TOWER RESOURCES PLC — Interim / Quarterly Report 2016

Nov 15, 2016

WENTWORTH RESOURCES LIMITED INTERIM FINANCIAL REPORT FOR THE THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2016

All financial figures are unaudited and in US dollars except where otherwise stated

Q3 2016 HIGHLIGHTS

Financial

• Gas sales revenue of \$2.38 million for the quarter, compared to \$0.97 million in Q3 2015.
• Loss before tax for the quarter of \$0.9 million compared to a loss before tax of \$1.25 million in Q3 2015.
• Exploration, appraisal and development capital expenditures of \$0.97 million compared to \$1.51 million during Q3 2015.
• Outstanding debt of \$21.7 million following a \$3.33 million principal payment.
• Cash and cash equivalents on hand of \$3.73 million at September 30, 2016 compared with \$2.75 million on hand at December 31, 2015.
• September 30, 2016 working capital was \$1.59 million compared to \$11.98 million at December 31, 2015.
• Continue to make progress to expand the Company's external debt capacity of up to \$50 million.

Operational

Tanzania

• Achieved average gross daily gas production for the third quarter of 34 MMscf/d down from 51 MMscf/d during Q2 2016. Contributing to the production decline from Q2 was the suspension of operations at the Symbion gas-fired power plant as a result of a dispute with the Tanzania Government, overhauls and commissioning of gas turbines at Ubungo II and Kinyerezi I power stations, and allocation of gas demand to industry competitors at the Songo Songo gas processing facility. The year-to-date average gross daily production is 44 MMscf/d.
• Expansion of the liquid separation units and gas processing facilities at Manzi Bay was ongoing during Q3 2016 with commissioning and full operations expected in the coming months.
• Potential increase in industrial consumer demand includes supplying the Dangote cement plant (30-40 MMscf/d) and resumption of operations at the Symbion power plant (20 MMscf/d).

Mozambique

• Engaged a third-party consulting firm to reprocess approximately 1,000 km of 1984/1985 vibroseis data which represents all of the existing regional seismic coverage over the Tembo appraisal area.
• Finalized the design details of a new 2D seismic survey of approximately 700 km data. This survey will further Wentworth's ability to identify a suitable appraisal location for an appraisal well in 2018.
• Ongoing analysis of existing seismic and well data in Mozambique and Tanzania to further our understanding of the regional Cretaceous geologic section.
• Once the estimated cost of the new 2D seismic survey and preliminary cost of an appraisal well are determined, it is the Company's intention to secure an industry partner prior to commencing further capital activity associated with the appraisal program.

Financial and Operating Results

	Quarter ended			Nine months ended
Financial	September	September	%	September	September	%
(Figures \$000's, except per share data)	2016	2015	Change	2016	2015	Change
Gas revenue	2,384	972	145	9,020	1,536	487
Adjusted EBITDA(1)	541	(1,259)	143	2,439	(5,441)	145
Loss from operations	(398)	(1,829)	(78)	(1,167)	(6,697)	(83)
Net loss and comprehensive loss	(3,591)	(1,249)	188	(4,670)	(5,777)	(19)
Basic and diluted net loss per share (\$ per share)	(0.02)	(0.01)	-	(0.03)	(0.04)	(25)
Net cash generated from/(used in) operating activities	433	(3,114)	114	1,304	(4,918)	127
Capital expenditures	965	1,506	(36)	3,788	20,491	(82)

(1) "Adjusted EBITDA" is calculated as revenue less production and operating expense and general and administrative expenses

	Quarter ended			Nine months ended
	September	September	%	September	September	%
Operating (Mnazi Bay Concession)	2016	2015	Change	2016	2015	Change
Sales to TPDC
Price per MMBtu (US\$)	3.01	3.00	-	3.01	3.00	N/A
Gas sales - MMBtu (net to Wentworth)	705,152	229,287	207	2,742,748	229,287	N/A
Sales to Tanesco (Mtwara 18MW Power
Plant):
Price per MMBtu (US\$)	5.36	5.36	-	5.36	5.36	-
Gas sales - MMBtu (net to Wentworth)	49,256	53,188	(7)	144,473	158,382	(9)
Production
Production volumes (MMscf) – net to Wentworth	737,446	276,125	167	2,822,308	378,953	2,022
Production and operating cost per MMscf (US\$)	1.05	2.72	(61)	0.87	6.98	(87)
Gross average daily production (MMscf/d)	34.3	12.6	170	44.2	5.7	675

	As at
	September 30,	December 31,	%
Statement of Financial Position (Figures 000's)	2016	2015	Change
Total assets	\$212,112	\$216,577	(2)
Net assets	\$176,212	\$180,411	(2)
Cash and cash equivalents	\$3,728	\$2,746	36
Long-term receivables (including current portion)	\$31,371	\$37,087	(15)
Credit facilities (principal balance)	\$21,667	\$26,000	(17)
Outstanding number of shares, options and warrants
Common shares	169,535	169,535	-
Options	10,600	11,950	(11)
Warrants	-	5,000	(100)

Third Quarter Ended September 30, 2016 Results

	Quarter ended			Nine months ended
Reconciliation of Adjusted EBITDA	September	September	%	September	September	%
	2016	2015	Change	2016	2015	Change
Loss from operations Add back:	(398)	(1,829)		(1,167)	(6,697)
Share based compensation	107	136		471	594
Depreciation and depletion	832	434		3,135	662
Adjusted EBITDA	541	(1,259)	143	2,439	(5,441)	145

Management Discussion and Analysis

This Management's Discussion and Analysis ("MD&A") is provided by management of Wentworth Resources Limited ("Wentworth", the "Company" or "WRL") and is based on information available as at November 14, 2016. This MD&A should be read in conjunction with the Company's unaudited condensed consolidated interim financial statements, and notes thereto, for the quarter and nine months ended September 30, 2016. The unaudited condensed consolidated interim financial statements have been prepared by management, presented in United States (US) dollars, and prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting". In addition, this MD&A should be read in conjunction with the Company's audited annual consolidated financial statements, and notes thereto, for the year ended December 31, 2015.

