8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

________________________

FORM 8-K
________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report: October 12, 2010

Date of earliest event reported: October 11, 2010

CAMAC ENERGY INC. (Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation)

001-34525	30-0349798
(Commission File Number)	(IRS Employer Identification Number)

250 East Hartsdale Ave., Hartsdale, New York 10530
(Address of principal executive offices)

(914) 472-6070
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[     ]     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[     ]     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)

[     ]     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))

[     ]     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))

Item 1.01. Entry Into A Material Definitive Agreement.

On October 11, 2010, CAMAC Energy Inc. (the “Company”) entered into a binding Heads of Agreement (the “Agreement”) with CAMAC Energy Holdings Limited (“CEHL”), CAMAC International (Nigeria) Limited (“CINL”), and Allied Energy Resources Nigeria Limited (“Allied,” and together with CEHL and CINL, “CAMAC”). Pursuant to the Agreement, the Company agreed to acquire CAMAC’s full remaining interest (the “Transaction”) in a Production Sharing Contract (the “PSC”) which relates to those certain Oil Mining Leases 120 and 121 granted to Allied by the Federal Republic of Nigeria with respect to oil and gas assets offshore of Nigeria (the “Non-Oyo Contract Rights”). The Company previously acquired all of CAMAC’s interest with respect to that certain oilfield asset known as the Oyo Field (the “Oyo Contract Rights”) under the PSC in a transaction that closed in April 2010, and upon consummation of the acquisition of the Non-Oyo Contract Rights as contemplated under the Agreement, the Company will have acquired CAMAC’s full interest in the PSC.

The Company shall acquire the Non-Oyo Contract Rights from CAMAC in exchange for cash within 15 days of the closing of the Transaction, and, at Allied’s option, cash or shares of Common Stock of the Company, par value $0.001 per share (“Shares”) upon the occurrence of certain milestones, as follows:

a.	Closing of the Transaction: $5 million in cash within 15 days of the closing of the Transaction;
b.	First Milestone: Upon commencement of drilling of the first well outside of the Oyo Field under the PSC, the Company may elect to retain the Non-Oyo Contract Rights upon payment to Allied of $5 million (either in cash, or at Allied’s option, in Shares);
c.	Second Milestone: Upon discovery of hydrocarbons outside of the Oyo Field under the PSC in sufficient quantities to warrant the commercial development thereof, the Company may elect to retain the Non-Oyo Contract Rights upon payment to Allied of $5 million (either in cash, or at Allied’s option, in Shares);
d.	Third Milestone: Upon the approval by the Management Committee (as defined in the PSC) of a Field Development Plan with respect to the development of non-Oyo Field areas under the PSC, as approved by the Company, the Company may elect to retain the Non-Oyo Contract Rights upon payment to Allied of $20 million (either in cash, or at Allied’s option, in Shares); and
e.	Fourth Milestone: Upon commencement of commercial hydrocarbon production outside of the Oyo Field under the PSC, the Company may elect to retain the Non-Oyo Contract Rights (with no additional milestones or consideration required thereafter following payment in full of the following consideration) upon payment to Allied, at Allied’s option of (i) $25 million in Shares, or (ii) $25 million in cash through payment of up to 50% of the Company’s net cash flows received from non-Oyo Field production under the PSC.

If any of the above milestones are reached and the Company elects not to retain the Non-Oyo Contract Rights at that time, then all the Non-Oyo Contract Rights will automatically revert back to CAMAC without any compensation due to the Company and with Allied retaining all consideration paid by the Company to date.

The Agreement contains the following conditions to the closing of the Transaction: (i) the Company, CINL, Allied, and Nigerian AGIP Exploration Limited (“NAE”) must enter into a Novation Agreement in a form satisfactory to the Company and CEHL and that contains a waiver by NAE of the enforcement of Section 8.1(e) of the PSC (preventing Allied from transferring its interest under the PSC to a third party) and that notwithstanding anything to the contrary contained in the PSC, the profit sharing allocation set forth in the PSC shall be maintained after the consummation of the Transaction; (ii) the Company and Allied must enter into a registration rights agreement with respect to the Shares in a form satisfactory to the Company and Allied.; and (iii) the Oyo Field Agreement, dated April 7, 2010, by and among the Company, CEHL and Allied, must be revised in order to remove certain indemnities with respect to Non-Oyo Operating Costs (as defined therein), provided, however, that the indemnities set forth in Sections 3.1(b) and (d) thereunder shall remain in full force and effect. In addition, CAMAC must deliver certain data and equipment to the Company in as-is condition.

