Addax Petroleum Announces Strong Cash Flows in First Quarter 2009 Results

CALGARY - High Impact Projects Expected to Yield a Transformational Year

Addax Petroleum Corporation (”Addax Petroleum” or the “Corporation”) (TSX: AXC and LSE: AXC), today announced its results for the quarter ended March 31, 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 Wednesday, May 13, 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:

“Addax Petroleum continues to deliver strong operating cash flows and healthy netbacks despite a significantly lower oil price environment. As part of the Corporation’s ongoing commitment to maintain liquidity and to operate under a balanced budget approach, certain development activities were postponed in order to maintain a concerted focus on exploration.

The stage has been set for our high impact projects to make for an exciting year. We are extremely pleased to have recently received a confirmation from the Kurdistan Regional Government that crude oil exports will commence from the Taq Taq field. In addition, with the recently contracted Deepwater Pathfinder drillship, the Corporation has entered a new and significant phase of exploration in the highly prospective Deepwater Gulf of Guinea. While the original schedule had us commencing drilling in the JDZ Block 4 in the fourth quarter, we understand that the drillship may now arrive earlier in the second half of 2009.”

Selected Financial Highlights The following table summarizes the selected financial highlights: ————————————————————————- Selected financial highlights Quarter ended as at March 31 $ million unless otherwise stated 2009 2008 Change ————————————————————————- Petroleum sales before royalties 576 1,154 -50% Average crude oil sales price, $/bbl 43.98 96.03 -54% Sales volumes, MMbbl 13.0 12.0 8% Funds Flow From Operations 276 466 -41% Net income 5 240 -98% Weighted average common shares outstanding (basic, millions) 157 156 1% Funds Flow From Operations per share ($/basic share) 1.76 3.00 -41% Earnings per share ($/basic share) 0.03 1.54 -98% Weighted average common shares outstanding (diluted, millions) 158 162 -2% Funds Flow From Operations per share ($/diluted share) 1.69 2.87 -41% Earnings per share ($/diluted share) 0.03 1.51 -98% Total assets 5,588 4,318 29% Long-term debt, excluding convertible bonds 1,400 1,125 24% ————————————————————————- Capital Expenditures - by Region Nigeria (excluding deepwater) & Cameroon 282 261 8% Gabon 151 66 129% Kurdistan Region of Iraq 18 7 157% Deepwater Nigeria & JDZ 13 3 333% Corporate, acquisitions, farm-in and licence signature fees (2) 3 -167% Total 462 340 36% Capital Expenditures - by Type Development 337 243 39% Exploration & appraisal 127 94 35% subtotal 464 337 38% Corporate, acquisitions, farm-in and licence signature fees (2) 3 -167% Total 462 340 36% ————————————————————————- ————————————————————————- - Petroleum sales before royalties in the first quarter (Q1) of 2009 amounted to $576 million, a decrease of 50 per cent over petroleum sales before royalties of $1,154 million in Q1 2008. The decrease in petroleum sales before royalties was primarily driven by a 54 per cent decrease in the average crude oil sales price in Q1 2009 to $43.98 per barrel (/bbl) as compared to $96.03/bbl realized in Q1 2008, offset partially by an 8 per cent increase in sales volumes between the same periods. - Funds Flow From Operations for Q1 2009 decreased 41 per cent to $276 million ($1.76 per basic share) compared to $466 million ($3.00 per basic share) in Q1 2008. - Net income in Q1 2009 decreased 98% to $5 million ($0.03 per basic share) compared to $240 million ($1.54 per basic share) in Q1 2008. - Capital expenditures increased by 36 per cent to $462 million in Q1 2009 from $340 million in Q1 2008. Development capital expenditures totaled $337 million in the first quarter, an increase of 39 per cent over development capital expenditures of $243 million in Q1 2008. Exploration and appraisal capital expenditures increased to $127 million in the quarter, an increase of 35 per cent over exploration and appraisal capital expenditures of $94 million in Q1 2008. The Corporation is on track to spend approximately $1 billion in capital expenditures during 2009 due to a planned slowdown in development activities and reductions in service costs. - At the end of Q1 2009, bank debt increased to $1,400 million due to the planned use of debt to fund temporary working capital fluctuations. 