Additional information related to the Company is available on the Company's website at www.wentworthresources.com. Unless otherwise stated, all dollar amounts are expressed in United States dollars, which is the Company's functional and presentation currency.

Overview of Operations

Mnazi Bay Concession, Tanzania

Gas Operations

Wentworth has a 31.94% participation interest in the Mnazi Bay Concession agreement covering an area of 756 square kilometers in the southeastern region of Tanzania. Wentworth and its joint venture partners have spent over \$300 million within concession on oil and gas exploration, development and operations since signing the concession agreement in 2004. Two gas fields, Mnazi Bay and Msimbati, have been discovered within the concession, with full field gross 2P reserves of 567 Bscf (94.5 MMboe) of natural gas (RPS Energy Canada Ltd, Mnazi Bay Reserves Report, December 31, 2015).

There are five producing wells in the field capable of a combined total production of approximately 100 MMscf/d, in management's best estimate. Extensive gas gathering and processing infrastructure has been built by Wentworth and its joint venture partners to supply the Tanzania Petroleum Development Corporation ("TPDC") owned National Natural Gas Pipeline ("NNGP") which consists of a 36" gas pipeline extending ~500km from Madimba, located within the Mnazi Bay Concession in the south of Tanzania, to the commercial capital Dar es Salaam. During Q4 2016, new field infrastructure is expected to be completed by the Mnazi Bay joint venture, including liquid separation units at the joint venture owned Msimbati gas processing facility ("Msimbati GPF"), This new field infrastructure is necessary to ensure that the gas meets the specifications of the Gas Sales Agreement ("GSA) signed with TPDC in 2014.

Currently, gas is sold to two customers in Tanzania, both of which are 100 percent owned by the Tanzanian Government: TPDC and Tanzania Electricity Supply Company Limited (TANESCO).

In September 2014, the Mnazi Bay joint venture partners signed a long-term GSA with TPDC. The GSA includes contractual volumes of 80 MMscf/d for the first 8 months after commissioning increasing to 130mmscf/day thereafter and remaining at this level for the duration of the GSA term. Gas sales under the

contract attract a price of \$3.01/MMbtu escalating annually at US CPI. Currently the NNGP project remains in the commissioning phase with gas deliveries having commenced in August 2015.

Approximately 2 MMscf/d is sold to TANESCO, the state electricity utility company, as fuel supply to an 18 MW, gas-fired, power plant located approximately 27 kilometres from the Mnazi Bay field operations. Gas deliveries commenced in 2006 and gas is currently sold at a price of \$5.36/MMbtu.

Expanding Market for Natural Gas

Clear Route to Market

The \$1.2 billion Government owned National Natural Gas Infrastructure Project ("NNGIP") provides a direct and secure route to market for the existing discovered gas and future gas discovered within the Mnazi Bay Concession. The Government owned pipeline has a capacity to transport ~784 MMscf/d of natural gas with the Mnazi Bay gas being the first gas transported though the pipeline. The full cost of the NNGIP has been borne by the Tanzanian Government, therefore, Wentworth can monetize significant quantities of discovered gas with a nominal amount of additional capital infrastructure and cost.

The Company commenced gas deliveries to the NNGIP in August 2015 when commissioning of the pipeline and processing facilities began. Gas is sold to TPDC at the metering stations located adjacent to the Company's Msimbati GPF. The TPDC owned Madimba Gas Processing Facility ("Madimba GPF"), with a processing capacity of 210 MMscf/d, is located within the Mnazi Bay Concession approximately 20 kilometres from the Company's discovered gas fields and was built for processing Mnazi Bay gas. Wentworth's existing discovered gas is an integral and essential component of the Tanzanian Government's gas-to-power initiative.

Ultimate end users of Mnazi Bay Gas

Mnazi Bay gas sold to TPDC is utilized by TANESCO to power electrical generation plants serving the National Electricity Grid. During Q3 2016, Mnazi Bay gas was used to fuel two power stations located within the city of Dar es Salaam: Kinyerezi-1 and Ubungo-II.

The Government has plans to add an additional 1,155 MW of electricity to the national grid over the next three to five years by constructing three new power stations and expanding the recently completed Kinyerezi-1 power plant. The additional gas fired power plants are to be located at Kinyerezi, Kilwa and Mtwara. The Kinyerezi-1 expansion project (185 MW) has reached financial close and the construction contract was signed during Q2 2016 with the expansion expected to be completed during H1 2018. Construction has commenced on the Kinyerezi-II (240 MW) power plant with start-up and commissioning expected in H2 2018. Other power stations in the planning conduit include Kinyerezi III (300 MW), Kinyerezi IV (330 MW) and Kilwa (300 MW); all of which are due to be commissioned and operational by 2020.

In addition to gas fired power generation facilities, growth in the industrial demand in Tanzania is expected to increase throughput of natural gas within the transnational gas pipeline. TPDC has recently signed a MOU with Goodwill Tiles Factory for the gas purchase (7 – 12 MMscf/d). A 1.4km 10" pipeline to connect the factory is being constructed and is expected to be completed by the end of 2016. Gas purchased by TPDC from the Mnazi Bay joint venture is expected to be used by the Goodwill Tiles Factory. Another near-term initiative undertaken by TPDC is to agree to supply between 30 MMscf/d and 40 MMscf/d to meet the power and operational activities of an existing Dangote Cement Factory, the largest cement factory in Tanzania located in the Mtwara region. Other industrial users have shown interest in utilizing natural gas and discussions with TPDC are ongoing. This estimated demand for Mnazi Bay gas is expected to exceed our current production potential by the end of 2018 which provides strong incentive for further exploration by Wentworth in its acreage.

During Q3 2016, the Mnazi Bay Gas field delivered 34.3 MMscf/d, a decrease compared to the 51.0 MMscf/d delivered during Q2 2016. The decrease in production is directly attributable to suspension of Symbion power station's operations due to a dispute between the owners of the plant and the Tanzanian Government. It is uncertain as to how long this power plant will remain idle, but as the onset of the hot weather season approaches, power demand is expected to increase and TANESCO is expected to require Symbion to be fully operational in order to fully meet the electric power demands of the Country. In addition, deliveries were constrained while major overhauls of the three power generation turbines were undertaken at the Ubungo-II power generation facility. The overhauls are expected to be completed by the end of November after which the facilities are expected to operate at full capacity. Lastly, commissioning of a new gas processing facility, part of the NNGP project, located on Songo Songo island commenced which diverted approximately 10-20 MMscf/d gas demand to an industry competitor. It is uncertain how long commissioning of this processing facility will take and the lasting impact on gas allocations.