The Agreement also contains other customary terms, including, but not limited to, customary representations and warranties, conditions to closing, indemnification and limitation of liability provisions.

The Agreement is intended by the parties to create a binding agreement between the parties with respect to the acquisition of the Non-Oyo Contract Rights by the Company, and the parties agree to endeavor to prepare and enter into a purchase and sale agreement to reflect the terms of the Agreement in further detail and shall endeavour to sign such Agreement as soon as possible, with the Transaction expected to close on or before November 30, 2010.

The foregoing summary of the material terms and conditions of the Agreement is qualified in its entirety by reference to the Agreement, a copy of which is attached hereto as Exhibit 10.1 and incorporated by reference in this Item 1.01.

Related Party Transactions

Dr. Kase Lawal, the Company’s Non-Executive Chairman and member of the Board of Directors, is a director of each of CEHL, CINL, and Allied. Dr. Lawal also owns 27.7% of CAMAC International Limited, which indirectly owns 100% of CEHL, and CINL and Allied are each wholly-owned subsidiaries of CEHL. As a result, Dr. Lawal may be deemed to have an indirect material interest in the transaction contemplated by the Agreement.

The Company, or its officers, directors and stockholders, and CAMAC are parties to the transactions or have the other relationships described in those certain Current Reports on Form 8-K filed by the Company with the Securities and Exchange Commission (the "SEC") on November 23, 2009, March 8, 2010, April 13, 2010, April 21, 2010, May 20, 2010, July 29, 2010, and September 8, 2010, Definitive Proxy Statements on Schedule 14A filed with the SEC on March 19, 2010 and June 16, 2010, Annual Report on Form 10-K/A filed with the SEC on April 30, 2010, and Quarterly Reports on Form 10-Q filed with the SEC on May 14, 2010 and August 9, 2010.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 of this report is incorporated in this Item 2.03 by reference.

Item 3.02 Unregistered Sales of Equity Securities.

As described in Item 1.01 of this Current Report on Form 8-K, pursuant to the Agreement, the Company has agreed to issue Shares to Allied valued at up to $55 million if, upon achievement of certain milestones as described in the Agreement, the Company elects to retain the Non-Oyo Contract Rights and Allied elects to be paid consideration for the Non-Oyo Contract Rights in Shares. The Shares will be issued by the Company in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933 (the “Securities Act”) for the offer and sale of securities not involving a public offering and Rule 506 of Regulation D promulgated thereunder. This exemption will be based on Allied’s agreement that (a) it has access to all of the Company’s information pertaining to the Shares and has been provided with the opportunity to ask questions and receive answers regarding the Shares, (b) it is acquiring the Shares for its own account for investment and not for the account of any other person and not with a view to or for any distribution within the meaning of the Securities Act, and (c) it will not sell or otherwise transfer the purchased Shares unless in compliance with state and federal securities laws. Allied is also expected to represent that it is an accredited investor as defined in Rule 501(a) under the Securities Act and that there was no general solicitation or advertising in connection with the offer and sale of the Shares.

The information pertaining to the Company’s common stock in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference into this Item 3.02.

Item 7.01 Regulation FD Disclosure.

On October 12, 2010, the Company issued a press release announcing the entry into the Agreement and certain related matters. A copy of the Company’s press release, dated October 12, 2010, announcing the entry into the Agreement and certain related matters is furnished herewith as Exhibit 99.1. In addition, beginning on October 12, 2010, and at other times thereafter, the Company intends to present or distribute a PowerPoint slide presentation entitled “IPAA OGIS San Francisco” to various institutions, funds, and sophisticated investors, including to participants at the IPAA Oil and Gas Investment Symposium in San Francisco, California on October 12, 2010. The PowerPoint slide presentation is accessible on the Company’s website at www.camacenergy.com, and is furnished herewith as Exhibit 99.2. The Company undertakes no obligation to update, supplement or amend the materials attached as Exhibit 99.2.

