates:

The preparation of financial statements requires management to make estimates and assumptions that

affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at

the date of the financial statements and the reported amounts of revenues and expenses during the

period. Actual results could differ from those estimates.

In the accounting for oil and gas interests, amounts recorded for depletion and amounts used for

impairment test calculations are based on estimates of oil and gas reserves and future cash flows,

including development costs. By their nature, the estimates of reserves and the related future cash

flows are subject to measurement uncertainty and the impact on the consolidated financial statements

of future periods could be material.

AFRICA OIL CORP.

(Formerly Canmex Minerals Corporation)

Notes to Consolidated Financial Statements

(Expressed in United States dollars unless otherwise indicated)

Years ended December 31, 2007 and 2006

9

3. Significant accounting policies (continued):

(i) Future accounting standard changes:

The following is an overview of accounting standard changes that the Company will be required to

adopt in future years.

Capital Disclosures and Financial Instruments - Presentation and Disclosure

The CICA issued three new accounting standards: section 1535, Capital Disclosures, section 3862,

Financial Instruments - Disclosures, and section 3863, Financial Instruments - Presentation. These

new standards will be effective for fiscal years beginning on or after October 1, 2007 and the Company

will adopt them on January 1, 2008. The Company is in the process of evaluating the disclosure and

presentation requirements of the new standards.

Section 1535 establishes disclosure requirements about an entity’s capital and how it is managed. The

purpose will be to enable users of the financial statements to evaluate the entity’s objectives, policies

and processes for managing capital.

Sections 3862 and 3863 will replace section 3861, Financial Instruments - Disclosure and Presentation,

revising and enhancing its disclosure requirements, and carrying forward unchanged its presentation

requirements. These new sections will place increased emphasis on disclosures about the nature and

extent of risks arising from financial instruments and how the entity manages those risks.

Assessing going concern

In June 2007, CICA Section 1400 was amended to include requirements for management to assess

and disclose an entity’s ability to continue as a going concern. This section applies to interim and

annual periods beginning on or after January 1, 2008.

4. Adoption of new accounting standards:

On January 1, 2007, the Company adopted three new accounting standards that were issued by the

Canadian Institute of Chartered Accountants: Handbook Section 1530, Comprehensive Income, Handbook

Section 3861, Financial Instruments - Presentation and Disclosure and Handbook Section 3855, Financial

Instruments - Recognition and Measurement. These standards have been applied prospectively;

accordingly, comparative amounts for prior periods have not been restated with the exception of the impact

of the change in the Company’s reporting currency which has been reclassified from a cumulative translation

amount to other comprehensive income within equity.

(a) Comprehensive income:

Section 1530 introduces comprehensive income, which consists of net income and other

comprehensive income. Other comprehensive income represents changes in shareholders’ equity

during a period arising from transactions and other events and circumstances from non-owner sources

and includes unrealized gains and losses on financial assets classified as available-for-sale. The

components of other comprehensive income are disclosed in the consolidated statement of

shareholders’ equity.

AFRICA OIL CORP.

(Formerly Canmex Minerals Corporation)

Notes to Consolidated Financial Statements

(Expressed in United States dollars unless otherwise indicated)

Years ended December 31, 2007 and 2006

10

4. Adoption of new accounting standards (continued):

(b) Financial instruments - presentation and disclosure; recognition and measurement:

Section 3861 establishes standards for the presentation and disclosure of financial instruments.

Section 3855 establishes standards for recognizing and measuring financial assets, financial liabilities

and non-financial derivatives. It requires that financial assets and financial liabilities, including

derivatives, be measured at fair value on initial recognition and recorded on the balance sheet.

Measurement in subsequent period depends on whether the financial instrument has been classified as

held-for-trading, available-for-sale, held-to-maturity, loans and receivables or other financial liabilities.

Financial assets and liabilities held-for-trading are measured at fair value with changes in those fair

values recognized in net income. Financial assets and financial liabilities considered held-to-maturity,

loans and receivables, and other financial liabilities are measured at amortized cost using the effective

interest method of amortization. Available-for-sale financial assets are measured at fair value with

unrealized gains and losses recognized in other comprehensive income. Investments in equity

instruments classified as available-for-sale that do not have a quoted market price in an active market

are measured at cost.

Derivative instruments, including embedded derivatives, are recorded on the balance sheet at fair value.