Gas Sales Agreement

During 2014, the Mnazi Bay joint venture partners and TPDC, the Government entity aggregating natural gas in Tanzania, executed a long-term GSA to supply existing discovered natural gas from the Mnazi Bay and Msimbati gas fields within the Mnazi Bay Concession. The GSA covers the supply up to 80 MMscf/d of natural gas for the first eight months of the contract (that is, after the commercial operations date (COD)), with an option to increase this supply after a period of 8 months, to a maximum of 130 MMscf/d. The Mnazi Bay joint venture partners have agreed payment security terms with TPDC and various other parties. The payment security provides the joint venture partners with sufficient assurance that sales of natural gas will be settled in accordance with the agreed payment terms. All aspects of the GSA will be in full force and effective upon reaching COD. COD will be achieved upon receipt of executed legal documentation associated with the agreed payment guarantee documentation and receipt of a site acceptance certificate.

The 2016 gas price is US\$3.01/MMBtu and will be escalating annually at United States CPI Industrial index. The gas is sold and purchased at the metering station located at the inlet to a 16" pipeline connecting the existing Mnazi Bay gas production facility to the new Government owned Madimba GPF. The Mnazi Bay joint venture partners are not responsible for paying a tariff for transporting the gas nor paying third party processing fees, therefore, the price of US\$3.01/MMBtu is equivalent to a wellhead "netback price".

Payments for gas delivered during October 2015 to September 2016 have been received in full. The Mnazi Bay joint venture partners have agreed to extend payment terms for the receivable from TPDC for line fill and line pack of the transnational pipeline (\$1.28 million net to Wentworth) during Q3 2015 and expect the full amount to be paid during 2017.

Existing Production Capability – Sales under the GSA

The existing five gas wells are expected to produce sufficient gas to meet the initial contracted quantity of 80 MMscf/d set out in the GSA. In prior years, workovers were performed on three wells (MS-1X, MB-2 and MB-3) allowing for production from multiple zones within these wells. The MB-4 well, drilled during Q2 2015, was tested and achieved a combined constrained flow-rate of up to 41 MMscf/d.

MS-1X, MB-2, MB-3 and MB-4 are tied-in to the new government owned pipeline infrastructure. The fifth well, MB-1, is currently producing approximately 2 MMscf/d which fuels the TANESCO-owned 18 MW Power Plant in Mtwara and will be tied into the new government owned pipeline infrastructure during Q4 2016.

Subject to further testing of deliverability from the existing Mnazi Bay wells and the drilling of additional development wells, as deemed necessary, the Company anticipates gas sales to the pipeline to increase to 130 MMscf/d to meet the anticipated growth in gas demand resulting from expanding gas to power generation infrastructure, primarily through the completion of Kinyerezi I expansion and Kinyerezi II power stations, and through growth in industrial demand. Gas production capacity could escalate up to 270 MMscf/d should additional exploration success occur within the Mnazi Bay Concession. Of the 270 MMscf/d, 210 MMscf/d is expected to be supplied to the Madimba GPF and 60 MMscf/d is anticipated to be supplied directly to a power plant planned for construction in the Mtwara region or supplied to industrial customers in the region.

Third Quarter Ended September 30, 2016 Results

Mnazi Bay Development Activities

During the third quarter of 2016, work continued on the expansion of the Mnazi Bay joint venture owned processing facilities at Msimbati and is expected to be completed in Q4 2016. Primary processing of the Mnazi Bay gas is required at Msimbati to knock-out free liquids before the gas enters the sub-marine pipeline leading to the Madimba GPF. Gas specifications contained in the GSA stipulate the temperature, pressure and liquids content of the Mnazi Bay gas at the transfer point which is adjacent to the Msimbati GPF. The Msimbati processing facilities are essential in ensuring the gas specifications set out in the GSA are met.

Exploration Opportunities

Given the immediate access to market for Mnazi Bay Concession gas and the spare capacity available in the transnational pipeline, the Company will seek to advance its exploration to match growth in demand. The Company expects the cost of these exploration activities to be fully funded from internally generated cash flow. The Company has 328 km2 offshore 3D seismic (2013) and over 2,000 km onshore/offshore 2D seismic including 315 km new data (2014) which is available for use in determining future exploration drilling prospects.

Participation Interest

The participation interest in the production operations and exploration operations in the Mnazi Bay Concession, as at September 30, 2016, are as follows:

Partner	Percentage Interest in Development and Production	Percentage Interest in Exploration
M&P (operator)	48.06	60.075
Wentworth	31.94	39.925
TPDC	20.00	-

General Industry Overview - Tanzania

Finance Bill 2016

The government published a new Finance Bill that came into effect on July 1, 2016. It introduces measures aimed at reducing tax evasion and plugging loop holes for tax avoidance, to create new sources of revenue in order to increase revenue collection and in the same spirit to control unnecessary expenditure. The Bill introduces a number of changes to the tax regime which impacts the oil and gas sector. Wentworth has ongoing discussions with industry participants and the Tanzania Revenue Agency ("TRA") to better understand how these new changes will impact the sector, be implemented on a go forward basis and be interpreted by the TRA.

Petroleum Act 2015 and Extractive Industries (Transparency and Accountability) Act 2015

The Petroleum Act 2015 ("PA 2015") and the Extractive Industries (Transparency and Accountability) Act 2015 ("TEITI 2015") were enacted in late 2015. The PA 2015, which has replaced the Petroleum Exploration and Production Act of 1980 ("PEPA 1980") and the Petroleum Act of 2008 ("PA 2008") covers upstream, midstream and downstream oil and gas activities. Agreements previously entered into pursuant to provisions of the PEPA 1980 and PA 2008, including the Mnazi Bay Concession Production Sharing Agreement, are deemed to have been made under PA 2015 and shall remain in force and effect.