In accordance with General Instruction B.2 of Form 8-K, the information in this Section 7.01 of this Current Report on Form 8-K shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing. The information set forth in, or in any exhibit to, this Form 8-K shall not be deemed an admission as to the materiality of any information in this report on Form 8-K that is required to be disclosed solely to satisfy the requirements of Regulation FD.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit	Description
10.1	Heads of Agreement, dated October 11, 2010, by and among CAMAC Energy Inc., CAMAC Energy Holdings Limited, Allied Energy Resources Nigeria Limited, and CAMAC International (Nigeria) Limited.
99.1	Press Release, dated October 12, 2010.
99.2	IPAA OGIS San Francisco PowerPoint slide presentation, dated October 12, 2010

SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: October 12, 2010

CAMAC Energy Inc.

^By: /s/ Byron A. Dunn                       
            Byron A. Dunn
            Chief Executive Officer

EXHIBITS

Exhibit	Description
10.1	Heads of Agreement, dated October 11, 2010, by and among CAMAC Energy Inc., CAMAC Energy Holdings Limited, Allied Energy Resources Nigeria Limited, and CAMAC International (Nigeria) Limited.
99.1	Press Release, dated October 12, 2010.
99.2	IPAA OGIS San Francisco PowerPoint slide presentation, dated October 12, 2010

EX-10.1

Exhibit 10.1

EXECUTION COPY

HEADS OF AGREEMENT

These Heads of Agreement (this “Heads of Agreement”), dated October 11, 2010 (the “Effective Date”), is entered into by and among CAMAC Energy Inc, a Delaware corporation (“CEI”), CAMAC Energy Holdings Limited, a Cayman Islands company (“CEHL”), Allied Energy Resources Nigeria Limited (“Allied”), and CAMAC International (Nigeria) Limited (“CINL,” and together with CEHL and Allied, “CAMAC”). CEI, CEHL, Allied and CINL are sometimes referred to herein collectively as the “Parties” or individually as a “Party.”

RECITALS

WHEREAS, on August 6, 2010, CEI and CAMAC entered into a Memorandum of Understanding (the “MOU”), regarding CEI’s intention to enter into a proposed transaction (the “Transaction”) pursuant to which CEI would acquire from CEHL of (i) all of the interest currently held by CEHL’s two wholly-owned subsidiaries, Allied and CINL, in that certain Production Sharing Contract (the “PSC”), dated July 22, 2005, by and between Allied, CINL, and Nigerian AGIP Exploration Limited (“NAE”), which PSC relates to those certain Oil Mining Leases 120 and 121 granted to Allied by the Federal Republic of Nigeria, commencing on February 27, 2001, and of which CAMAC currently holds a sixty percent (60%) participating interest (“OML 120/121”); and (ii) the joint and several obligations of CINL and Allied to NAE under the PSC, subject to those rights and obligations that are, by law, required to remain with Allied (the foregoing interests and obligations shall be referred to herein as the “Contract Rights”);

WHEREAS, in consideration for the transfer of the Contract Rights to CAMAC Petroleum Limited, a wholly-owned Nigerian subsidiary of CEI (“CPL”), the Parties agreed that CEHL (or its assignee) would receive such consideration to be agreed by the Parties;

WHEREAS, pursuant to the MOU, the Parties agreed that CINL, Allied and NAE would enter into a Novation Agreement (the “Novation Agreement”) pursuant to which (i) CINL and Allied shall novate to CPL their respective participating interests in and all rights and obligations under the PSC (other than in relation to the Oyo Asset previously acquired by CEI from CAMAC on April 7, 2010, and those rights and obligations that are, by law, required to remain with Allied), and (ii) CPL shall assume the joint and several obligations of CINL and Allied under the PSC, other than those obligations that are, by law, required to remain with Allied); and

WHEREAS, following further evaluation of the Contract Rights, CEI has offered, and CAMAC has agreed upon, the definitive and binding essential terms of the Transaction as set forth herein.

