The Gambia & Senegal: The Company is continuing meetings and discussions with the Governments of The Gambia and Senegal with a view of aligning the requirements of potential incoming partners with the respective licence terms and obligations. Post period end, in February 2017, a delegation from the Company travelled to The Gambia to attend the 52nd Independence Anniversary Celebrations and Inauguration of His Excellency Mr Adama Barrow, President of the Republic of The Gambia, and to hold a private meeting with President Barrow.

African Petroleum delegation meeting President Barrow in The Gambia, 19 February 2017 African Petroleum Corporation Ltd Interim Financial Report for the Fourth Quarter 2016 6 The Company has signed a non-exclusive Letter of Intent (“LOI”) with an undisclosed International E&P company with respect to Licences A1 and A4, offshore The Gambia (announced 31 August 2016). The LOI represents a non-binding commercial proposal regarding the possible acquisition of interests in Licences A1 and A4 where African Petroleum holds 100% operated working interest in both blocks.

The proposal set forth within the LOI is subject to ongoing due diligence and commercial negotiations. In the meantime, the Company is in active discussions with other interested companies. This part of the Atlantic Margin has become highly active with the recent exploration success of third party operators, namely Cairn Energy in Senegal and Kosmos Energy in Senegal and Mauritania.

A significant level of activity in the region is ongoing as Cairn Energy and its partners commenced a multi-well exploration and appraisal drilling programme across their Senegal acreage in December 2015, with the first three appraisal wells SNE-2, SNE-3 and SNE-4 being announced as successful in January 2016, March 2016 and May 2016 respectively. In addition, Kosmos Energy extended their Mauritania drilling campaign further south and commenced drilling in Senegal in December 2015. This has led to a string of very successful drilling programmes by Kosmos Energy through the first half of 2016, including significant gas discoveries at Tortue, Geumbeul-1 and Ternanga-1, and the successful appraisal well at Ahmeyim.  

In December 2016 Kosmos announced a farm-out to BP for $916 million in fixed consideration and up to $2 billion in variable consideration. Despite the challenging market conditions for exploration activity and the prolonged nature of discussions with potential partners and governments, the Company remains confident that current advanced discussions can yield farm-outs in due course. Further announcements will be made when appropriate. LICENCE PHASES African Petroleum is actively engaged in discussions with a number of governments regarding possible licence extensions and amendments to existing and future work obligations. The Company maintains strong relationships with host governments founded upon recognition of the Company’s efforts to progress the exploration of these licences.

Based on the dialogue experienced to date with the governments of Senegal, The Gambia, Côte d’Ivoire and Sierra Leone, we are confident that we will achieve outcomes that are mutually beneficial for our host countries, potential industry partners and African Petroleum. On 23 November 2016 the Company announced that Liberian production sharing contracts LB-08 and LB-09 (“PSCs”) had expired and will not be extended. The Company had been in discussions with the relevant Liberian authorities regarding the possible amendment of terms and extension of these PSCs to enable the Company additional time to attract an industry partner whilst not enduring costly work commitments; however, agreement could not be reached. Please refer to the next section “Licence Information” for further information on specific licences.


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