The TEITI 2015 is another piece of new legislation which provides the foundation of the Tanzania Extractive Industries Transparency and Accountability Initiative ("TEITI"). The TEITI Committee is an independent Government body charged with the oversight responsibilities for promoting and enhancing transparency and accountability.

The Company does not expect operations in Tanzania to be significantly impacted by the introduction of the PA 2015 and TEITI 2015 but continues to engage with industry and government to determine the full extent of the changes on the energy industry in Tanzania.

Rovuma Onshore Block, Mozambique

Appraisal of the Tembo Gas Discovery

The Rovuma Onshore Block in northern Mozambique is onshore and forms part of the Rovuma Basin. The current area of the Block consists of the approximately 2,500 sq. km Tembo appraisal area and is immediately south of the Company's Mnazi Bay Concession in Tanzania.

On June 17, 2016, the Mozambique Government through the Minister of Minerals & Energy approved an appraisal plan and area for the Tembo gas discovery of December 2014. The Tembo-1 well was drilled to a total depth of 4,553 meters (4,401 meters True Vertical Depth Sub Sea) and a gas discovery was made in Cretaceous aged sands. Natural gas and a skim of oil was recovered by modular formation dynamics testing ("MDT"). Preliminary evaluation of the Tembo-1 well results and the regional seismic evaluation suggests the possibility of a substantial hydrocarbon accumulation.

The appraisal plan covers a two-year period from the date of the Mozambique Government's approval. Wentworth has been approved as the Operator of the Rovuma Onshore Block and has increased its participation interest in the Block from 11.59% to 85%. State owned Empresa Nacional de Hidrocarbonetos ("ENH") retained 15% participation interest as a carried partner through to the commencement of commercial operations. In addition, ENH has the right to acquire a further 15% participation interest in the Block from Wentworth within 18 months from the date of submission for a development plan for consideration equal to the proportionate share of past costs incurred.

By its nature, the appraisal plan includes activities which are subject to certain contingencies but generally includes the reprocessing and re-interpretation of existing seismic followed by further acquisition of seismic, if warranted, with the aim of identifying a suitable drilling location. The re-processing and interpretation of existing seismic data will specifically focus on the sands encountered in the Tembo gas discovery. Subject to the results of this work, additional seismic may be acquired in Q3 2017. Drilling of an appraisal well will proceed in 2018 subject to a suitable location being identified.

It is expected that the work program in Mozambique will be funded through internally generated cash flow and / or through the addition of one or more industry partners.

Participation Interest

At September 30, 2016, the participation interests in production operations and exploration (and appraisal) operations in the Rovuma Onshore Block were agreed between the Company and ENH as follows:

		Percentage Interest in
	Percentage Interest in	Exploration (and
Partner	Development and Production (1)	Appraisal)
Wentworth	85.00	100.00
ENH	15.00	-

(1) Should the results of the appraisal of the Tembo gas discovery lead to the submission of a development plan, ENH shall have the right to acquire, within 18 months, an additional 15 percent participation interest in the block for a consideration equal to the proportionate share of costs incurred by Wentworth.

Third Quarter Ended September 30, 2016 Results

General Industry Overview - Mozambique

New Petroleum Law Regulations

Decree 34/2015 of December 31, 2015, approves the Regulations for Petroleum Operations and repeals the Regulations approved by Decree No. 24/2004 of August 20, 2004. The new Decree details the rules according to which petroleum operations are carried in Mozambique through a concession contract. The Regulations apply to all petroleum operations and to any infrastructures owned by the concessionaires or by third parties that are related to those operations, as defined by Law No. 21/2014 of August 18, 2014. Amongst other things, the Decree details the requirements and procedures applicable to the work programs, plans and evaluations, the management of petroleum operations, particularly as regards the environment and health and safety standards for drilling operations and other activities in the upstream operations, emergency requirements and contingency measures, development and production of oil and gas and applicable penalties. Further to this, the Regulations provide more clarification regarding the local content requirements and the participation of Mozambican nationals in the sector.

Wentworth does not expect to be negatively affected by these new regulations but continues to work with legal advisors in Mozambique to gain a comprehensive understanding of the new regulations, particularly as the Company commences operatorship of the Rovuma Onshore Block.

Financial and Operating Discussion

Revenue

Gas sales to TPDC

During Q3 2016 the Company recorded net sales of 705,152 MMBtu, a 207% increase over Q3 2015. The gas sales price was \$3.01/MMBtu (2015 - \$3.00/MMBtu) for total revenue of \$2.12 million (2015 - \$0.69 million). August and September 2016 invoices were outstanding at September 30, 2016 with both invoices being settled during October 2016.

Gas sales to Tanesco

Gas sales to an 18 MW gas-fired power plant in Mtwara, Tanzania during the third quarter of 2016 were 49,256 MMBtu (2015 – 53,188 MMBtu) while the gas price remained fixed and unchanged at \$5.36/MMBtu. Total revenue earned during the quarter was \$0.26 million compared to \$0.29 million during the same quarter in 2015.

Production and operating expense

Production costs within the Mnazi Bay Concession comprise the Company's share of field operating costs, operator's administration and operator's overhead required to manage production operations. Production costs are substantially fixed in nature. On a per MMscf basis production costs decrease as gas volumes increase. Gross third quarter production is 34.3 MMscf/d compared to 12.6 MMscf/d during the third quarter of 2015. Production and operating expenses during the third quarter were \$0.78 million (2015 - \$0.75 million).

Third Quarter Ended September 30, 2016 Results

	Quarter ended September 30,		Nine months ended September 30,
(figures in \$000's)	2016	2015	2016	2015
Employee salaries and benefits	406	722	1,682	1,851
Contractors and consultants	198	181	605	455
Travel and accommodation	130	148	407	402
Professional, legal and advisory	94	104	471	566
Office and administration	131	174	536	554
Corporate and public company costs	106	150	432	504
	1,065	1,479	4,133	4,332

General and administrative expense

The Company maintains offices in Calgary, Canada, Dar es Salaam, Tanzania and Maputo, Mozambique and is listed on the public stock exchanges in both Oslo, Norway (Oslo Stock Exchange) and London, UK (AIM). Many general and administrative expenditures are fixed in nature and include such items as corporate and public company costs (exchange listing, transfer agent and directors' fees), legal fees supporting the compliance with corporate and public obligations (Canada, UK and Norway) and professional advisory (external audit, resources engineering and Nomad for our AIM listing).