Changes in the fair values of derivative instruments are recognized in net income with the exception of

derivatives designated as effective cash flow hedges. The Company has no such designated hedges.

5. Oil and gas interest:

2007 2006

Geological and

Acquisition geophysical Total Total

Somalia $ 5,500,000 $ 1,369,106 $ 6,869,106 $ -

During the first quarter of 2007, the Company entered into Production Sharing Agreements (PSAs) and Joint

Operating Agreements acquiring an 80% interest in licenses covering the Dharoor Valley and Nogal Valley

Blocks in the state of Puntland in northern Somalia.

The Company acquired its 80% participating interest in the blocks from Range Resources Ltd. (Range), a

public company listed on the Australian Stock Exchange. As consideration for its participating interest, the

Company paid Range $5.0 million and assumed the obligation to solely fund $22.8 million of joint venture

costs on each of the blocks ($45.5 million in total for both blocks) during the exploration period. In the event

that a commercial discovery is declared on a block prior to the Company spending $22.8 million, the

Company shall be deemed to have earned its interest in the block and the Company and Range will be

responsible for future expenditures on the block in proportion to their respective working interests. In the

event that the Company does not fund the required $22.8 million during the two three-year exploration

periods, the Company’s interest in the block would be forfeited. An additional $3.5 million will be payable to

Range upon commencement of commercial production.

The Company entered into a drilling contract and a seismic study contract in February 2008, incurring

related costs of $4.1 million.

AFRICA OIL CORP.

(Formerly Canmex Minerals Corporation)

Notes to Consolidated Financial Statements

(Expressed in United States dollars unless otherwise indicated)

Years ended December 31, 2007 and 2006

11

6. Share capital:

(a) The authorized and issued share capital is as follows:

Authorized:

100,000,000 common shares without par value

2007 2006

Shares Amount Shares Amount

Balance, beginning of year 13,229,912 $ 11,492,546 9,249,912 $ 8,066,951

Exercise of warrants - - 3,980,000 3,425,595

Private placements, net 4,000,000 16,872,350 - -

Exercise of options 27,500 131,577 - -

Balance, end of year 17,257,412 $ 28,496,473 13,229,912 $ 11,492,546

(i) During the year ended December 31, 2006, 3,980,000 share purchase warrants were exercised at

a price of CAD$1.00 per share for total proceeds of $3,425,595 (CAD$3,980,000). There are no

further warrants outstanding.

(ii) During the second quarter ended June 30, 2007, the Company completed a private placement

consisting of 4,000,000 common shares at CAD$5.00 per share less share issuance costs of

CAD$500,000 for net proceeds of $16.9 million (CAD$19.5 million).

(b) Stock options:

The Company has a stock option plan (the Plan) in which 1,300,000 common shares have been made

available for the Company to grant incentive stock options to certain directors, officers, employees and

consultants of the Company. Option exercise prices, when granted, reflect current trading values of the

Company’s shares and all options are subject to a four-month “hold” period from the date of grant. The

term of any option granted under the Plan will be fixed by the Board of Directors and may not exceed

five years from the date of grant; vesting periods are determined by the Board of Directors. No optionee

is entitled to a grant of more than 5% of the Company’s outstanding issued shares.

Share purchase options outstanding at December 31, 2007 and 2006, all of which are exercisable, are

as follows:

2007 2006

Weighted average Weighted average

Number exercise price Number exercise price

of shares (CAD$) of shares (CAD$)

Outstanding, beginning of year 500,000 3.43 - -

Granted 595,000 4.33 500,000 3.43

Expired - - - -

Exercised (27,500) 3.43 - -

Outstanding, end of year 1,067,500 3.93 500,000 3.43

AFRICA OIL CORP.

(Formerly Canmex Minerals Corporation)

Notes to Consolidated Financial Statements

(Expressed in United States dollars unless otherwise indicated)

Years ended December 31, 2007 and 2006

12

6. Share capital (continued):

(b) Stock options (continued):

An additional 295,000 stock options were granted during 2006 and were subject to shareholder

approval. The fair value of these options has been recognized in the statement of operations for the

year ended December 31, 2007 as shareholder approval was received at the Annual General Meeting

held on June 21, 2007.

