PetroNor E&P ASA

M&A Activity • Apr 18, 2017

HEADS OF TERMS & EXCLUSIVITY AGREEMENT - SENEGAL & THE GAMBIA

HEADS OF TERMS & EXCLUSIVITY AGREEMENT - SENEGAL & THE GAMBIA

African Petroleum Corporation Limited ("African Petroleum" or

the "Company"), an independent oil and gas exploration

company operating high impact exploration licences offshore

West Africa, is pleased to announce that it has signed non-

binding heads of terms ("Heads of Terms") and a binding

exclusivity agreement ("Exclusivity Agreement") with a well

funded, listed oil and gas company with a strong track record

in off-shore deep-water drilling. The Heads of Terms and

Exclusivity Agreement provide a framework for the incoming

third party to secure a 70% operated interest in the

Company's SOSP production sharing contract ("PSC") in Senegal

and the A1 and A4 licences in The Gambia.

The Exclusivity Agreement grants the incoming third party an

initial eight week period of exclusivity over the Company's

SOSP PSC in Senegal and the A1 and A4 licences in The

Gambia. This period of exclusivity may be further extended

under certain conditions. During the period of exclusivity

the Company and the incoming party will work together to

finalise negotiations with the respective governments in

order to amend the work commitment in Senegal and to enter

the next phase of the licences in The Gambia, complete due

diligence, and agree and execute farm-in documentation.

The Heads of Terms sets out the broad commercial terms under

which the incoming party intends to, subject to certain

conditions, farm-in to the Company's SOSP PSC in Senegal and

the A1 and A4 licences in The Gambia. The terms propose that

the incoming party will pay up to US$8.5 million to the

Company, fund 100% of at least two deep water offshore wells

at a gross cost of up to US$35 million per well, fund 100% of

a 3D seismic acquisition, fund 100% of pre-stack depth

migration ("PSDM") processing/reprocessing, and potentially

fund 100% and 85% respectively of a further two wells at a

gross cost of up to US$35 million per well.

The broad commercial terms outlined in the Heads of Terms are

summarised as follows:

SOSP (Senegal):

The incoming party proposes to farm-in to the SOSP PSC for a

70% operated interest in return for:

a) reimbursing 100% of certain licence fee costs;

b) paying 100% of acquiring 3D seismic and PSDM processing;

and

c) paying 100% of the first exploration well.

A1 (The Gambia):

The incoming party proposes to farm-in to the A1 licence for

a 70% operated interest in return for:

a) reimbursing 100% of certain licence fee costs;

b) paying 100% of PSDM reprocessing;

c) paying 100% of the first exploration well; and

d) paying 85% of the second exploration well.

A4 (The Gambia):

The incoming party to be granted a 15 month option to farm-in

to the A4 licence for a 70% operated interest in return for

paying 100% of the annual licence fees for the licence during

the option period. Should the incoming party exercise its

option then it will pay 100% of the first exploration well in

order to earn its 70% operated interest.

Commenting on this announcement, African Petroleum's Chief

Executive Officer Jens Pace said:

"This is a significant development for the Company with a

well funded credible partner with strong deep-water drilling

experience. Whilst final farm-in agreements are subject to

completion and the successful outcome of negotiations with

the governments in Senegal and The Gambia, we are confident

that the proposed partner's reputation, strong balance sheet

and appetite to explore the potential of these exciting

licences with the drill-bit, will greatly increase our

ability to conclude the discussions with an outcome that

benefits all parties. Our objective is to ensure that African

Petroleum's shareholders retain significant exposure to

several firm and contingent wells, at no cash cost to the

Company, in one of the most exciting hydrocarbon basins in

the world."

For further information, please contact:

Jens Pace, Chief Executive Officer

Stephen West, Chief Financial Officer

Tel: +44 20 3655 7810

Angeline Hicks, Company Secretary

Tel: + 61 401 489 883

Media Contacts:

Buchanan

Ben Romney/Chris Judd

Tel: +44 207 466 5000

About African Petroleum

African Petroleum is an independent oil and gas exploration

company with an equity interest in eight licences in four

countries offshore West Africa (Senegal, the Gambia, Cote

d'Ivoire and Sierra Leone). The Company's assets are located

in proven hydrocarbon basins in the West African Transform

Margin and the Atlantic Margin, where several discoveries

have been made in recent years. The Company is working with

its partner Ophir Energy (operator) on the CI-513 licence in

Côte d'Ivoire to drill an exploration well in May 2017.

For more information about African Petroleum, please see

www.africanpetroleum.com.au