African International Energy To Gain Forest’s South Africa Subsidiary

To buy subsidiary holding 70% stake in Offshore Petroleum Block 2A offshore South Africa.

African International Energy Plc, London, (Frankfurt: 7AE) plans to buy Forest Exploration International (South Africa) from parent Forest Oil Corp., Denver, (NYSE: FST) for $63 million.

AIE has provided Forest with an option payment of $7 million currently in the form of a letter of credit, in exchange for which AIE has a period of 45 days to obtain financing to close on the transaction. If at the end of the Option Period AIE elects to proceed to the closing, AIE must inform Forest and Anschutz South Africa Corp., a subsidiary of Denver-based The Anschutz Exploration Corp., of its intent to do so and provide each with satisfactory evidence that AIE has obtained adequate financing.

Forest South Africa has a commercial gas discovery, Offshore Petroleum Block 2A, in about 100 meters of water about 100 kilometers from the South African coast. Anschutz South Africa has a 30% stake in the block.

After closing, AIE is obligated to pay the following additional amounts: $35 million upon the earlier of the successful negotiation of a sales agreement for natural gas to be produced from Offshore Petroleum Block 2A or the first sale of any such gas, and payments equivalent to $0.49 per thousand cubic feet equivalent for all additional incremental proved resources resulting from the first five development wells drilled on Block 2A and attributable to the interest currently held by Forest.