Prior to being appointed operator of the Rovuma Onshore Block in Mozambique, the Company incurred including geological, geophysical and technical analysis, in respect to the oversight of the operations in Mozambique, all of which were included in general and administration expenses. Commencing June 2016, the Company was appointed operator of the Rovuma Onshore Block and during Q3 2016 established an operational presence in Mozambique. Direct and indirect costs relating to the appraisal activities within the Rovuma Onshore Block commenced being capitalized during Q3 2016.

Share based compensation

During the third quarter and nine months of 2016 the Company recognized \$0.11 million and \$0.47 million respectively (2015 - \$0.14 million and \$0.59 million) as share based compensation expense.

During the third quarter and nine months of 2016 a total of 350,000 options and 1,350,000 options were forfeited respectively while no options were granted or exercised during the same period (2015 - no options were granted, exercised or forfeited). A total of 10,600,000 stock options were outstanding at September 30, 2016 with 7,399,990 vested and exercisable with an average exercise price per share of NOK 4.28 (\$0.53).

Depreciation and depletion

Depreciation and depletion of gas producing assets and office assets of \$0.83 million (2015 - \$0.43 million) or \$1.13/Mscf (2015 - \$1.38/Mscf) were recorded during third quarter of 2016. At September 30, 2016, the net book value of natural gas property, plant and equipment was \$94.16 million.

Finance income and costs

Finance income and costs that are settled in cash are interest income, interest expense and realized foreign exchange on current transactions. All other finance income and costs are non-cash in nature.

During the quarter and nine months ended September 30, 2016, interest expense on the long-term loans totalled \$0.52 million and \$1.73 million respectively (2015 - \$0.47 million and \$1.08 million respectively).

During the third quarter and nine months ended September 30, 2016 non-cash accretion of the TPDC receivable of \$1.27 million and \$3.38 million respectively (2015 - \$1.09 million and \$3.44 million) was recorded in finance income. The Company revised the accounting estimates used to determine the expected amounts and timing of future revenue streams to determine collection of the TPDC receivable resulting from revised gas demand estimates for future periods obtained from industry sources. This resulted in a \$1.26

million and \$2.13 million respectively charge to finance costs during the third quarter and nine months ended September 30, 2016 (2015 - \$1.40 million for six month).

Non-cash accretion of the Tanzanian Government receivable (Umoja/power) of \$0.12 million and \$0.35 million respectively (2015 – \$0.12 million and \$0.36 million) was recorded in finance income during the third quarter and nine months ended September 30, 2016.

Deferred tax expense/recovery

At September 30, 2016, the deferred tax asset of \$31.27 million reflects the estimated future tax benefit of accumulated tax losses within the Tanzanian operations. The commencement during 2015 of production and sales of commercial quantities of gas under the long-term GSA allowed for the recognition of the accumulated tax losses estimated to be utilized in the future. A non-cash deferred tax expense of \$2.70 million has been recorded in third quarter of 2016 (2015 - \$Nil) following the acceptance of an amended tax assessment by the Tanzania Revenue Authority upon filing the 2015 income tax return of the Company's Tanzanian subsidiary. The amended tax assessment relates to 2010 to 2012 and reduces the tax carrying values of Company's assets by \$9.5 million, which reduces the accumulated tax losses by that amount.

Receivables from gas delivered to TANESCO

The Company's ongoing exposure to receivables from TANESCO is associated with gas sales from the Mnazi Bay Concession to the 18 MW gas-fired power plant located in Mtwara, Tanzania. At September 30, 2016, the Mnazi Bay joint venture partners were owed thirteen months of gas sales, with \$2.10 million owed to Wentworth. Receipts equivalent to one months' revenue (August 2015) was received during Q3 2016. In addition, during October Tanesco settled a further two months' revenue (October 2015 and December 2015) totaling \$0.3 million net to Wentworth. The Company is in discussions with TANESCO to arrange a payment process to quicken the settlement process.

Receivables from gas delivered to TPDC

Apart from gas deliveries to the new pipeline during Q3 2015 for commissioning, line fill and line pack and August 2015 gas invoice which was paid after a month delay due to change in TPDC management, all gas sales invoices are being settled on a regular and timely basis. The amounts owed by TPDC to the Mnazi Bay joint venture for August and September 2016 and that were outstanding at September 30, 2016 were settled in October 2016.

The GSA specified separate payment terms for gas deliveries to the new ~500 km pipeline for line filing and line pack. The Mnazi Bay joint venture partners have agreed with TPDC to delay settlement of the total \$2.94 million (\$1.28 million net to Wentworth) until such time as production/sales is stabilized at ~70-80 MMscf/d. The parties do not know with precision when production will stabilize the contracted levels but given this is for the line pack, effectively a cost of the pipeline infrastructure and not gas resold to the end user, the Mnazi Bay joint venture partners deemed it prudent to provide support to TPDC through this lengthy start-up phase of operations.

Long-term receivable - TPDC

The Company has a receivable from TPDC, a 20 percent participating interest partner in the Mnazi Bay Concession, for TPDC's share of past development and operating costs that were paid by the Company prior to June 30, 2009. In addition, the Company has been paying its proportionate share of TPDC's share of development and operating costs incurred subsequent to June 30, 2009, the value of which has been added to the TPDC receivable balance. The Company will recover this receivable from an agreed percentage of TPDC's share of current and future revenue from the Mnazi Bay Concession. The undiscounted face value of the TPDC receivable at September 30, 2016 is \$29.02 million (December 31, 2015 - \$35.29 million). Due to its long-term nature, the TPDC receivable has been discounted to \$26.53 million (December 31, 2015 - \$32.13 million). This reported fair value is discounted to reflect the time expected until the receivable is settled in the future. With the passage of time and the move closer to recovery of the receivable, the carrying amount of the TPDC receivable is accreted up to the face value with a corresponding credit to finance income.

