Ann: Operational Update & UK 33rd Offshore Licensing Round, page-56

From the annual report.

**on, Nkembe block
The Group is currently in the first exploration phase of the Block, which initially covered a
period of four years. On 3 November 2016, Hartshead was granted a 12-month extension
of the current exploration phase with no additional work commitments. A dispute has arisen
with the Directeur Général des Hydrocarbures (DGH) as to whether the first exploration stage
commenced when the Nkembe PSC was signed, on 11 January 2013 or on the date of issue
of the Presidential Decree, 4 December 2014. As a consequence of this dispute Hartshead
has claimed force majeure in relation to the Nkembe PSC since 1 April 2018 until such time as
the dispute is resolved. In the meantime, the Nkembe PSC remains on foot.
The work commitments for the first exploration stage under the Nkembe PSC includes the
acquisition and processing of 3D seismic data and an exploration well. The Nkembe PSC
included an estimate of US$17 million for the work commitments for the first exploration phase
and Hartshead has expended approximately US$1.4 million towards these work commitments.
Separately to the committed work program an additional US$8.6 million of allowable costs have
been incurred during the first exploration phase. The effect of the dispute with the DGH has
meant that Hartshead has been unable to make any progress with potential funding partners
for an exploration well. Accordingly, until such time as the dispute is resolved it is not possible
to quantify the likely commitment and/or payable (if any) in relation to the Nkembe PSC.
Hartshead has received legal advice that its obligations to make the fund contributions (refer
Note 20) under the Nkembe PSC commenced on the issue of the Presidential Decree, being
4 December 2014. Based on this advice, no fund contributions are outstanding. This issue,
however, remains unresolved between Hartshead and the DGH and accordingly until this matter
is resolved the Board believe it is prudent to disclose a contingent liability.