Addax Petroleum Announces Record Production in Second Quarter 2009 Results

CALGARY, Canada -

- Record Quarterly Production of 143.2 Mbbl/d - Funds Flow From Operations of $306 million - Net Income of $38 Million

Addax Petroleum Corporation (”Addax Petroleum” or the “Corporation”) (TSX: AXC and LSE: AXC), today announced its results for the quarter ended June 30, 2009. The financial results are prepared in accordance with Canadian GAAP and the reporting currency is US dollars.

A conference call will be held for analysts and investors today Monday, July 27, 2009 at 11:00 a.m. Eastern Time / 4:00 p.m. London, U.K. Time. Full details can be found at the end of this announcement.

CEO’s Comment

Commenting today, Addax Petroleum’s President and Chief Executive Officer, Jean Claude Gandur, said: “Record production performance and improved commodity prices have contributed to another quarter of strong operating cash flows and healthy netbacks. During the quarter, we saw a significant progression in the Kurdistan Region of Iraq through the commencement of crude oil exports from the Taq Taq licence area. In addition, we were advised that the deepwater Pathfinder drillship should arrive in August to enable Addax Petroleum to commence exploration in the Deepwater Gulf of Guinea.”

“The highlight of the quarter was the offer received from Sinopec International Petroleum Exploration and Production Corporation to acquire all of the outstanding common shares of Addax Petroleum by way of a negotiated cash take-over bid for C$52.80 per common share. Addax Petroleum’s Board of Directors considered a number of factors when reviewing the offer and believes that the offer is fair to shareholders and is in the best interests of Addax Petroleum. As a result, the Board of Directors unanimously recommended that shareholders accept the offer and tender their shares accordingly. We believe that this offer appropriately reflects the value we have been able to create and will be beneficial for all stakeholders of Addax Petroleum, including our public shareholders, employees and the countries and communities in which we operate.”