Based on the Company's internal estimates, the \$29.02 million face value of this receivable as at September 30, 2016 is expected to be fully recovered by Q3 2018. The recovery of the TPDC receivable is expected to provide a significant source of cash flow for the Company during the next two years.

At September 30, 2016, the current portion of the TPDC receivable is \$12.02 million compared to \$18.19 million at December 31, 2015. During Q3 2016, \$2.04 million was recovered from TPDC's share of gas sales. The current portion of the receivable is updated at each reporting period and is calculated taking into consideration the estimated timing and amounts of future gas sales.

Long-term receivable - Tanzanian Government (Umoja/power)

The Company has an agreement with the Government of Tanzania (TANESCO, TPDC and the MEM) to be reimbursed, at costs, for past project development costs associated with transmission and distribution ("T&D") expenditures. An audit of the Mtwara Energy Project ("MEP") development expenditures was completed in November 2012 and costs of approximately \$8,121 were verified to be reimbursable. After deducting costs associated with the Tariff Equalization Fund and VAT input credits associated with the MEP totaling \$1,610, the amount agreed to be reimbursed was \$6,511. The receivable is considered long-term in nature and has been discounted to reflect the anticipated timing of collection. This receivable is considered a financial instrument and was initially recorded at fair value based on discounted cash flows and at each reporting date it is revalued and amortized by accreting the instrument over the expected life of the receivable. The undiscounted face value of the Tanzanian Government receivable (Umoja/power) at September 30, 2016 is \$6.51 million (December 31, 2015 - \$6.51 million) while the discounted value, taking into consideration the anticipated time of collection, is \$5.22 million (December 31, 2015 – \$4.96 million). Timing of reaching an agreement on the reimbursement procedure is indeterminable but the Company has re-engaged with the Government of Tanzania following commencement of deliveries of gas to the new pipeline. Management continues working with the Government of Tanzania on agreeing a mechanism to settle the outstanding balance and anticipates to recover the amounts from the Government's share of revenue generated from the Mnazi Bay Concession.

Capital expenditures

During the nine months of 2016, capital spending totaled \$3.79 million which were primarily incurred in respect to field infrastructure and development capital activities within the Mnazi Bay gas field location. In Mozambique, appraisal costs include technical evaluation of the Tembo-1 well, preliminary planning for a possible 2017 seismic acquisition program and establishment of operations in Mozambique as Wentworth is now operator of the Rovuma Onshore Block.

(figures in \$000's)		Quarter ended		Nine months ended
	September	September	September	September
	2016	2015	2016	2015
Exploration and evaluation assets Mozambique
Exploration drilling	-	273	950	8,904
Operator and indirect overhead	541	107	686	614
	541	380	1,636	9,518
Tanzania Seismic acquisition, processing
and interpretation	9	2	26	154
	9	2	26	154
Property, plant and equipment Tanzania
MB-4 development well	-	147	-	8,055
Field infrastructure connection works	317	935	1,724	2,331
Other field development capital	98	68	393	345
	415	1,150	2,117	10,731
Canada
IT and office assets	-	8	9	39
	965	1,540	3,788	20,442

Long-term loans

On December 8, 2014, Wentworth Gas Limited ("WGL"), a subsidiary of the Company, executed two longterm credit facilities: a) a \$20.0 million loan to finance field infrastructure development within the Mnazi Bay Concession in Tanzania and b) a \$6.0 million loan to repay and replace an existing medium-term loan. The two loan facilities have similar commercial terms. Each loan is forty-eight months in duration commencing on the first draw down date, bears interest of six months LIBOR rate plus 750 basis points subject to a minimum (floor) of 8% p.a. and a maximum (ceiling) of 9.5% p.a. In addition, principal repayments following the grace period of eighteen months after the first draw down date are payable in six semi–annual equal instalments in arrears and have security in the form of a debenture creating first ranking charge over all the assets of the WGL (assets of WGL include a 25.4 percent participation interest in the Mnazi Bay Concession) and assignment over the TPDC long-term receivable. The loan facilities have no financial covenants.

Principal repayments commenced in June 2016 with the first of six equal semi-annual payments of \$1.0 million on the \$6.0 million loan. In July 2016, the first of six equal semi-annual principal payments of \$3.33 million on the \$20.0 million loan was made. At the end of September 2016, the total principal balance owing on the debt facilities was \$21.67 million.

Shares, share capital, dividends

The Company had 169,534,969 shares issued and outstanding as at September 30, 2016, all of which are of the same class and with equal voting and dividend rights. The Company's ordinary shares are listed on the Oslo Stock Exchange (ticker: WRL) and denominated in Norwegian Kroner. The Company's shares are also traded on the Alternative Investment Market of the London Stock Exchange (ticker: WRL) and denominated in British Pounds.

As the Company is in the early stage of its operations, it does not have a formal dividend policy. No dividends have ever been declared or paid by the Company. There are no restrictions on dividend distributions. At the Annual General Meeting in 2015, the Board of Directors did not propose dividends to be paid for the year ended December 31, 2015. Proposals for dividend distribution in future years will be subject to assessment of business performance, operating environment, and growth opportunities in determining the appropriate level in any specific year.

Financial Condition and Liquidity

At September 30, 2016, Wentworth had cash on hand of \$3.73 million and receivables, deposits and advances of \$18.43 million, most of which, \$12.02 million, is receivable from TPDC of which the Company has started collecting substantial amounts after gas sales to the new gas pipeline commenced during Q4 2015.

During the remainder of 2016 the Company has no exploration capital commitments in Tanzania. Anticipated development capital spending is limited to the completion of Mnazi Bay infrastructure tying field producing assets to the NNGIP. This development activity is expected to be completed in Q4 2016 and cost a total of approximately \$3.0 million net to Wentworth during 2016. In Mozambique, spending on appraisal activities is limited to 2D seismic reprocessing and planning for a possible 2D seismic acquisition program anticipated for the second half of 2017.

Current liabilities include approximately \$10.0 million due to the operator of the Company's assets in Tanzania for field development and operating expenses during the last 15 months. This obligation is expected to be settled within the next 2-4 months. In addition, currently liabilities include the principal repayment obligations on external credit facilities due within the next 12 months and the anticipated settlement of other liabilities also due within the next 12 months.