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 $500 million senior unsecured revolving facility. Selected Operational Highlights The following table summarizes selected operational information: ————————————————————————- Quarter ended as at Selected operational highlights March 31 2009 2008 Change ————————————————————————- Quarter average gross working interest oil production (Mbbl/d) Nigeria (offshore) 98.3 102.3 -4% Nigeria (onshore) 5.6 7.4 -24% Nigeria sub-total 103.9 109.7 -5% Gabon (offshore) 6.6 7.0 -6% Gabon (onshore) 21.3 22.4 -5% Gabon sub-total 27.9 29.4 -5% Kurdistan 2.9 - n/a Total 134.7 139.1 -3% Prices, expenses and netbacks ($/bbl) Average realized price 43.98 96.03 -54% Operating expense 8.47 8.09 5% Operating netback 29.35 72.49 -60% ————————————————————————- ————————————————————————- - Average gross working interest oil production in Q1 2009 was 134,730 bbl/d, representing a decrease of approximately 3 per cent over Q1 2008 average production of 139,100 bbl/d. Nigeria - average oil production from Nigeria in Q1 2009 was 103,930 bbl/d and in line with expectations, compared to a Q1 2008 average production level of 109,700 bbl/d; - lower production in the first quarter of 2009 was primarily attributed to contractor delays in the start-up of new wells and a gas constraint in gas-lift, both in the OML123 licence area, and a scheduled shutdown of the Sendje Berge FPSO for a statutory inspection in the OML126 licence area. Gabon - average oil production from Gabon in Q1 2009 was 27,960 bbl/d and in line with expectations, compared to a Q1 2008 average production level of 29,400 bbl/d; - production in the first quarter of 2009 was impacted from the start-up of the new Obangue production facility and wells awaiting gas-lift installation. Kurdistan - Addax Petroleum’s entitlement to crude oil production from the Taq Taq field in the Kurdistan Region of Iraq commenced in Q1 2009 at an average rate of 2,850 bbl/d; - petroleum activities for Taq Taq remain in the pre-production or development stage for accounting purposes, and as such, all revenues are currently being recorded as a reduction to capitalized expenditures. - Development project highlights in Q1 2009 include: Nigeria - drilled four new development wells which included two oil production wells and one water injection well in OML123 and one oil production well in OML126; - placed a total of two new oil production wells on production in the quarter, being the two wells drilled in OML123 in the quarter; and, - installed and tested the Adanga North B platform topsides in OML123 offshore Nigeria. Gabon - drilled three new development wells onshore in the Addax Petroleum operated Obangue field in the Panthere NZE licence area and a further two development wells in the third party operated Ebouri field in the Etame Marin licence area; - placed three new oil production wells on production in the quarter, being two wells in the Obangue field and one well in the Ebouri field; - completed the new onshore Obangue East Central Processing Facility that will handle the planned increase in production and associated fluids from the Obangue field during the ongoing field development; and, - continued development of the Koula field by the operator of the Awoun licence area for a planned production start-up in the fourth quarter of 2009. Kurdistan - commenced sustained crude oil production and sales to the domestic market from the Taq Taq field; - submitted a full field development plan for the Taq Taq field to the Kurdistan Regional Government; and, - continued expansion of the on-site processing facilities to increase capacity up to 70 Mbbl/d in late 2009. - Operating netbacks in Q1 2009 decreased 60 per cent to $29.35/bbl compared to $72.49/bbl in Q1 2008. Unit operating expenses in Q1 2009 increased to $8.47/bbl, an increase of 5 per cent over the 2008 level of $8.09/bbl primarily due to additional downhole maintenance and personnel related costs in relation to the growing operations in Gabon and increased security costs for ocean marine vessels in Nigeria. Selected Exploration and Appraisal Highlights - Exploration and appraisal highlights to date in 2009 include: Kurdistan Region of Iraq - completed testing on the TT-10 appraisal well that was drilled into the crest of the Cretaceous formations in the Taq Taq field where it encountered a gross oil column of 530 metres. The TT-10 well successfully flow-tested three reservoirs with an aggregate rate of 44,240 bbl/d of light oil, measured gravity of 48 degrees API with low gas oil ratio; and, - commenced the exploration drilling of the Kewa Chirmila prospect in the Taq Taq licence area where the well is expected to reach total depth by mid-2009. Gulf of Guinea Deep Water (Nigeria and JDZ) - announced that the Corporation 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 the second half of 2009 in order to commence the drilling of four consecutive wells. Gulf of Guinea Shallow Water (Nigeria and Cameroon) - notified intention to enter the next two-year exploration period in the Ngosso licence area offshore Cameroon, subject to government approval, which includes the commitment to drill one exploration well by January 2011. Gabon - drilled an appraisal well at the Autour field in the Panthere licence area onshore Gabon, the results of which are currently being evaluated; - commenced the exploration program in the Gryphon Marin licence area offshore Gabon with the drilling of the Corporation’s first wells. The Ajomba South and Ajomba Main wells were plugged and abandoned as dry holes, however, the results and technical data acquired from the well will be used in the additional seismic and exploration drilling that is planned for the license area; and, - participated in the drilling of the North Etame exploration well in the Corporation’s Etame Marin license area offshore Gabon. The third party operated well encountered lower than anticipated hydrocarbons, was water bearing and was plugged and abandoned.