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EXECUTION COPY

NOW, THEREFORE, in consideration of the premises, and the mutual covenants and agreements set forth herein, the Parties agree as follows:

1. Transaction Structure. The Transaction shall be structured as an acquisition of the Contract Rights assets of CAMAC by CEI through its wholly-owned Nigerian subsidiary, CAMAC Petroleum Limited (“CPL”), in exchange for cash and/or Common Stock of CEI (“Shares”) upon the achievement of certain milestones and at CEI’s election as follows:

a.	Closing of Transaction: Within 15 days of the closing of the Transaction, CEI shall pay to Allied $5 million (the “Closing Cash Consideration”);
b.	First Milestone: Upon commencement of drilling of the first well outside of the Oyo Field (as defined in the Purchase and Sale Agreement, dated November 18, 2009, as amended, by and between the Parties (the “PSA”), and hereinafter referred to as the “Oyo Field”) under the PSC, CEI may elect to retain the Contract Rights (the “First Milestone Option”) upon payment to Allied of $5 million (either in cash, or at Allied’s option, in Shares) (the “First Milestone Consideration”);
c.	Second Milestone: Upon discovery of hydrocarbons outside of the Oyo Field under the PSC in sufficient quantities to warrant the commercial development thereof, CEI may elect to retain the Contract Rights (the “Second Milestone Option”) upon payment to Allied of $5 million (either in cash, or at Allied’s option, in Shares) (the “Second Milestone Consideration”);
d.	Third Milestone: Upon the approval by the Management Committee (as defined in the PSC) of a Field Development Plan with respect to the development of non-Oyo Field areas under the PSC, as approved by CEI, CEI may elect to retain the Contract Rights (the “Third Milestone Option”) upon payment to Allied of $20 million (either in cash, or at Allied’s option, in Shares) (the “Third Milestone Consideration”); and
e.	Fourth Milestone: Upon commencement of commercial hydrocarbon production outside of the Oyo Field under the PSC, CEI may elect to retain the Contract Rights (with no additional milestones or consideration required thereafter following payment in full of the Fourth Milestone Consideration, as defined below) (the “Fourth Milestone Option,” and together with the First Milestone Option, the Second Milestone Option, and the Third Milestone Option, the “Milestone Options”) upon payment to Allied, at Allied’s option of (i) $25 million in Shares, or (ii) $25 million in cash through payment of up to 50% of CEI’s net cash flows received from non-Oyo Field production under the PSC (the “Fourth Milestone Consideration,” and together with the Closing Cash Consideration, First Milestone Consideration, Second Milestone Consideration, and Third Milestone Consideration, the “Consideration”).

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EXECUTION COPY

Notwithstanding anything to the contrary herein, if, at any time that an opportunity for CEI to exercise a Milestone Option occurs, CEI elects not to exercise such Milestone Option, then all the Contract Rights will automatically revert back to CAMAC without any compensation due to CEI and with Allied retaining all Consideration paid by CEI to date.

Notwithstanding the above, CEI shall not assign or transfer any of its interest in the PSC without first obtaining the consent of Allied and paying all remaining amounts that would have been due to Allied had CEI exercised all options set forth above.

For purposes of the Agreement, the purchase price per Share shall be calculated as the 30 day weighted average closing sale price per share of CEI’s Common Stock, as quoted by NYSE Amex (or other national exchange that CEI may be listed upon at such time), measured back from the first business day prior to the occurrence of the applicable Milestone Option event.

In the event that the PSC is terminated by any party after the Effective Date, Allied shall be obligated to fulfill the obligations of NAE under the PSC or secure a third party acceptable to CEI to do the same, and shall obtain such instruments, assignments, certificates, notices, statements, consents, agreements, deeds, papers and documents, as necessary to give CEI the same rights and obligations with respect to the Contract Rights as provided under these Heads of Agreement.

The Parties agree that Section 8.8 and Article X of the PSA (as defined below) are incorporated by reference herein as if they were included herein.

2. Purchase and Sale Agreement. The parties hereto shall prepare and enter into a purchase and sale agreement (the “Agreement”) to reflect the terms of these Heads of Agreement in further detail and shall endeavour to sign such Agreement as soon as possible but in any event on or before November 30, 2010.

