Addax Petroleum announces 2006 results

    Funds Flow From Operations increases by 77 per cent


    TORONTO, March 21 /CNW/ - Addax Petroleum Corporation ("Addax Petroleum"
or the "Corporation") (TSX:AXC), an international oil and gas exploration and
production company with a strategic focus on West Africa and the Middle East,
today announced its results for the year ended December 31, 2006. The
financial results are prepared in accordance with Canadian GAAP and the
reporting currency is US dollars.
    This announcement coincides with the filing with the Canadian securities
regulatory authorities of Addax Petroleum's Audited Consolidated Financial
Statements for the year ended December 31, 2006 and related Management's
Discussion and Analysis. Copies of these documents may be obtained via and the Corporation's website,

    CEO's Comment

    Commenting today, Addax Petroleum's President and Chief Executive
Officer, Jean Claude Gandur, said: "I am delighted to report that Addax
Petroleum's first year as a publicly-traded company has also been our most
successful year, both operationally and financially. Addax Petroleum's
business in Nigeria, our core area of operations at the time of our initial
public offering in February 2006, performed above expectations and has been
the key contributor to our record 2006 results. 2006 was also a year of
successful expansion of Addax Petroleum's business; we established a
significant position in the Gulf of Guinea deep water, diversified our
production and reserves base into Gabon through the acquisition of Pan-Ocean
and demonstrated the considerable potential of the Kurdistan Region of Iraq
through testing of the Taq Taq field. I believe that the performance of all of
our business units in 2006 has delivered, and will continue to deliver, value
for Addax Petroleum and our shareholders."

    Selected Financial Highlights

    -   Petroleum sales before royalties in 2006 amounted to $2,029 million,
        an increase of 66 per cent over petroleum sales before royalties of
        $1,219 million in 2005. Petroleum sales before royalties contribution
        from the acquired business of Pan-Ocean Energy Corporation Limited
        ("Pan-Ocean") was $74 million, representing less than 4 per cent of
        the year's sales. An increase of 20 per cent in average crude oil
        sales price to $63.40 per barrel (/bbl) as compared to $52.85/bbl
        realized in 2005 contributed significantly to the year on year growth
        in petroleum sales before royalties.

    -   Net income in 2006 was $243 million ($1.70 per share), an increase of
        18 per cent over net income of $206 million ($1.76 per share) in the
        previous fiscal year.

    -   Funds Flow From Operations for 2006 increased 77 per cent to
        $829 million ($5.80 per share) compared to $468 million ($4.00 per
        share) in 2005.

    -   Consideration for the acquisition of the petroleum properties,
        including license signature and farm-in fees, in 2006 amounted to
        $1,740 million including a cash consideration of $1,441 million to
        acquire the business of Pan-Ocean on September 7th, 2006.

    -   During 2006, the Corporation completed two public offerings of its
        common shares which in aggregate realized net proceeds of
        $665 million for the Corporation. The two public offerings were (a)
        the initial public offering followed by the TSX listing of common
        shares in February and (b) a follow-on issue of subscription receipts
        in August, subsequently converted into common shares, in connection
        with the funding of the acquisition of Pan-Ocean.

    -   Bank debt increased in 2006 by $750 million to $830 million in
        connection with the funding of the acquisition of Pan-Ocean.
        Presently, the bank debt is drawn under a 5-year, $1.5 billion

    The following table summarizes the selected financial highlights.

    Selected financial highlights                           Year ended/
                                                         as at December 31
    $ million unless otherwise stated                   2006    2005  Change
    Petroleum sales before royalties                   2,029   1,219     66%
    Average crude oil sales price, $/bbl               63.40   52.85     20%
    Net income                                           243     206     18%

    Earnings per share, $/share                         1.70    1.76     (3%)
    Average shares outstanding                           143     117     22%
     (basic & diluted), million

    Funds Flow From Operations                           829     468     77%
    Funds Flow From Operations per share, $/share       5.80    4.00     45%

    Property, plant & equipment                        2,083     487    328%
    Total assets                                       2,978     867    244%
    Long-term debt                                       830      80    938%
    Shareholders' equity                               1,168     298    292%

    Selected New Business Highlights

    -   During 2006, Addax Petroleum concluded a number of strategic
        acquisitions which have established a considerable exploration
        presence in the Gulf of Guinea deep water play, expanded the Gulf of
        Guinea shallow water position in Nigeria, established Addax Petroleum
        as a significant developer and producer in Gabon and increased and
        extended participation in the Taq Taq property in the Kurdistan
        Region of Iraq.

    -   New business highlights in 2006 include:

        Gulf of Guinea Deep Water

        -   acquisition of various working interests in Blocks 2, 3 and 4 of
            the Joint Development Zone ("JDZ"), an offshore area operated
            under treaty between Nigeria and Sao Tome and Principe, and in
            OPL291, offshore Nigeria. The Corporation operates JDZ Block 4
            and OPL291 and holds a net acreage position of 360,900 acres in
            the Gulf of Guinea deep water.