Selected Financial Highlights The following table summarizes the selected financial highlights: ————————————————————————- Selected second quarter financial highlights Quarter ended as at June 30 $ million unless otherwise stated 2009 2008 Change ————————————————————————- Petroleum sales before royalties 735 1,493 -51% Average realized sales price, $/bbl 59.45 123.17 -52% Sales volumes, MMbbl 12.4 12.2 2% Funds Flow From Operations 306 521 -41% Net income 38 293 -87% Weighted average common shares outstanding (basic, millions) 157 156 1% Funds Flow From Operations per share ($/basic share) 1.95 3.37 -42% Earnings per share ($/basic share) 0.24 1.88 -87% Weighted average common shares outstanding (diluted, millions) 158 162 -2% Funds Flow From Operations per share ($/diluted share) 1.90 3.22 -41% Earnings per share ($/diluted share) 0.24 1.83 -87% Total assets 5,761 4,540 27% Long-term debt, excluding convertible bonds 1,525 910 68% ————————————————————————- Capital Expenditures - by Region Nigeria (excluding deepwater) & Cameroon 188 235 -20% Gabon 97 106 -8% Kurdistan Region of Iraq 7 9 -22% Deepwater Nigeria & JDZ 9 3 200% Corporate, acquisitions, farm-in and licence signature fees 1 16 -94% Total 302 369 -18% Capital Expenditures - by Type Development 243 300 -19% Exploration & appraisal 58 53 9% subtotal 301 353 -15% Corporate, acquisitions, farm-in and licence signature fees 1 16 -94% Total 302 369 -18% ————————————————————————- ————————————————————————- ————————————————————————- Selected first half year financial highlights Half year ended as at June 30 $ million unless otherwise stated 2009 2008 Change ————————————————————————- Petroleum sales before royalties 1,311 2,647 -50% Average realized sales price, $/bbl 51.52 109.58 -53% Sales volumes, MMbbl 25.4 24.2 5% Funds Flow From Operations 582 987 -41% Net income 43 533 -92% Weighted average common shares outstanding (basic, millions) 157 156 1% Funds Flow From Operations per share ($/basic share) 3.71 6.38 -42% Earnings per share ($/basic share) 0.28 3.42 -92% Weighted average common shares outstanding (diluted, millions) 158 162 -2% Funds Flow From Operations per share ($/diluted share) 3.59 6.11 -41% Earnings per share ($/diluted share) 0.27 3.35 -92% Total assets 5,761 4,540 27% Long-term debt, excluding convertible bonds 1,525 910 68% ————————————————————————- Capital Expenditures - by Region Nigeria (excluding deepwater) & Cameroon 470 496 -5% Gabon 248 172 44% Kurdistan Region of Iraq 25 16 56% Deepwater Nigeria & JDZ 22 6 267% Corporate, acquisitions, farm-in and licence signature fees (1) 19 -105% Total 764 709 8% Capital Expenditures - by Type Development 580 543 7% Exploration & appraisal 185 147 26% subtotal 765 690 11% Corporate, acquisitions, farm-in and licence signature fees (1) 19 -105% Total 764 709 8% ————————————————————————- ————————————————————————- - Petroleum sales before royalties in the second quarter (Q2) of 2009 amounted to $735 million, a decrease of 51 per cent over petroleum sales before royalties of $1,493 million in Q2 2008. The decrease in petroleum sales before royalties was primarily driven by a 52 per cent decrease in the average crude oil sales price in Q2 2009 to $59.45 per barrel (/bbl) as compared to $123.17/bbl realized in Q2 2008, offset partially by a 2 per cent increase in sales volumes between the same periods. - Funds Flow From Operations for Q2 2009 decreased 41 per cent to $306 million ($1.95 per basic share) compared to $521 million ($3.37 per basic share) in Q2 2008, largely the result of lower crude oil prices as referred to above. - Net income in Q2 2009 decreased 87 per cent to $38 million ($0.24 per basic share) compared to $293 million ($1.88 per basic share) in the corresponding period in 2008. - Capital expenditures decreased by 18 per cent to $302 million in Q2 2009 from $369 million in Q2 2008. Development capital expenditures totaled $243 million in the second quarter, a decrease of 19 per cent over development capital expenditures of $300 million in Q2 2008. Exploration and appraisal capital expenditures increased to $58 million in the quarter, an increase of 9 per cent over exploration and appraisal capital expenditures of $53 million in Q2 2008. - At the end of Q2 2009, bank debt increased to $1,525 million due to the planned use of debt to fund the excess of capital expenditures versus funds generated during the quarter. Debt is drawn under two facilities that consist of a $1.6 billion senior secured reducing revolving borrowing base facility (of which $1.3 billion can be drawn as debt) and a $500 million senior unsecured revolving facility. Selected Operational Highlights The following table summarizes selected operational information: ————————————————————————- Selected second quarter operational highlights Quarter ended June 30 2009 2008 Change ————————————————————————- Quarter average gross working interest oil production (Mbbl/d) Nigeria (offshore) 97.5 98.5 -1% Nigeria (onshore) 5.8 7.0 -17% Nigeria sub-total 103.3 105.5 -2% Gabon (offshore) 7.5 7.0 7% Gabon (onshore) 20.4 20.4 0% Gabon sub-total 27.9 27.4 2% Kurdistan 12.0 - n/a Total 143.2 132.9 8% Prices, expenses and netbacks ($/bbl) Average realized sales price 59.45 123.17 -52% Operating expenses 7.95 9.55 -17% Operating netback 38.98 91.14 -57% ————————————————————————- ————————————————————————- ————————————————————————- Selected first half year operational highlights Half year ended June 30 2009 2008 Change ————————————————————————- Quarter average gross working interest oil production (Mbbl/d) Nigeria (offshore) 97.9 100.4 -2% Nigeria (onshore) 5.7 7.2 -21% Nigeria sub-total 103.6 107.6 -4% Gabon (offshore) 7.1 7.0 1% Gabon (onshore) 20.8 21.4 -3% Gabon sub-total 27.9 28.4 -2% Kurdistan 7.5 - n/a Total 139.0 136.0 2% Prices, expenses and netbacks ($/bbl) Average realized sales price 51.52 109.58 -53% Operating expenses 8.22 8.81 -7% Operating netback 34.05 81.78 -58% ————————————————————————- ————————————————————————-