3. Terms of the Transaction. The Parties hereto make the following representation and warranties with respect to the Transaction, and the proposed Agreement will contain representations and warranties usual and customary for transactions of this nature, including the following:

A.

CEHL represents and warrants that:

(1) it has the power and authority to enter into these Heads of Agreement, the Agreement, and consummate the Transaction detailed herein; (2) the Transaction will not violate or conflict with any agreement to which CAMAC is a party or result in a default by any party thereunder; (3) there are no legal or regulatory actions outstanding or, to its knowledge, pending against CAMAC or any other parties to the PSC or OML 120/121; (4) no consent is needed for the Novation of the PSC by CAMAC to CPL; (5) CAMAC has, and upon the novation, CPL will have, good and valid title to the interest in OML 120/121 that is being transferred under the Novation Agreement, and at closing of the Transaction this interest shall be free and clear of any liens, except for certain permitted liens to be set forth in the Agreement; (6) CAMAC’s rights and obligations under the PSC and OML 120/121 constitute all the material contracts and asset rights used by CAMAC with respect to OML 120/121; (7) the PSC and the OML 120/121 are each in full force and effect; (8) there are no contracts, agreements or other instruments regarding the interests to be transferred by which CAMAC is bound, except for the PSC and OML 120/121 themselves and as specifically set forth in the Agreement; (9) except as provided in the PSC or the OML 120/121, there are no outstanding commitments to make capital expenditures with respect to the assets that will be transferred that are binding on CAMAC, and there are no bonds, letters of credit, guarantees, deposits or other security furnished by CAMAC or any affiliate of CAMAC relating to OML 120/121 that will require expenditures in excess of $100,000; and (10) CAMAC’s and interests in the PSC and OML 120/121 are not subject to any preferential rights to purchase, rights of first opportunity or similar rights, or any required third party consents to assignment that may be applicable to the Transaction other than as may be specified in the PSC or OML 120/121 and as may be provided in the Right of First Refusal Agreement, dated April 7, 2010 by and between CEI and CAMAC.

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EXECUTION COPY

B.	CEI represents and warrants that:
	(1) it has the power and authority to enter into these Heads of Agreement, the Agreement, and consummate the Transaction as detailed herein;
	(2) the Transaction will not violate or conflict with any agreement to which it or any of its subsidiaries is a party or result in a default by any party thereunder; and
	(3) there are no legal or regulatory actions outstanding or, to its knowledge, pending against it, its subsidiaries or any other parties to the production sharing contracts, joint venture agreements, licenses, leases, and other ventures of which CEI or its subsidiaries are participants or other material agreements to which CEI or its subsidiaries are legally bound (the “CEI Contracts”).

4. Condition to Closing. The closing of the Transaction shall be contingent upon the satisfaction of the following conditions, and the Agreement will contain these conditions to closing and such other conditions as usual and customary for transactions of this nature, including those conditions that CAMAC would require of CEI, and those conditions CEI would require of CAMAC:

• Payment of the Closing Cash Consideration to Allied.

• Receipt of all necessary approvals, if any, from third parties and governmental authorities having jurisdiction over the matter or matters in question, including the U.S. Securities and Exchange Commission, and any other foreign and domestic required parties and government entities.

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EXECUTION COPY

• Entry by CPL, CINL, Allied and NAE into a Novation Agreement in a form satisfactory to CEHL and CEI, which agreement shall include a waiver by NAE of the enforcement of Section 8.1(e) of the PSC and its agreement that, notwithstanding anything to the contrary contained in the PSC, the profit sharing allocation set forth in the PSC shall be maintained after the consummation of the Transaction.

• Entry by CEI and Allied into a registration rights agreement with respect to the Shares in a form satisfactory to CEI and Allied.

• The revision of the Oyo Field Agreement, dated April 7, 2010, by and among CPL, CEHL and Allied, in order to remove certain indemnities with respect to Non-Oyo Operating Costs (as defined therein), provided, however, that the indemnities set forth in Sections 3.1(b) and (d) thereunder shall remain in full force and effect.