During the quarter, gas sales averaged 34.3 MMscf/d which was below Company expectations. In order to enhance short-term liquidity and provide financial flexibility the Company has advanced the initiative to expand the Company's debt capacity of up to \$50 million.

Outlook

The Company continues to work closely with the Mnazi Bay joint venture partners, TPDC and TANESCO to get the full value chain from the gas field to the end user operating efficiently and at maximum capacity. Although production from the Mnazi Bay exceeded 70 MMscf/d on two occasions during 2016, Q3 was beset with several demand issues out of the control of the joint venture partners. We expect demand to increase from the Q3 2016 average of 34.3 MMscf/d as we move into the hot season and correspondingly high demand period for power.

For the remainder of 2016 and for all of 2017, base gas demand from Mnazi Bay is expected to be average between 40 MMscf/d and 50 MMscf/d. Additional sources of gas demand in Tanzania are available but the timing and quantities cannot be estimated with a reasonable degree of accuracy. Sources of possible future gas demand in 2017 include supplying the Dangote cement plant (30-40 MMscf/d) and resumption of operations at the Symbion power plant (20 MMscf/d). In 2018, the expansion on the Kinyerez-1 power plant (40 MMscf/d) and Phase 1 of the Kinyerezi-II power plant (35 MMscf/d) are expected to be commissioned and operational.

The lower than anticipated ramp up in gas production volumes during a startup phase of the NNGIP which has extended over a longer period than planned has negatively impacted the cash flow available to the Company. With the primary objective of providing the Company with financial flexibility to meet its current and planned development and operational activities in Tanzania, the Company continues to make progress to expand the Company's external debt capacity of up to \$50 million. Expanded debt capacity would provide access to funds for operational purposes during the period of ongoing ramp up in production volumes.

In Mozambique, seismic reinterpretation and evaluation of the Tembo well and gas discovery is ongoing. Reprocessing of existing seismic data commenced during Q3 and is expected to be completed in Q4 2016. A 2D seismic acquisition program over the retained area of the Rovuma Onshore Block is tentatively planned for the second half of 2017. It is expected that the work program in Mozambique will be funded through a combination of internally generated cash flow and the addition of one or more industry partners.

Third Quarter Ended September 30, 2016 Results

Risk factors

The Company emphasizes that the information included herein contains certain forward-looking statements that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future. These statements are based on various assumptions made by the Company, many of which are beyond its control and all of which are subject to risks and uncertainties. Wentworth is subject to a significant number of risk factors including but not limited to normal market risks inherent in the oil and gas business such as: operational and technical risks, reserve estimates, risks of operating in a foreign country (including economic, political, social and environmental risks), commodity price fluctuations, and available resources. Wentworth recognizes these risks and manages operations to minimize exposure to the extent practical. As a result of these and other risk factors, actual events and actual results may differ materially from those indicated or implied in such forward-looking statements.

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk is comprised of foreign currency risk, interest rate risk and other price risk, for example, commodity price risk. The objective of market risk management is to manage and control market price exposures within acceptable limits, while maximizing returns.

Credit risk

Wentworth's maximum credit exposure risk is equal to the carrying value of its trade, other and long-term receivables. Trade and other receivables are comprised predominantly of amounts due from government departments in Tanzania, tax input credits for Goods and Services Tax (GST) in Canada and Value Added Tax (VAT) in Tanzania and Mozambique. The Company's ongoing exposure to receivables from TANESCO, the state power company, relates to the gas sales from the Mnazi Bay Concession to the 18 MW gas-fired power plant located in Mtwara, Tanzania. At September 30, 2016, the Mnazi Bay joint venture partners were owed thirteen months of gas sales, with \$2,095 million owing to Wentworth of which \$0.3 million has been collected in October 2016.

A long-term undiscounted receivable of \$26.15 million is due from TPDC, which is a partner in the Mnazi Bay Concession. The Company receives a significant portion of TPDC's share of gas production from the Mnazi Bay Concession directly from the operator of the Mnazi Bay Concession before TPDC receives cash from its share of revenue. There is a risk that future production from the Mnazi Bay Concession may not be sufficient to settle the receivable and should such a determination be made, a provision against the receivable will be recorded.

At September 30, 2016, the Company has a receivable from the Government of Tanzania of \$6.51 million related to the Company's disposal of transmission and distribution assets and the costs associated with the Mtwara Energy Project incurred by a wholly owned subsidiary of Wentworth. On February 6, 2012, the Company, TANESCO, TPDC and MEM reached an agreement that the Company's cost of historical operations in respect of the Mtwara Energy Project should be reimbursed. Wentworth is currently in discussions with TANESCO, TPDC and MEM on agreeing a method of reimbursement. There is a risk that the cost reimbursement method may not be in cash, but rather in a long-term recovery from other sources.

Liquidity risk

Liquidity risk is the risk that the Company will not have sufficient funds to meet its liabilities. Other than routine trade and other payables, incurred in the normal course of business, the Company also has a longterm loan.

Third Quarter Ended September 30, 2016 Results

Measurement uncertainty and use of estimates and judgments

The preparation of financial statements requires management to make estimates, judgements and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts may differ materially from these estimates due to changes in general economic conditions, changes in laws and regulations, changes in future operating plans and the inherent imprecision associated with estimates.

Workplace

Wentworth aims to be a workplace with equal opportunities for women and men in all areas. In terms of gender equality within the Company, no Board Members are women but 22 percent of the executive & senior management team, including the corporate secretary, are women. The Corporation promotes a productive working environment and does not tolerate disrespectful behavior. The Corporation has not experienced any discriminatory treatment of men and women and special measures to promote greater equality has therefore not been considered necessary.

Exemption

The Company has received an exemption from the requirement to present parent company financial statements on an annual basis.

Third Quarter Ended September 30, 2016 Results

Board of Directors and Corporate Governance

The Company's Board of Directors are Robert 'Bob' McBean (Executive Chairman), John Bentley (Deputy Chairman), Cameron Barton, and Neil Kelly. The Board has established four subcommittees: an Audit Committee, Compensation Committee, Governance & Nomination Committee and Reserves Committee. The committees act as preparatory bodies for the Board of Directors and assist the Directors in exercising their responsibilities.