- Average gross working interest oil production in Q2 2009 was 143,240 barrels per day (bbl/d) representing an increase of approximately 8 per cent over the 2008 average production of 132,880 bbl/d. Nigeria - average oil production from Nigeria in Q2 2009 was 103,290 bbl/d, compared to a Q2 2008 average production level of 105,500 bbl/d; - drilled four new development wells which included three oil production wells in OML123 and one oil production well in OML126; - lower production in Q2 2009 was primarily attributed to a gas constraint in gas-lift and the deferred start-up and completion of new production wells, both in the OML123 licence area; and, - completed drilling the OK-19 (Okwori East) exploration well in the OML126 licence area, offshore Nigeria, where the well was plugged and abandoned as a dry hole. Gabon - average oil production in Q2 2009 from Gabon was 27,910 bbl/d, compared to a Q2 2008 average production level of 27,390 bbl/d; - drilled six new development wells in the Addax Petroleum operated Panthere licence area, onshore Gabon; - placed a total of seven new oil production wells on production in the quarter of which five were drilled in the quarter and two were drilled in the previous quarter; - completed the commissioning at the new Obangue East Central Processing Facility in Q2 2009 with the installation of gas compressors and the commissioning of a second train with a test separator; and, - completed drilling the Ajomba Main exploration well in the Gryphon Marin licence area, offshore Gabon, where the well was plugged and abandoned as a dry hole. Kurdistan Region of Iraq - average oil production in Q2 2009 from Kurdistan increased to 12,050 bbl/d due to the commencement of international crude oil exports from the Taq Taq licence area on June 1, 2009; - obtained approval from the Kurdistan Regional Government for the Taq Taq full field development plan; - continued expansion of the on-site processing facilities to increase capacity up to 70 Mbbl/d in late 2009; and, - continued to drill the Kewa Chirmila exploration prospect which is expected to reach target depth in Q3 2009. Gulf of Guinea Deep Water (Nigeria and JDZ) - Addax Petroleum previously announced that it signed an agreement with a subsidiary of Transocean Ltd. for the provision and operation of the Deepwater Pathfinder drillship to commence its exploration drilling campaign in the Deepwater Gulf of Guinea. Addax Petroleum expects to receive delivery of the Deepwater Pathfinder in August 2009 and intends to commence the consecutive drilling of four wells, the first of which being the Kina prospect in Block 4 of the Joint Development Zone; and, - Sinopec JDZ Block 2 Limited has notified the Joint Development Authority of its intent to commence its exploration drilling in August 2009 on JDZ Block 2, where Addax Petroleum holds a 14.3 per cent interest. - Operating netbacks in Q2 2009 decreased 57 per cent to $38.98/bbl compared to $91.14/bbl in Q2 2008. Unit operating expenses in Q2 2009 decreased to $7.95/bbl, a decrease of 17 per cent over the 2008 level of $9.55/bbl due to savings from fewer workovers and a drag reducer no longer being required in Nigeria to improve oil flow following the installation of a larger 14″ pipeline, offset partially by additional pipeline maintenance, increased security costs and higher personnel related costs. Selected New Business Highlights - New business highlights for Q2 2009 include the following: Gabon - Addax Petroleum agreed to fund an exploration well in the Ogueyi licence area located on the eastern edge of the Port Gentil basin, onshore Gabon, with the potential to earn a 50% interest in the licence. The Azango prospect in the Ogueyi licence area was drilled during the quarter and was plugged and abandoned.

Dividend Declaration

During Q2 2009, the Corporation paid a dividend of CDN$0.10 per share. The Board of Directors of the Corporation declared a dividend of CDN$0.10 per share on July 24, 2009 which is payable on August 27, 2009 to shareholders of record on August 13, 2009. In accordance with Canada Revenue Agency Guidelines, dividends paid by the Corporation during the period are eligible dividends.

Recent Developments

In July 2009, Addax Petroleum announced that Mirror Lake Oil and Gas Company Limited (”Mirror Lake”), an indirect wholly-owned subsidiary of Sinopec International Petroleum Exploration and Production Corporation (”SIPC”), commenced its offer for Addax Petroleum (the “Offer”) and mailed the Offer and take-over bid circular (the “Offer Documentation”) as well as the Addax Petroleum directors’ circular, containing the Addax Petroleum board’s unanimous recommendation to accept the Offer, to Addax Petroleum shareholders. On June 24, 2009, SIPC and Addax Petroleum reached an agreement for Mirror Lake to make an offer to acquire all of Addax Petroleum’s outstanding common shares for C$52.80 per common share in an all-cash transaction. The Offer is subject to a number of conditions including valid acceptances by holders of not less than 66 2/3 per cent of Addax Petroleum shares on a fully diluted basis and receipt of certain regulatory approvals, including the government of The People’s Republic of China. The Offer is expected to close in the third quarter of 2009. In July 2009, Addax Petroleum announced that it received a letter from the Minister of Natural Resources of the Kurdistan Regional Government (the “KRG”) and has confirmation from SIPC that receipt of this letter satisfies the condition to the Offer for Addax Petroleum dated July 9, 2009 made by Mirror Lake.