• There shall be no effective injunction, writ or preliminary restraining order or any order of any nature issued by a governmental authority of competent jurisdiction prohibiting the Transaction, and no proceeding or lawsuit shall have been commenced by any governmental authority that is reasonably likely to result in any such injunction, writ or preliminary restraining order or to otherwise prohibit or make illegal the consummation of the Transaction.

• Accuracy of the representations and warranties made by the parties in the Agreement, performance of and compliance with all covenants of the parties in the Agreement, and the execution and delivery of certificates of the parties certifying these matters as of the date of closing of the Transaction.

• Such other closing conditions as the parties reasonably require.

• Execution and delivery of all other agreements and instruments reasonably necessary to consummate the Transaction.

• Delivery by CAMAC to CEI of copies of all documents, computer files, records, data and other materials in CAMAC’s possession, including, but not limited to, such materials necessary or otherwise reasonably requested by CEI in order for CEI to undertake field development planning, all such material to be in “as-is” condition (collectively, “Data”).

• Delivery by CAMAC to CEI of two (2) SMT geophysical workstations located in Houston, Texas, and two (2) SMT geophysical workstations located in Lagos, Nigeria, including corresponding Micro Seismic Technology Geophysical software (SMT) and Petrel software and licenses, to the extent such software licenses are assignable or transferrable by CAMAC to CEI, and all in “as-is” condition (the “G&G Workstations”).

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EXECUTION COPY

• Delivery by CAMAC to CEI of one (1) engineering workstation located in Lagos, Nigeria, including corresponding engineering software and licenses, to the extent such software licenses are assignable or transferrable by CAMAC to CEI, and all in “as-is” condition (the “Engineering Workstation,” and together with the Data and G&G Workstations, the “Deliverables”). In the event the Contract Rights revert back to CAMAC as described in Section 1 above, CEI shall return all Deliverables to CAMAC in “as-is” condition as of such time.

5. Governing Law. These Heads of Agreement will be governed by and construed under the laws of the State of Texas without regard to conflicts of law principles.

6. Binding Agreement. These Heads of Agreement are intended by the Parties to create a binding agreement between the Parties with respect to the subject matter hereof, and the Parties agree to endeavor to prepare and enter into the Agreement to reflect the terms of these Heads of Agreement in further detail and shall endeavour to sign such Agreement as soon as possible but in any event on or before November 30, 2010.

These Heads of Agreement supersedes in its entirety the MOU and any previous discussions between the parties, which previous discussions shall have no further force and effect.

These Heads of Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original instrument, but all of which together shall constitute but one and the same Heads of Agreement.

[SIGNATURE PAGE FOLLOWS]

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EXECUTION COPY

The Parties hereby execute these Heads of Agreement as of the Effective Date first written above.

CAMAC ENERGY INC.

By: /s/ Byron Dunn____________________
             Byron Dunn
             President and Chief Executive Officer

CAMAC ENERGY HOLDINGS LIMITED

By:_/s/ Dr. T. Fahm__________________

Name: Dr. T. Fahm                                              

Title: Director                                                      

CAMAC INTERNATIONAL (NIGERIA) LIMITED

By:_/s/ Kamoru Lawal_________________         

Name: Kamoru Lawal                                         

Title: Director                                                      

ALLIED ENERGY RESOURCES NIGERIA LIMITED

By:_/s/ Kamoru Lawal________________

Name: Kamoru Lawal                                        

Title: Director                                                     

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EX-99.1

Exhibit 99.1

CAMAC ENERGY INC. ENTERS AGREEMENT TO ACQUIRE CONTRACT RIGHTS
LOCATED OFFSHORE NIGERIA

Hartsdale, New York, October 12, 2010: CAMAC Energy Inc. (NYSE Amex: CAK) (the "Company"), a US-based energy company engaged in the development and production of oil and gas in West Africa and China, announced today that it has entered into a binding Heads of Agreement (the "Agreement") with Allied Energy Resources Nigeria Limited and certain of its affiliates ("Allied") to acquire all of Allied’s remaining interest in a Production Sharing Contract (the "PSC") which relates to those certain Oil Mining Leases 120 and 121 ("OML 120" and "OML 121") granted to Allied by the Federal Republic of Nigeria with respect to oil and gas assets offshore of Nigeria (the "Non-Oyo Contract Rights"). The Company previously acquired all of Allied’s interest with respect to the Oyo Field, located in OML 120 (the "Oyo Contract Rights") under the PSC in a transaction that closed in April 2010. Upon consummation of the transaction contemplated under the Agreement, the Company will have acquired Allied’s full interest in the PSC and recombined the Oyo field within OML 120. The transaction is expected to close on or before November 30, 2010 and is subject to certain closing conditions.