The Company is committed to maintaining high standards of corporate governance and believes that effective corporate governance is essential to the success of Wentworth. As a Canadian corporation registered under Alberta corporate law, with its primary listing on the Oslo Børs (the "OSE"), the Company is subject to the rules of the OSE, including its continuing obligations for listed companies. As such, the Company has adopted the Norwegian Code of Practice for Corporate Governance. Wentworth also implements corporate governance guidelines beneficial to the business and which add value to the shareholders. Corporate governance principles are adopted by the Board of Directors and are periodically reviewed. The Corporate Governance Report is prepared and approved by the board on an annual basis. The Company's articles of association, in addition to full versions of the Board of Directors Mandate and Terms of Reference, the board subcommittees' Charters, Corporate Governance Report and Code of Ethics and Business Conduct are available on the Company website at www.wentworthresources.com.

The Company maintains a compliance hotline operated by an external service provider in order to facilitate reporting of any concerns regarding inappropriate business conduct. Wentworth encourages the use of the hotline by anyone who has concerns relating to compliance with laws and regulations, breaches of the code of conduct, fair treatment, or any other matter. Concerns can also be raised directly with the corporate secretary or any Board member.

Approved by the Board November 14, 2016

Directors Robert P. McBean John W.S. Bentley

Cameron Barton Neil B. Kelly

Executive Chairman Deputy Chairman

Non-Executive Director Non-Executive Director

Executive Management Geoffrey Bury Lance Mierendorf

Managing Director Chief Financial Officer

Responsibility Statement

We confirm that, to the best of our knowledge, the unaudited condensed consolidated interim financial statements for the quarter ended September 30, 2016, which are prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" gives a true and fair view of the Company's consolidated assets, liabilities, financial position and results of operations and the MD&A includes a fair review of the development and performance of the business and the position of the issuer and the group taken as a whole, together with a description of the principal risks and uncertainties that they face under Norwegian Securities Trading Act sections 5-6 fourth paragraph.

Approved by the Board November 14, 2016

Directors
Robert P. McBean	John W.S. Bentley
Executive Chairman	Deputy Chairman
Cameron Barton	Neil B. Kelly
Non-Executive Director	Non-Executive Director

Executive Management
Geoffrey Bury	Lance Mierendorf
Managing Director	Chief Financial Officer

****

Wentworth Resources Limited is a publicly traded international oil and gas exploration and production company with rights extending over the Rovuma Basin play in southern Tanzania and northern Mozambique. The Company is focused on the exploration and development of oil and natural gas reserves. The Company has producing Tanzania gas assets, oil and gas exploration activities in both Mozambique and Tanzania, and large-scale gas monetization projects in development. The Company's strategy is centered on proving up additional gas resources in its Mnazi Bay Concession in Tanzania to satisfy third party demand for natural gas and to identify significant resources for consumption by future large-scale petrochemical projects to be built. Competitive business environments in both Tanzania and Mozambique combined with the Tanzanian Government working to solve electricity shortages by way of planned large scale gas to power projects utilizing the recently commissioned transnational pipeline connecting Mtwara, Tanzania, the location of the Mnazi Bay Concession, to the commercial capital of Dar es Salaam, provides Wentworth with an opportunity to monetize its assets in a relatively short period of time.

Wentworth is incorporated in Canada and is listed on the Oslo Stock Exchange (ticker: WRL) and the AIM market of the London Stock Exchange (ticker: WRL). The Company has offices in Calgary, Canada and Dar es Salaam, Tanzania.

For more information on Wentworth Resources Limited visit www.wentworthresources.com.

**** Forward-Looking and Cautionary Statements

Certain statements made herein, other than statements of historical fact relating to Wentworth, are forwardlooking statements. These include, but are not limited to, statements with respect to anticipated business activities, planned expenditures, including those relating to the exploration, development and production of its petroleum assets, corporate strategies, participation in projects and financing operations, the outcome of development activities in the exploration for, appraisal of, and development and operations relating to oil and natural gas in Tanzania and Mozambique, technical risks and resource potential of the drilling prospects, and the financing and timing of construction and the field development plan for the Mnazi Bay Concession, and other statements that are not historical facts. When used in this MD&A, the words such as "could", "plan", "estimate", "expect", "intend", "may", "potential", "should" and similar expressions, are forward-looking statements. Although the Company believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include those described under the heading "Risk Factors" elsewhere in this MD&A. The reader is cautioned not to place undue reliance on forward-looking statements. The Company assumes no obligation to update forward looking statements except to the extent required by applicable securities laws.

All such forward-looking information is based on certain assumptions and analysis made by management in light of experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. The risks, uncertainties, and assumptions are difficult to predict and may affect operations, including, without limitation: the risks associated with foreign operations, foreign exchange fluctuations, commodity prices; equipment and labour shortages and inflationary costs, general economic conditions, industry conditions, changes in applicable environmental, taxation and other laws and regulations as well as how such laws and regulations are interpreted and enforced, the ability of oil and natural gas companies to raise capital, the existence of operating risks, volatility of oil and natural gas prices, oil and natural gas product supply and demand, risks inherent in the ability to generate sufficient cash flow from operations to meet current and future obligations, increased competition, stock market volatility, opportunities available to or pursued by the Company and other factors, many of which are beyond the Company's control.

In addition to the foregoing, this MD&A contains forward looking information with respect to estimated resources, the potential size and distribution of fields and recovery factors. Such forward looking information is based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated. These risks include, but are not limited to risks associated with the oil and gas industry (e.g. operational risks in development, exploration and production delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of resource estimates; the uncertainty associated with geological interpretations, the uncertainty of estimates and projections in relation to production, costs and expenses and health, safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, risks associated with the implementation of new technology, risks associated with obtaining, maintaining and the timing of receipt of regulatory approvals, permits, and licenses, uncertainties relating to access to capital markets and the risk of volatile global economic conditions. Statements relating to resources are deemed to be forward looking information, as they involve implied assessment, based on certain estimates and assumptions, that the resources exist in the quantities predicted or estimated. The actual resources discovered may be greater or less than those calculated.

The forward-looking information contained herein is expressly qualified by this cautionary statement.