Outlook

Addax Petroleum’s 2009 approved capital expenditure budget was set at approximately $1.6 billion but, as previously indicated, this plan was based on an assumed average Brent Crude price of $60/bbl for 2009. Management continues to adjust the capital program with the goal of balancing expenditures against internally generated funds over the full year. The current full year capital expenditure plan is approximately $1.3 billion, although Addax Petroleum continues to review incremental capital expenditure investment opportunities if oil prices remain at or higher than those experienced in the latter part of Q2 2009. The Corporation’s production outlook for 2009 continues to be in line with previous guidance provided. Excluding oil production from the Kurdistan Region of Iraq, Addax Petroleum expects annual average working interest gross oil production for 2009 to be between 132 and 137 Mbbl/d.

Regulatory Filings

This announcement coincides with the filing with the Canadian and U.K. securities regulatory authorities of Addax Petroleum’s Unaudited Consolidated Financial Statements for the quarter ended June 30, 2009 and related Management’s Discussion and Analysis. Copies of these documents may be obtained via www.sedar.com, www.londonstockexchange.com and the Corporation’s website, www.addaxpetroleum.com.

Analyst Conference Call

Financial analysts are invited to participate in a conference call today Monday, July 27, at 11:00 a.m. Eastern Time / 4:00 p.m. London, U.K. time with Mr. Jean Claude Gandur, President and Chief Executive Officer, Mr. Michael Ebsary, Chief Financial Officer and Mr. James Pearce, Chief Operating Officer. The media and shareholders may participate on a listen only basis. To participate in the conference call, please dial one of the following:

Toronto: +1-416-644-3414 Toll-free (Canada and the US): 1-800-733-7571 Toll-free (UK): 00-800-2288-3501 Toll-free (Switzerland): 00-800-2288-3501

A replay of the call will be available at +1-416-640-1917 or +1-877-289- 8525, passcode 21296236 followed by the number sign until Thursday, August 27, 2009.

Reader Advisory Regarding Forward-Looking Information

Certain statements contained in this news release, including statements related to future capital expenditures, financing and capital activities, business strategy and goals, future commodity prices, reserves and resources estimates, drilling plans, development plans and schedules, future seismic activity, production levels and sources of growth thereof, results of exploration activities and dates that areas may come on-stream, royalties payable, construction projects, contingent liabilities and government approvals, statements that contain words such as “may”, “will”, “would”, “could”, “should”, “anticipate”, “believe”, “intend”, “expect”, “plan”, “estimate”, “budget”, “outlook”, “propose”, “project”, and statements relating to matters that are not historical fact constitute forward-looking information within the meaning of applicable Canadian securities legislation. In this news release, forward-looking information and statements include: Addax Petroleum’s capital expenditures budget and associated anticipated production, anticipated cost controls, future commodity prices, and access to future financing and liquidity, income tax and other contingent liabilities, major capital projects and ongoing contractual obligations and commitments.

Forward-looking information is subject to known and unknown risks and uncertainties attendant with oil and gas operations, and other factors, which include, but are not limited to the termination of the Support Agreement between Addax Petroleum and SIPC (as defined herein), including a termination under circumstances that could require Addax Petroleum to pay a $300 million termination fee to the Offeror, the risk that the Offer (as defined herein) may not be completed in a timely manner or at all, which may adversely affect Addax Petroleum’s business and price of its common shares, the potential adverse effect on Addax Petroleum’s business, properties and operations because of certain covenants in the Support Agreement, increases in costs resulting from the expenses related to the Offer, the inability to retain and, if necessary, attract key employees, particularly in light of the Offer, risks related to diverting management’s attention from ongoing business operations, the risk that Addax Petroleum may be subject to litigation in connection with the Offer, the failure to satisfy the conditions to complete the Offer, the failure of the Offer to be completed for any reason, the effect of the announcement of the Support Agreement on Addax Petroleum’s operating results and business generally, including the risk that Addax Petroleum may be subject to litigation should those relationships deteriorate, imprecision of reserves and resources estimates; ultimate recovery of reserves; commodity prices; general economic, market and business conditions; industry capacity; competitive action by other companies; refining and market margins; the ability to produce and transport crude oil and natural gas to markets; weather and climate conditions; results of exploration and development drilling and other related activities; fluctuation in interest rates and foreign currency exchange rates; ability of suppliers to meet commitments; actions by governmental authorities, including increases in taxes; decisions or approvals of administrative tribunals; changes in environmental and other regulations; international political events; and expected rates of return. More specifically, production may be affected by exploration success, start-up timing and success, facility reliability, reservoir performance and natural decline rates, gas and water handling and drilling progress. Capital expenditures may be affected by cost pressures associated with new capital projects, including labour and material supply, project management, drilling rig rates and availability and seismic costs.