The OML 120 block is located directly east of OML 133 (containing the giant Erha Field) and north of OML 121. It covers an area 916.6 sq. km in water depths ranging from 150m to 1000m. Covered by 3D seismic, this block has proven stacked oil and gas reserves in the shallow (Pliocene) part of the Oyo Field located within the OML 120 block, interests in which field the Company acquired from Allied in April 2010.

The OML 121 block is located directly south of the OML 120 block, and covers an area 887 sq. km in water depths ranging from 150m to 1000m. The OML 120 block has proven more than 90 feet of gas in the shallow (Pliocene) part of the Ebolibo-1 in the Ebolibo Field. The Ebolibo-1 well was drilled in late 2008. The deeper Miocene sequences in this block, where promising prospects have been identified nearby, are untested. Potential recoverable reserves in seismically defined prospects are estimated to be in excess of 100 million barrels. Identified crude oil reserves potentials for both OML 120 and the adjoining OML 121 are estimated at over 500 million bbls, with some exciting prospects having been identified in the deeper Miocene interval.

In exchange for the Non-Oyo Contract Rights, the Company has agreed to an option-based de-risking consideration structure, whereby it will pay $5 million in cash to Allied within 15 days of the closing of the transaction, and has the option to elect to retain these contract rights upon payment of additional consideration to Allied upon the occurrence of certain milestones as follows: (i) upon commencement of drilling of the first well outside of the Oyo Field under the PSC, the Company may elect to retain the Non-Oyo Contract Rights upon payment to Allied of $5 million, either in cash, or at Allied’s option, in shares of Company Common Stock; (ii) upon discovery of hydrocarbons outside of the Oyo Field under the PSC in sufficient quantities to warrant the commercial development thereof, the Company may elect to retain the Non-Oyo Contract Rights upon payment to Allied of $5 million in cash or shares; (iii) upon the approval by the Management Committee of a Field Development Plan with respect to the development of non-Oyo Field areas under the PSC, the Company may elect to retain the Non-Oyo Contract Rights upon payment to Allied of $20 million in cash or shares; and (iv) upon commencement of commercial hydrocarbon production outside of the Oyo Field under the PSC, the Company may elect to retain the Non-Oyo Contract Rights upon payment to Allied, at Allied’s option of (i) $25 million in shares, or (ii) $25 million in cash through payment of up to 50% of the Company’s net cash flows received from non-Oyo Field production under the PSC. There are no further payments due to Allied after satisfaction of this milestone.

If any of the above milestones are reached and the Company elects not to retain the Non-Oyo Contract Rights at that time, then all of the Non-Oyo Contract Rights will automatically revert back to Allied without any compensation due to the Company and with Allied retaining all consideration paid by the Company to date.

Byron A. Dunn, President and Chief Executive Officer of the Company, said: "The signing of this agreement with the Allied group is the culmination of several months of effort by the Company’s management and Board of Directors, working closely with Allied, to bring to the Company the first of many potential acquisition opportunities. This transaction will change the complexion of the Company’s West African operations to include this exciting resource play in the Gulf of Guinea with prospects estimated at 500 million bbls of potential recoverable oil resources on these two blocks.

Mr. Dunn continued, "The acquisition of the PSC contract rights with respect to the OML 120 and OML 121 blocks represents significant potential value for the Company. These contract rights extend under and well beyond the limits of the currently producing Oyo Field and are equivalent in size to 77 blocks in the Gulf of Mexico. These blocks are in a proven hydrocarbon complex, have stacked reservoirs, including the prolific regional producing Miocene trend, and are completely covered by four recently acquired high resolution 3D seismic surveys.

