UNAUDITED FINANCIAL REPORT FOR THE HALF YEAR ENDED 30 JUNE 2019
Please find enclosed African Petroleum Corporation Limited's (the "Company" or "African Petroleum") unaudited financial report for the half year ended 30 June 2019.

COMPANY BACKGROUND

African Petroleum, listed on the Oslo Axess (APCL), is an independent oil and gas exploration company led by an experienced Board and management team, with significant experience in oil and gas exploration, appraisal, development and production. The Company holds acreage in West Africa with estimated net unrisked mean prospective recoverable oil resources in excess of 4.9 billion barrels.

African Petroleum has equity interests in four licences across two countries offshore West Africa (Senegal and The Gambia). The Company’s assets are located in proven hydrocarbon basins, where several material discoveries have been made in recent years.

The Company has acquired more than 13,400km2 of 3D seismic data and has participated in the drilling of four exploration wells in West Africa.


CEO STATEMENT

It is anticipated that this will be the last report we issue as African Petroleum Corporation Limited. The first half of the year can be defined as a period in which we laid the solid foundations for transformative growth in the form of our pending combination with PetroNor E&P. Completion of that deal has taken longer than we had originally anticipated however we, and our future colleagues at PetroNor, continue to maintain close alignment as we work to complete the transaction by the end of August 2019. Collectively we have been formulating the various strategies that will be employed to drive shareholder value so that we can move swiftly to deliver positive outcomes upon completion. These strategies include ways to leverage our enhanced scale and profile to deliver satisfactory outcomes with regards to the ongoing arbitrations, extract maximum value from PetroNor’s existing portfolio that continues to perform well, and explore business development opportunities in line with the growth strategy set out at the time of announcing the proposed merger. The delay to the completion has not been time wasted as we have made good headway in regard to these items. Whilst we appreciate concern with regards to the conditional warrant timeframe associated with the merger, we reassure shareholders that the work we have done to date with PetroNor supports our view that the timeframe remains realistic. Based on our latest dialogue with stakeholders, we believe that we remain on track to complete the combination within the timeframe of August 2019.

OPERATIONAL & CORPORATE UPDATE

ARBITRATION

The Gambia
The International Centre for the Settlement of Investment Disputes (“ICSID”) arbitration proceedings initiated by the Company to protect its interests in the A1 and A4 licences in The Gambia are continuing, with the following recent developments:
- In February 2019, the Company filed a memorial on admissibility, jurisdiction and the merits.
- In July 2019, the Republic of The Gambia filed a counter-memorial on admissibility, jurisdiction and the merits.

Further procedural details may be viewed at the ICSID website: https://icsid.worldbank.org/en/

The Company remains open to engaging in constructive dialogue with the Gambian authorities, with a view to establishing a satisfactory solution that is in the interests of all parties.

Senegal
The Company’s subsidiary African Petroleum Senegal Limited lodged Request for Arbitration documents with ICSID in June 2018 in order to protect its interests in the ROP and SOSP blocks in Senegal. The arbitration proceedings are continuing with the following recent developments:
- In early January 2019, the Republic of Senegal filed observations on the Company’s request for provisional measures and filed a request for provisional measures.
- On 23 January 2019, the Tribunal was constituted in accordance with Article 37(2)(a) of the ICSID Convention.
- In March 2019, the Tribunal held a hearing on provisional measures in Paris.
- During April 2019, the Tribunal issued two procedural orders, the first on procedural matters, the second concerning measures.
- In July 2019, the Company filed a memorial on the merits.

Further procedural details may be viewed at the ICSID website: https://icsid.worldbank.org/en/

The Company remains open to engaging in constructive dialogue with the Senegalese authorities through appropriate and official channels, with a view to establishing a satisfactory solution that is in the interests of all parties.

PORPOSED MERGER

Petronor E&P Limited
On 19 March 2019, the Company announced its intention to combine with PetroNor E&P Ltd (“PetroNor”) for an all-share consideration of c. 816 million shares in African Petroleum. The existing African Petroleum shareholders will receive one for one (c. 155 million) warrants to preserve some potential upside from the Company’s existing exploration portfolio in The Gambia and Senegal. The proposed transaction transforms the Company from an exploration-focused player into a cash-flow generating producer with a significant growth profile.