        Gulf of Guinea Shallow Water

        -   acquisition of a 40 per cent participating interest in the Okwok
            property, offshore Nigeria and close to OML123, the Corporation's
            largest producing property. Addax Petroleum is Technical Adviser
            for the Okwok property. Appraisal drilling during the second half
            of the year added working interest gross proved plus probable
            reserves as at December 31, 2006 of 9 MMbbl at Okwok.


        -   acquisition of the business of Pan-Ocean, a TSX listed company,
            positioned the Corporation as a significant, growth-oriented
            company in Gabon. The acquired portfolio combines existing
            production with large development potential and considerable
            exploration upside in both operated and non-operated properties.
            As at December 31, 2006, the Corporation's working interest gross
            proved plus probable reserves in Gabon were estimated to be 98

        Kurdistan Region of Iraq

        -   in November, the Taq Taq production sharing agreement was amended
            to reflect revised terms and an increase in Addax Petroleum's
            effective interest to 36 per cent in the Taq Taq field and an
            extension of the Taq Taq license to include a potentially large
            undrilled exploration prospect, Kewa Chirmila. As at
            December 31, 2006, the Corporations's gross working interest
            proved plus probable reserves in Taq Taq were estimated to be 40

    Selected Operational Highlights

    -   Average working interest gross oil production in 2006 was 90,050
        barrels per day (bbl/d) an increase of 38 per cent over 2005 average
        production of 65,280 bbl/d. Production contribution from Pan-Ocean,
        which was acquired in September, 2006, was 3,750 bbl/d, or 4 per cent
        of the annual average.

    -   Working interest gross proved plus probable reserves, as estimated by
        Netherland, Sewell & Associates, in accordance with NI 51-101,
        increased 80 per cent to 354 MMbbl as at December 31, 2006 from
        197 MMbbl as at December 31, 2005.

    -   Capital expenditures increased by 109% to $773 million in 2006 from
        $370 million in 2005, excluding acquisition considerations, farm-in
        fees and license signature fees. Development capital expenditures
        totaled $573 million in 2006, an increase of 65 per cent over 2005
        development capital expenditure of $348 million. Exploration and
        appraisal capital expenditures increased to $200 million in 2006 from
        $22 million in 2005.

    -   Development project highlights in 2006 include:


        -   conversion of Oil Prospecting License OPL90 to Oil Mining License
        -   the start-up of the first development well on the Nda field on
            OML126 within six months of approval by the Nigerian authorities
            of its field development plan;
        -   safe and successful change-out of the OML123 FPSO whereby the
            Knock Taggart FPSO was replaced by the larger Knock Adoon FPSO;
        -   bringing on-stream of 13 additional development wells, 7 in
            OML123 and 6 in OML126; and
        -   ongoing surface facilities development at the Oron and Adanga
            fields on OML123.

        Gabon (since September 7th)

        -   commissioning of the Addax Petroleum-operated onshore production
            and export pipeline system from its Maghena property;
        -   bringing on-stream of two horizontal development wells on the
            onshore Tsiengui and Obangue fields; and
        -   ongoing installation and commissioning work offshore on the non-
            operated Avouma field, which commenced production in early 2007.

    -   Exploration and appraisal activity and highlights in 2006 include:

        Gulf of Guinea Shallow Water (Nigeria and Cameroon)

        -   3D seismic acquisition, processing and interpretation on OPL225,
            offshore Nigeria and Ngosso, offshore Cameroon, preceding
            expected exploration drilling in 2007;
        -   a four well exploration and appraisal campaign on the Okwok field
            all of which encountered oil and tested at oil rates up to 1,220
            bbl/d. Two of the wells drilled were suspended as potential
            future oil producers;
        -   an additional three exploration wells were drilled, one on
            OML123, which encountered significant gas columns but no oil, and
            two on OML126, which were unsuccessful;

        Gulf of Guinea Deep Water (Nigeria and JDZ)

        -   building an expert in-house sub-surface interpretation and
            drilling technical team following the establishment of our Gulf
            of Guinea deep water position in JDZ Blocks 2, 3 and 4 and OPL291
            offshore Nigeria. Subsequently, in March 2007, the Corporation
            contracted the services of a deep water drillship to commence
            drilling in mid-2008;

        Kurdistan Region of Iraq

        -   drilled and tested the first new well on the Taq Taq field,
            TT-04, and commenced drilling of the second new well, TT-05. The
            TT-04 well tested at an aggregate flow rate of 29,790 bbl/d from
            three separate zones;

    -   Operating netbacks in 2006 increased 20 per cent to $44.97/bbl
        compared to $37.43/bbl in 2005. Unit operating expenses increased
        slightly to $6.33/bbl, an increase of less than 1 per cent over the
        2005 level of $6.29/bbl.