What is exciting about the OML 120 and OML 121 blocks is that the Oyo Field, which is located in the central portion of OML 120 block, has its main producing reservoirs in younger Pliocene aged, deep water sandstones that have not been found to exist in other nearby fields. The main production from the surrounding nearby giant fields, including the Erha field complex (Esso), the Bosi field (Esso), the Bonga field (Shell), and the Sonam field (Chevron), which collectively represent over 2.5 billion bbls of recoverable oil reserves and over 7 tcf of gas, are from resources found in Miocene aged reservoirs. In addition to production from Pliocene reservoirs, the OML 120 and OML 121 prospects have been identified in the Miocene trend. It is estimated that these Miocene prospects have over 500 million bbls of potential recoverable oil resources. Many of these prospects have been third party independently evaluated and confirmed."

Dr. Kase Lawal, Chairman of the Company, and Chairman and Chief Executive Officer of CAMAC International Corporation and a director of Allied, commented: "This agreement represents a further step in the relationship between CAMAC International Corporation, Allied, and CAMAC Energy, and demonstrates the continued commitment of CAMAC International Corporation and Allied to working with CAMAC Energy to offer it exciting exploration and production opportunities to expand its asset base. We look forward to continuing to participate in CAMAC Energy’s existing and future energy projects, and continuing to be a strategic stakeholder in a company that is positioned for growth based on a sound business plan, responsible corporate governance, and high ethical standards."

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For more information on the Company, please visit its website at www.CAMACEnergy.com.

About CAMAC Energy Inc.:

CAMAC Energy Inc. (NYSE Amex: CAK) is a U.S.-based energy company engaged in the development and production of oil and gas. The Company focuses on early cash flow and high-return global energy projects and currently has operations in Nigeria and, through its Pacific Asia Petroleum subsidiaries, in China. The Company's principal assets include interests in the Oyo Oilfield, an offshore oil asset in deepwater Nigeria that started production in December 2009, a 100% interest in the Zijinshan Block gas asset located in the Shanxi Province, China, and the Enhanced Oil Recovery and Production business in Northern China. The Company was founded in 2005 and was formerly known as Pacific Asia Petroleum, Inc. CAMAC Energy Inc. has offices in Hartsdale, New York, Houston, Texas, Beijing, China, and Lagos, Nigeria.

About CAMAC International Corporation:

Founded in 1986 and headquartered in Houston, Texas, CAMAC International Corporation is a privately-held, global energy corporation with interests in the exploration and production of crude oil and natural gas in West Africa and South America energy properties, engineering and consulting services, and crude oil and refined products trading for markets in Africa, Europe, North America and South America. In 2008, CAMAC earned revenues of $2.43 billion.

Cautionary Statement Relevant To Forward-Looking Information

This press release may contain certain "forward-looking statements" relating to the business of CAMAC Energy Inc. (the "Company") and its subsidiaries. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding: the general ability of CAMAC Energy Inc. to achieve its commercial objectives; the business strategy, plans and objectives of CAMAC Energy Inc. and its subsidiaries; and any other statements of non-historical information. Words such as "anticipates," "expects," "plans," "projects," "believes," "seeks," "estimates," and similar expressions are intended to identify such forward-looking statements. The statements are based upon management’s current expectations, estimates and projections, are not guarantees of future performance, and are subject to a variety of risks, uncertainties and other factors, some of which are beyond CAMAC Energy Inc.’s control and are difficult to predict, including those discussed in CAMAC Energy Inc.'s periodic reports that are filed with the SEC and available on its website (http://www.sec.gov). You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, CAMAC Energy Inc. undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

All statements in this press release relating to oil and gas "resources," "prospects" and "potential" are not references to "proved reserves" as defined under applicable SEC regulations, and are not permitted in the Company’s filings with the SEC.

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Media Contact:

CAMAC Energy Inc.
Bonnie Tang
PR@camacenergy.com
(713) 364 4114
www.camacenergy.com

Outside Investor Relations Contact:

Liviakis Financial Communications, Inc
John Liviakis
(415) 389-4670
John@Liviakis.com
www.liviakis.com

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EX-99.2

Exhibit 99.2