VEL

Vanoil Energy Ltd. ("Vanoil") (TSX VENTURE:VEL) is pleased to announce that it
has entered into a non-binding heads of terms to potentially acquire the entire
issued and to be issued share capital of Avana Petroleum Limited ("Avana") from
its shareholders (the "Sellers") on a cash-free debt-free basis (the
"Acquisition").


Highlights:



--  Non-binding heads of terms agreed for the Acquisition in a cash-free-
    debt-free share transaction 
--  If completed, will deliver a 10% interest in Kenya offshore block L9
    with its partners Ophir and FAR Limited and a 25% interest in Seychelles
    Areas A and B with its partner Afren plc 
--  Supports Vanoil's vision of becoming an emerging leader in East African
    oil and gas exploration 
--  Brings geological and geopolitical diversification to the existing
    onshore Vanoil portfolio 
--  Increases, at completion, Vanoil's net recoverable mean unrisked
    prospective resources from 927 million boe to well over two billion boe 
--  Accelerates Vanoil's exploration program, with two 3D seismic surveys
    and at least four drilling events scheduled for 2013 alone



Avana is a privately held Isle of Man company which holds a 10% working interest
in Kenya offshore block L9 with its partners Ophir Energy plc ("Ophir") and FAR
Limited. Block L9 is a 5065 km2 block located off the coast of Mombasa in the
southern waters of Kenya; a region in which all of the neighbouring acreage is
held by Total, Anadarko, BG, Apache, PTT and their respective partners. Block L9
lies directly to the south of block L8, on which Apache discovered gas in the
Mbawa prospect earlier this year. The results of a 560 km2 3D seismic survey
conducted in Q2 2012 suggest that the analogous Mbawa South prospect extends
across the border of block L8 into L9, and a second 1536 km2 3D seismic survey
conducted by Ophir in Q3 2012 illuminated potential oil prospects in a separate
fairway spanning the southern half of block L9 and notably the Simba Graben.
Ophir management presentations in October 2012 note that the estimated gross
recoverable mean unrisked prospective resources on block L9 are 2.7bbbl/11.8 TCF
of natural gas and that drilling will commence in 2013.


Avana also holds a 25% working interest in Seychelles Areas A and B with its
partner Afren plc ("Afren"). Areas A and B comprise in excess of 14,000 km2 in
total and are located on the Seychelles plateau and adjacent zones in the
northern waters of the Seychelles in a region where Amoco previously drilled
three wells with hydrocarbon shows. Avana and its partner have acquired 8,500km
of 2D seismic in the Seychelles (in addition to over 4,000km acquired by other
parties over the blocks) and an extensive new 3D seismic survey is scheduled to
commence in early 2013. Multiple oil seeps have been observed on Areas A and B,
and tar balls of natural origin are abundant throughout the region. In August
2012, Afren's management noted that the estimated gross recoverable mean
unrisked prospective resources on Areas A and B are 2.8 billion boe and that
drilling is due to commence in Q4 2013.


It is proposed that the consideration due to the Sellers will be CAD$15,000,000
(approx), satisfied by the issue to the Sellers of common shares in Vanoil.
Deferred consideration of up to US$4,000,000 (approx.) may become payable in
future, subject to certain conditions being satisfied in connection with the
discovery of hydrocarbon on Avana's offshore blocks. The Acquisition remains
subject to the satisfaction of a number of conditions, including agreeing the
form of and entering into legally binding documentation, formal acceptance by
the Sellers, satisfactory due diligence being carried out, as well as the
parties obtaining all necessary corporate and regulatory approvals which may be
required. 


It is proposed that Sam Malin, CEO of Avana, join the board of Vanoil upon
completion of the Acquisition.


The potential Acquisition supports Vanoil's vision of becoming an emerging
leader in East African oil exploration. The underlying acreage to be acquired
through Avana represents a complementary addition to Vanoil's existing
portfolio, bringing geological and geopolitical diversification. The combined
company will hold blocks in four separate basins, two onshore and two offshore,
spanning four of the most prospective hydrocarbon systems in East Africa. At the
completion of this transaction, Vanoil's net recoverable mean unrisked
prospective resources will more than double, rising from 927 million boe to well
over 2 billion boe. An active exploration program across the portfolio will also
yield regular news flow, with two 3D seismic surveys and at least four drilling
events scheduled for 2013 alone.