    The following table summarizes selected operational information

    Selected operational results                             Year ended/
                                                         as at December 31
                                                        2006    2005  Change
    Annual average working interest
     gross oil production (bbl/d)
    Nigeria (offshore)                                82,460  61,790     33%
    Nigeria (onshore)                                  3,840   3,490     10%
    Gabon (offshore)                                   1,650       -       -
    Gabon (onshore)                                    2,100       -       -
    Total                                             90,050  65,280     38%

    Prices, expenses and netbacks ($/bbl)
    Average realized price                             63.40   52.85     20%
    Operating expense                                   6.33    6.29      1%
    Operating netback                                  44.97   37.43     20%

    Working interest gross oil reserves (MMbbl)
    Proved                                               182     109     67%
    Proved plus Probable                                 354     197     80%
    Proved plus Probable plus Possible                   480     279     72%


    For information purposes, the Corporation declared and paid aggregate
dividends in 2006 of CDN$0.10 per share. A dividend of CDN$0.05 per share was
declared and paid in the first quarter of 2007 relating to the fourth quarter
of 2006.

    Recent Developments

    In February, 2007 the Corporation completed the drilling and flow testing
of the TT-05 well on the Taq Taq field in the Kurdistan Region of Iraq. The
TT-05 well tested at an aggregate oil rate of 26,550 bbl/d from two separate
zones. In March 2007, the Corporation together with Sinopec entered into an
agreement with Aban Offshore Limited for the provision of a deep water
drillship to start drilling as early as the second quarter of 2008 on JDZ
Block 4 and OPL291 where the Corporation is the operator and JDZ Block 2 where
Sinopec is the operator.


    The Corporation's outlook for 2007 is in line with guidance provided to
date. Addax Petroleum expects annual average working interest gross oil
production to approximate 127 to 133 Mbbl/d from its Nigeria and Gabon

    Legal Notice - Forward-Looking Statements

    Certain statements in this press release constitute forward-looking
statements under applicable securities legislation. Such statements are
generally identifiable by the terminology used, such as "anticipate",
"believe", "intend", "expect", "plan", "estimate", "budget", "outlook" or
other similar wording. Forward-looking information includes, but is not
limited to, reference to business strategy and goals, future capital and other
expenditures, reserves and resources estimates, drilling plans, construction
and repair activities, the submission of development plans, seismic activity,
production levels and the sources of growth thereof, project development
schedules and results, results of exploration activities and dates by which
certain areas may be developed or may come on-stream, royalties payable,
financing and capital activities, contingent liabilities, and environmental
matters. By its very nature, such forward-looking information requires Addax
Petroleum to make assumptions that may not materialize or that may not be
accurate. This forward-looking information is subject to known and unknown
risks and uncertainties and other factors, which may cause actual results,
levels of activity and achievements to differ materially from those expressed
or implied by such information. Such factors include, but are not limited to:
imprecision of reserves and resources estimates, ultimate recovery of
reserves, prices of oil and natural gas, general economic, market and business
conditions; industry capacity; competitive action by other companies;
fluctuations in oil prices; refining and marketing margins; the ability to
produce and transport crude oil and natural gas to markets; the effects of
weather and climate conditions; the results of exploration and development
drilling and related activities; fluctuation in interest rates and foreign
currency exchange rates; the 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; risks attendant with oil and gas operations, both domestic and
international; international political events; expected rates of return; and
other factors, many of which are beyond the control of Addax Petroleum. More
specifically, production may be affected by such factors as 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. These factors are
discussed in greater detail in filings made by Addax Petroleum with the
Canadian provincial securities commissions.
    Readers are cautioned that the foregoing list of important factors
affecting forward-looking information is not exhaustive. Furthermore, the
forward-looking information contained in this press release is made as of the
date of this press release and, except as required by applicable law, Addax
Petroleum does not undertake any obligation to update publicly or to revise
any of the included forward-looking information, whether as a result of new
information, future events or otherwise. The forward-looking information
contained in this press release is expressly qualified by this cautionary

    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 profit margin associated with the production and sale of crude
oil and is calculated as the funds flow from operations per barrel sold, prior
to corporate charges. FFFO and Operating Netback are not recognized measures
under Canadian GAAP. Readers are cautioned that these measures should not be
construed as an alternative to net income determined in accordance with
Canadian GAAP or as an indication of Addax Petroleum's performance. Addax
Petroleum's method of calculating this measure may differ from other companies
and accordingly, it may not be comparable to measures used by other companies.

    Analyst Conference Call

    Financial analysts are invited to participate in a conference call today
Wednesday, March, 21 at 11:00 a.m. Eastern 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 3422
    Toll-free (Canada and the US):    1 800 732 1073
    Toll-free (UK):                   00 800 0000 2288
    Toll-free (Switzerland):          00 800 0022 8228

    A replay of the call will be available at (416) 640-1917 or  (877)
289-8525, passcode 21229987 followed by the number sign, until Wednesday,
April 4, 2007.

For further information:

For further information: Mr. Michael Ebsary, Chief Financial Officer,
Tel.: +41 (0) 22 702 94 03,; Mr. Patrick
Spollen, Investor Relations, Tel.: +41 (0) 22 702 95 47,; Mr. Craig Kelly, Investor Relations, Tel.:
+41 (0) 22 702 95 68,; Mr. Mac Penney, Press
Relations, Tel.: +1 (416) 934 80 11,; Ms.
Marie-Gabrielle Cajoly, Press Relations, Tel.: +41(0) 22 702 94 44,

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