African Petroleum completes farm out, page-18

Hi there Wasa et al.,

I agree that, at least fundamentally, this stock's assets are incredibly undervalued. Unfortunately, this coy is heavily tainted by the scandalous history of its major shareholder, Frank Timis. Very few if any of his many companies have succeeded for shareholders whose name was not Timis.

I have stalked African Petroleum for about 6-7 years and, every year, block out a few hours to analyse, absorb and become utterly bewildered by the gripping crime novel that passes itself off as the Annual Report! I have been a professional resource analyst and public company executive for more than 25 years and I have never seen anything as bad as the Timis corporation companies...(well, at least not since Bond Corp). US$620m of shareholders money now has an equity value of US$33m (with the $16m)....95% of all shareholder value has disappeared. Hmmm..

It is quite scary that this is not fiction. The saga with the jet, the intercompany 'loans' and write downs are legends with the governance hall of shame. The $16m they just received has saved their bacon for the short term...but they owe $37m this year so it wont last long. On top of this, their highly attractive Gambia and Senegal leases have 3 wells due within the next 5 months; which of coarse, wont happen. So it comes down to how well AP can negotiate extensions/renewals. Lets be clear....these leases could legally be taken off AP in the near future for failing to meet commitments. I doubt that'll happen but you could imagine some of the bigger boys whispering to the relevant authorities in Senegal and the Gambia to let the leases lapse and let the big boys have a shot.

I think the point to make here is that no deals will be done on these permits until there is clear agreement concerning licence renewal terms and conditions. I'm sure AP is working hard behind the scenes to make this happen, but its a risk that is factored into the sp.

And caveat emptor! I implore you to analyse the deals that Timis's other companies have done over the past 20+years. Rarely do shareholders 'win'.

Cheers,