In June 2019, the Company announced that significant progress had been made towards fulfilment of conditions required for completion; however, a number of key documents required by the Oslo Børs in order to confirm that the listing status of the combined company will be maintained were still being finalised.

As at the date of this report, the Company expects to complete the proposed transaction with PetroNor shortly.

LICENCE INFORMATION

SENEGAL:

Blocks ROP & SOSP
In Senegal, African Petroleum Senegal Limited holds a 90% operated working interest in exploration blocks Rufisque Offshore Profond (“ROP”) and Senegal Offshore Sud Profond (“SOSP”). The National Oil Company Petrosen, holds the remaining 10% equity. The Company’s Senegal production sharing contracts (“PSC”) are located offshore southern and central Senegal, with a net acreage of 14,216km2.

Both licences are positioned in a high potential exploration area, as demonstrated by third party oil discoveries and successful appraisal wells drilled in the adjacent acreage by Cairn Energy.

The Company has licensed over 10,000km2 of 2D seismic data and 5,100km2 3D seismic data over both licences.

Independent petroleum consultant ERC Equipoise prepared an assessment of prospective oil resources attributable to the Company’s Senegal PSCs and estimates the net unrisked mean prospective recoverable oil resources at 1,779MMStb.

The Group is currently in dispute with the Senegalese government regarding the status of the ROP and SOSP licences and ICSID arbitration proceedings have been initiated.

THE GAMBIA:

Blocks A1 & A4
African Petroleum holds a 100% operated working interest in offshore licences A1 and A4, with a combined net acreage of 2,672km2. The Company has completed a 3D seismic survey with data covering 2,500km2 and has found a number of analogous leads and prospects in its acreage to that of the recent SNE and FAN discoveries drilled by Cairn Energy in Senegal.

Independent petroleum consultant ERC Equipoise prepared an assessment of prospective oil resources attributable to the Company’s Gambian licences and estimates the net unrisked mean prospective recoverable oil resources at 3,079MMStb.

The Group is currently in dispute with the Gambian government regarding the status of the A1 and A4 licences and ICSID arbitration proceedings have been initiated.

HEALTH, SAFETY, ENVIRONMENT AND SECURITY

As an operator of offshore concessions, it is the duty of African Petroleum to provide a safe working environment and minimise any adverse impact on the environment. Health, safety, environment and security policies are embedded throughout all of the Company’s core operations. In this regard, we strive for continuous improvement as lessons learnt from past operations are incorporated into business practices going forward.

PRINCIPAL RISKS AND UNCERTAINTIES

As an exploration company in the oil and gas industry, the Company operates in an inherently risky sector. Oil and gas prices are subject to volatile price changes from a variety of factors, including international economic and political trends, expectation of inflation, global and regional demand, currency exchange fluctuations, interest rates and global or regional consumption patterns. These factors are beyond control of the Company and may affect the marketability of oil and gas discovered. In addition, the Company is subject to a number of risk factors inherent in the oil and gas upstream industry, including operational and technical risks, reserve and resource estimates, risks of operating in a foreign country (including economic, political, social and environmental risks) and available resources. We recognise these risks and manage our operations in order to minimise our exposure.

OUTLOOK

African Petroleum’s near-term outlook will be dictated by events that are ultimately outside of the control of the Company. The Board remains open to constructive dialogue with the various authorities in the hope that all parties can agree a mutually beneficial outcome that avoids prolonged and costly legal proceedings. We are however preparing ourselves to maintain the full course of proceedings and have the financial strength to see them through to the end if required. At this point in the proceedings it is impossible to predict potential outcomes and timings, but the Board maintains full confidence in our legal position and continues to work tirelessly to ensure we protect value on behalf of our shareholders.

STATEMENT OF RESPONSIBILITY

We confirm that, to the best of our knowledge, the condensed set of unaudited financial statements for the first half of 2019, which has been prepared in accordance with IAS34 Interim Financial Statements, provides a true and fair view of the Company’s consolidated assets, liabilities, financial posit