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The Company's exploration block in South Africa is located off shore on the Atlantic coast just south of the border with Namibia. A small oil discovery was previously made in the exploration area.

The exploration area was previously explored using two-dimensional seismic surveys that were analysed and processed in recent years. The survey identified six new structures within the licence area that may contain oil. In 2013, 700 square kilometres of 3D seismic data was collected and processed. Final results from the surveys were presented in 2014.

The oil-bearing reservoir in the licence area was discovered during test drilling in 1988 and it tested for about 200 barrels of oil per day. Through Crown Energy’s reinterpretation of existing data, it is estimated that the licence area could potentially contain several billion barrels of oil.

The work performed during 2014/2015 includes amplitude versus offset (AVO), which entails, briefly, additional testing of seismic results; sedimentology, i.e. analysis of the composition of soil, sand, and clay in the reputed reservoir; petrophysics, i.e. mapping of rock characteristics; and our own analyses of drill cores and fluid samples from the well/discovery. Certain related activities were also conducted, such as environmental studies for potential future wells.

The partnership has now been granted an initial two-year extension phase for the Block 2B exploration licence, which started in March 2015. The production programme during the extension phase aims to clarify the volumes of hydrocarbons in the various actual and potential reservoirs that have been identified within the licence area. The programme comprises technical appraisals and resulted in a brand new Competent Persons Report (CPR), see below.

The operator and the partnership were of the opinion that it was important to conduct another appraisal before preparing the new asset reports. As a result, they decided to conduct an analysis of drilling data from the discovery well at A-J1 from 1988. It was assessed that this petrophysical study provided a clearer view of the salt content of the reservoir and the study contributed to a better basis for work on the CPR. The analysis was conducted in Spring 2015 and is based on both modern technology and new studies of drilling data produced in the past. The results of the analysis are very positive, indicating a substantial increase in the size of oilbearing formations, given the new data on salt content supported by the analysis.

As part of efforts to obtain 3D seismic data and additional geophysical and geological studies between 2013 and 2015, the partners of the licence hired ERC Equipoise (ERCE) to certify and assess existing data and ascertain contingent resources in the Block 2B licence in South Africa. An analysis of the A-J1 discovery was completed in June 2015, which found that the reservoir contains contingent 2C resources totalling 37 million barrels, with an average of 56 million barrels of oil and considerable potential beyond that with up to 118 million barrels of oil in the form of 3C resources. As a result, the next step in this licence will be to drill an appraisal well to ascertain the size, extent, and production volumes, and thus establish that this is a commercially strong oil project.

Crown Energy announced the signing of a farm-out agreement with Africa Energy in December 2015. The agreement leaves Crown Energy with 10 per cent of the licence in exchange for Africa Energy paying for future drilling of the AJ prospect. Africa Energy is simultaneously acquiring the other partners’ shares of the licence. As a result, Africa Energy will also become the operator in the long term. The farm-out is subject to regulatory approval in South Africa, which means that Africa Energy cannot access the licence until these permits have been awarded. The application for the permit is currently in processing and approval is expected to take at least six months.

License: Block 2B, South Africa

Operator: Africa Energy Corp

Share (working interest): 10%

Other partners: Africa Energy Corp (10%)

Block 2B - South Africa

Stage

Gross contigent resources 2C (mmboe)

Gross prospective resources (mmboe)

Total resources mmboe

Net WI (mmboe)

Exploration/Apprasal

37

355

392

39

Crown Energy's working interest (WI) is 10.%

All resources in mmboe (Million Barrels of Oil Equivalents). Crown Energy calculates reserves and resources according to Society of Petroleum Engineers Petroleum Resources Management System of 2007.

Crown Energy AB (publ)

Norrlandsgatan 18, SE-111 43 Stockholm

Phone+46 8 400 207 20

Fax+46 8 400 207 25

Emailinfo@crownenergy.se

Organisationsnummer556804-8598