Dividend Declaration

The Board of Directors of the Corporation declared a dividend of CDN$0.10 per share on May 12, 2009 which is payable on June 18, 2009 to shareholders of record on June 4, 2009. During the first quarter of 2009, the Corporation declared a dividend of CDN$0.10 per share. In accordance with Canada Revenue Agency Guidelines, dividends paid by the Corporation during the period are eligible dividends.

Recent Developments

In May 2009, the Corporation received formal notification from the Kurdistan Regional Government that international exports of crude oil from the Taq Taq licence area will commence on or soon after June 1, 2009.

In April 2009, the Corporation completed drilling one exploration well at the Okwori East prospect in the OML126 licence area offshore Nigeria where the well was plugged and abandoned as a dry hole.

Outlook

The Corporation’s production outlook for 2009 continues to be in line with previous guidance provided. 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 March 31, 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 Wednesday, May 13, at 11:00 a.m. Eastern Time / 4:00 p.m. London, U.K. Time with Mr. Jean Claude Gandur, President and Chief Executive Officer, Mr. Michael Ebsary, Chief Financial Officer and Mr. James Pearce, Chief Operating Officer. The media and shareholders may participate on a listen only basis. To participate in the conference call, please dial one of the following:

Toronto: (416)-644-3416 Toll-free (Canada and the US): 1-800-733-7560 Toll-free (UK): 00-800-2288-3501 Toll-free (Switzerland): 00-800-2288-3501

A replay of the call will be available at (416)-640-1917 or (877)-289-8525, passcode 21296234 followed by the number sign until Saturday, June 13, 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 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, 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 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(0)22-702-94-03, michael.ebsary@addaxpetroleum.com; Mr. Craig Kelly, Investor Relations, Tel.: +41(0)22-702-95-68, craig.kelly@addaxpetroleum.com; Mr. Chad O’Hare, Investor Relations, Tel.: +41(0)22-702-94-10, chad.o’hare@addaxpetroleum.com; Ms. Marie-Gabrielle Cajoly, Press Relations, Tel.: +41(0)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(0)20-3178-6242, mark.antelme@pelhampr.com

Source: Addax Petroleum Corporation

For further information: Mr. Michael Ebsary, Chief Financial Officer, Tel.: +41(0)22-702-94-03, michael.ebsary at addaxpetroleum.com; Mr. Craig Kelly, Investor Relations, Tel.: +41(0)22-702-95-68, craig.kelly at addaxpetroleum.com; Mr. Chad O’Hare, Investor Relations, Tel.:
+41(0)22-702-94-10, chad.o’hare at addaxpetroleum.com; Ms. Marie-Gabrielle Cajoly, Press Relations, Tel.: +41(0)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(0)20-3178-6242, mark.antelme at pelhampr.com