Aaron D'Este commented, "The vision of Vanoil's Board of Directors is to provide
a compelling proposition for investors committed to oil exploration in East
Africa. The potential acquisition of Avana represents a very positive step
towards this goal. In a single transaction, Vanoil could double its net
prospective resources, reduce risk through diversification, and gain a host of
well-known joint venture partners with extensive experience across Africa. We
are also delighted that Sam Malin has agreed to join the Board of Vanoil upon
completion and pleased to note that the share-for-share nature of the deal
preserves our cash position. Overall, we are confident that the acquisition of
Avana will prove to be a transformational event for Vanoil and its
shareholders." 


Sam Malin of Avana commented, "The bringing together of Avana and Vanoil will
create a uniquely focused East African exploration company with a wealth of
regional experience. The transaction, once complete, will also meet Avana's
objective of providing its shareholders with a listing on an internationally
recognised stock exchange."


About Vanoil Energy Ltd.

Based in Vancouver, Canada, Vanoil is an internationally diversified resource
company that has a comprehensive portfolio of oil and gas assets in the African
countries of Kenya and Rwanda. In Kenya, Blocks 3A and 3B were acquired in
October 2007 through the signing of a Production Sharing Contract with the
Government of the Republic of Kenya. Blocks 3A and 3B, which cover 24,912 square
kilometers, are part of the vastly under-explored Cretaceous Central African
Rift Basin System. The Company is preparing to drill in Q1 2013 its first
exploration well on its Kenyan concession. Vanoil's is also the holder of 1,631
square kilometers of an oil and gas exclusive licence in the East Kivu Graben in
Rwanda at the southern extension of the Albertine Graben where Heritage and
Tullow Oil made their historic discovery in neighbouring Uganda. 


On behalf of the Board of

VANOIL ENERGY LTD. 

Aaron D'Este, Chief Executive Officer

Cautionary Statement 

By definition of the COGE Handbook - "Undiscovered resources are those
quantities of oil and gas estimated on a given date to be contained in
accumulations yet to be discovered." Further the Handbook states - Caution (per
NI 51-101/5.9(2)(v)(B)) - "There is no certainty that any portion of the
resources will be discovered. If discovered, there is no certainty that it will
be commercially viable to produce any portion of the resources." 


Disclaimer for Forward Looking Information

This news release includes forward looking statements that are subject to
assumptions, risks and uncertainties. Statements in this news release which are
not purely historical are forward looking statements, including without
limitation any statements concerning the Company's intentions, plans, estimates,
beliefs or expectations regarding the future. Although the Company believes that
any such intentions, plans, estimates, beliefs and expectations in this news
release are reasonable, there can be no assurance that any such intentions,
plans, beliefs and expectations will prove to be accurate.


The Company cautions readers that all forward looking statements, including
without limitation those relating to the Company's future operations and
business prospects, are based on assumptions none of which can be assured, and
are subject to certain risks and uncertainties that could cause actual events or
results to differ materially from those indicated in the forward looking
statements. Readers are advised to rely on their own evaluation of such risks
and uncertainties and should not place undue reliance on forward looking
statements.


Any forward looking statements are made as of the date of this news release, and
the Company assumes no obligation to update the forward looking statements, or
to update the reasons why actual events or results could or do differ from those
projected in the forward looking statements. The Company assumes no obligations
to update any forward looking statements, whether as a result of new
information, future events or otherwise.


Oil and Gas Disclosure

For the purpose of calculating unit costs, natural gas volumes have been
converted to a barrel of oil equivalent ("BOE") using six thousand cubic feet
equal to one barrel unless otherwise stated. A BOE conversion ratio of 6:1 is
based upon an energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the wellhead. BOEs may
be misleading, particularly if used in isolation.


FOR FURTHER INFORMATION PLEASE CONTACT: 
Vanoil Energy Ltd.
Malcolm Burke
604-689-1515 x 108
mpb@primarycapital.net


Vanoil Energy Ltd.
Don Padgett
604-689-1515 x 104
dp@primarycapital.net
www.vanoil.ca

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