In this news release, Addax Petroleum has made assumptions with respect to the following: - prices for oil and natural gas; - oil and gas reserve and resource quantities and the discounted present value of future net cash flows from these reserves and the ultimate recoverability of reserves; - timing and amount of future production, forecasts of capital expenditures and the sources of financing thereof; - the amount, nature, timing and effects of capital expenditures; - plans for drilling wells and the timing and location thereof; - expectations regarding the negotiation and performance of contractual rights; - operating and other costs; - business strategies and plans of management; - anticipated benefits and enhanced shareholder value resulting from prospect development and acquisitions; - approvals for petroleum exports from the Kurdistan Regional Government; and, - treatment under the fiscal terms of Production Sharing Contracts and governmental regulatory regimes.

Addax Petroleum’s actual results could differ materially from those anticipated in these forward-looking statements if the assumptions underlying them prove incorrect, or if one or more of the uncertainties or risks described above materializes. Risk factors are discussed in greater detail in filings made by Addax Petroleum with the Canadian provincial securities commissions.

Readers are strongly cautioned that the above list of factors affecting forward-looking information is not exhaustive. Further, forward-looking statements are made as at the date they are given and, except as required by applicable law, Addax Petroleum does not intend, and does not assume any obligation, to update any forward-looking statements, whether as a result of new information or otherwise. The forward-looking statements contained in this news release are expressly qualified by this advisory.

Non-GAAP Measures

Addax Petroleum defines “Funds Flow From Operations” or “FFFO” as net cash from operating activities before changes in non-cash working capital. Management believes that in addition to net income, FFFO is a useful measure as it demonstrates Addax Petroleum’s ability to generate the cash necessary to repay debt and/or fund future growth through capital investment. Addax Petroleum also assesses its performance utilizing Operating Netbacks which it defines as the per barrel pre-tax profit margin associated with the production and sale of crude oil and is calculated as the average realized sales price less royalties and operating expenses, on a per barrel basis. FFFO and Operating Netback are not recognized measures under Canadian Generally Accepted Accounting Principles (”GAAP”). Readers are cautioned that these measures should not be construed as an alternative to net income or cash flow from operating activities determined in accordance with Canadian GAAP or as an indication of Addax Petroleum’s performance. Addax Petroleum’s method of calculating these measures may differ from other companies and accordingly, it may not be comparable to measures used by other companies.

For further information: Mr. Michael Ebsary, Chief Financial Officer, Tel.: +41-22-702-94-03, michael.ebsary@addaxpetroleum.com; Mr. Craig Kelly, Investor Relations, Tel.: +41-22-702-95-68, craig.kelly@addaxpetroleum.com; Mr. Chad O’Hare, Investor Relations, Tel.: +41-22-702-94-10, chad.o’hare@addaxpetroleum.com; Ms. Marie-Gabrielle Cajoly, Press Relations, Tel.: +41-22-702-94-44, marie- gabrielle.cajoly@addaxpetroleum.com; Mr. Nick Cowling, Press Relations, Tel.: +1-416-934-8011, nick.cowling@cossette.com; Mr. Mark Antelme, Press Relations, Tel.: +44-20-3178-6242, mark.antelme@pelhampr.com

Source: Addax Petroleum Corporation

For further information: Mr. Michael Ebsary, Chief Financial Officer, Tel.: +41-22-702-94-03, michael.ebsary at addaxpetroleum.com; Mr. Craig Kelly, Investor Relations, Tel.: +41-22-702-95-68, craig.kelly at addaxpetroleum.com; Mr. Chad O’Hare, Investor Relations, Tel.: +41-22-702-94-10, chad.o’hare at addaxpetroleum.com; Ms. Marie-Gabrielle Cajoly, Press Relations, Tel.: +41-22-702-94-44, marie-gabrielle.cajoly at addaxpetroleum.com; Mr. Nick Cowling, Press Relations, Tel.: +1-416-934-8011, nick.cowling at cossette.com; Mr. Mark Antelme, Press Relations, Tel.: +44-20-3178-6242, mark.antelme at pelhampr.com