The fair value of each option granted during the period ended December 31, 2007 is estimated on the

date of grant using the Black-Scholes options pricing model with the following weighted average

assumptions:

2007 2006

Fair value of options granted (CAD$/share) 1.52 - 2.09 1.52

Risk-free interest rate (%) 4.29 - 4.83 4.29

Expected life (years) 2 - 3 3

Expected volatility (%) 55 - 63 62

Expected dividend yield - -

The following table summarizes information regarding stock options outstanding at December 31, 2007.

Exercise price Weighted average

(CAD$/share) Number outstanding remaining contractual life

3.43 767,500 1.75

5.00 50,000 2.50

5.26 250,000 2.75

3.93 1,067,500 2.02

AFRICA OIL CORP.

(Formerly Canmex Minerals Corporation)

Notes to Consolidated Financial Statements

(Expressed in United States dollars unless otherwise indicated)

Years ended December 31, 2007 and 2006

13

7. Income taxes:

Substantially all of the difference between the actual income tax expense (recovery) of nil and the expected

federal and BC statutory corporate income tax recovery relates to losses not recognized.

The significant components of the Company’s future income tax assets and liabilities at December 31, 2007

and 2006 are as follows:

2007 2006

Combined federal and provincial statutory income tax rate 34.12% 34.12%

Future income tax assets:

Mineral properties $ 238,152 $ 261,432

Capital losses carried forward 644,376 707,206

Non-capital losses carried forward 383,884 268,264

Share issuance costs 119,560 -

Total future income tax assets 1,385,972 1,236,902

Valuation allowance (1,385,972) (1,236,902)

Future income tax assets, net of allowance $ - $ -

8. Financial instruments:

At December 31, 2007 and 2006, the fair values of the Company’s cash, term deposits, amounts receivable

and accounts payable and accrued liabilities approximate their carrying amounts due to the immediate or

short term to nature of these items.

9. Related party transactions:

During the year ended December 31, 2007 the Company incurred $153,962 (December 31, 2006 - $58,196)

for rent and administrative services from a company owned by the former president of the Company. At

December 31, 2007, there were no amounts due to this company (2006 - $9,307) included due to related

parties. All amounts are non-interest bearing. These services are provided pursuant to a service agreement

and are measured at the exchange amounts.

During the year ended December 31, 2006, the Company earned $6,429 of other income from companies

with a common director for use of certain of the Company’s equipment, of which $2,554 was included in due

from related parties as at December 31, 2006. These transactions did not occur in 2007.

AFRICA OIL CORP.

CORPORATE DIRECTORY

APRIL 25, 2008

OFFICERS

Richard Schmitt

President and CEO

Darren Moulds

Chief Financial Officer

Kathy Love

Corporate Secretary

DIRECTORS

Richard Schmitt

Corporate Governance and

Nominating Committee

J. Cameron Bailey

Audit Committee

Compensation Committee

Corporate Governance and

Nominating Committee

Paul Conibear

Audit Committee

Compensation Committee

Corporate Governance and

Nominating Committee

Keith Hill

Audit Committee

Compensation Committee

AUDITORS

KPMG LLP

Vancouver, BC, Canada

BANKERS

Bank of Montreal

Vancouver, BC. Canada

SUBSIDIARIES

Africa Oil Holdings (Bermuda) I Ltd.

Canmex Holdings (Bermuda) I Ltd.

Canmex Holdings (Bermuda) II Ltd.

COMPANY HEAD OFFICE

#2101 - 885 West Georgia St.

Vancouver, BC, Canada

V6C 3E8

Telephone: (604) 689-7842

Facsimile: (604) 689-4250

REGISTERED AND RECORDS OFFICE

#1100 - 888 Dunsmuir St.

Vancouver, BC, Canada

V6C 3K4

SOLICITOR

McCullough, O’Connor, Irwin

Vancouver, BC, Canada

SHARE CAPITAL

Authorized: 100,000,000 common shares

Issued and outstanding 17,542,812 shares

REGISTRAR AND TRANSFER AGENT

Computershare Trust Company of Canada

Vancouver, BC, Canada

SHARE LISTING

TSX Venture Exchange

Trading Symbol AOI

[Thankful]

You'll see if the people don't accept it. If they didn't these trucks wouldnt' have even left the port. There are enemies in Puntland targeting intelligence officers, so yeah they'll take shots at whatever they can. Their goal is to harm the state.

 

But don't speak for the people! Concentrate on your tribal enclave.