CONTENTS

Page Corporate Directories 2 1. Key Terms and Abbreviations for Investors’ Guide 3 2. Abridged Timetable 4 3. Summary of the Offer 5 4. Directors and Parties to the Offer 6 5. Chairman's Letter 9 6. The Profit Forecast 12 6.1 Profit Forecast 14 6.2 Bases and Assumptions 15 6.3 Letter from the Joint Issuing Houses 15

7. Confirmation of the Going Concern Status 17 7.1 Issuer's Statement 18 7.2 Auditor's Statement 18 8 Financial Information 8.1 Historical Profit and Loss Account 19 8.2 Balance Sheets Account 20 8.3 Statements of Cashflows 20 8.4 Notes to the Accounts 21

9. Statutory and General Information 9.1 Incorporation and Share Capital History 22 9.2 Shareholding Structure 26 9.3 Subsidiaries/Affiliated Company 26 9.4 Directors' Interest 26 9.5 Indebtedness 26 9.6 Claims and Litigation 27 9.7 Declarations 27 9.8 Material Contracts 27 9.9 Risk Factors and Mitigating Factors 27 9.10 Unclaimed/Unpaid Dividend 28 9.11 Training, Research and Development 28 9.12 Issue Cost and General Expenses 28 9.13 Relationship between Issuer and Advisers 28 9.14 Changes in Financial or Trading Position 29 9.15 Related Party Transactions/Conflict of Interest 29 9.16 Off Balance Sheet Items 29 9.17 Merger and Takeovers 29 9.18 Consents 29 9.19 Documents Available for Inspection 31 10. Provisional Allotment Letter 32 11. Receiving Agents 34 12. Acceptance/Renunciation Form 35

AP AFRICAN PETROLEUM PLC RC 4119 Rights Circular 1 CORPORATE DIRECTORY

Below is the Corporate Directories African Petroleum Plc:

HEAD OFFICE: AP HOUSE 54/56 BROAD STREET P.O. BOX 512 LAGOS TEL: 234 - 1 - 2600050 - 7, TELEFAX: 234 - 1 - 2634341 TELEX: 28690 AYEPEE NG, CABLE & TELEGRAMS: AYEPEE P.M.B. 12690 MARINA, LAGOS www.applcng.com E - MAIL: [email protected]

NORTHERN REGION: 105 OLUSEGUN OBASANJO WAY CENTRAL AREA, FCT, ABUJA TEL: (09) 6710681

SOUTH - WEST REGION: NOC BUILDING 1 AP/CONOIL OIL RD APAPA LAGOS TEL: (01) 5451227-8, 54530767, 5803533

SOUTH - EAST REGION: 11 MOSCOW ROAD PMB 5237, PORT-HARCOURT TEL: (084) 234677, 236100, 235885

KANO OFFICE: CLUB ROAD P.O. BOX 636 KANO TEL: ()64) 632630 -1, 647276, 647052

AP AVIATION: MURTALA MOHAMMED AIRPORT IKEJA TEL: (01) 4937449

AP CHEMICALS: 112 LADIPO STREET, MATORI INDUSTRIAL ESTATE, MUSHIN LAGOS. TEL: (01) 4744484, 7918803

AP AFRICAN PETROLEUM PLC 2 Rights Circular RC 4119 1. KEY TERMS AND ABBREVIATIONS FOR INVESTORS' GUIDE

“Allotment Date” The date after the Offer Closing date when the securities allotted to successful shareholders are approved by SEC.

“Brokerage” Commission payable to Receiving Agents in respect of returns bearing their stamp and duly allotted.

“Business Day” Any day other than Saturday, Sunday or official public holiday in Nigeria.

“CAC” Corporate Affairs Commission.

“CAMA” Companies and Allied Matters Act, No. 29, 2007 as amended from time to time.

“CHN” Clearing House Number

“CSCS” Central Securities Clearing System.

“DPS” Dividend per share.

“EGM” Extra Ordinary General Meeting

“EPS” Earnings per share.

“FGN” The Federal Government of Nigeria.

“ICT” Information and Communication Technology.

“ISA” Investments and Securities Act No. 29, 2007 as amended from time to time.

“Lead Issuing House” or “LIH” Zenith Capital Limited.

“Joint Issuing Houses” or “JIH” Access Bank Plc, Afribank Capital Markets Limited, FCMB Capital Markets Limited, Guaranty Trust Bank Plc, Intercontinental Capital Markets Limited, UBA Global Markets Limited, UNEX Capital Limited, Vetiva Capital Management Limited and Union Capital Markets Limited.

“LFN” Laws of the Federation of Nigeria.

“The Company” or “AP” African Petroleum Plc

“The NSE” or “The Exchange” The Nigerian Stock Exchange.

“Pari-Passu” Equally

“Parties” Professionals engaged to ensure the success of the Offer.

“Receiving Agent” Market operator authorized to receive acceptance forms/monies from Investors.

“Registrars” Afribank Registrars Limited

“Rights Circular” The legal document through which the shares are being made to the existing shareholders.

“The SEC” or “The Commission” The Securities and Exchange Commission

“The Offer” or “Rights Issue” Rights Issue of 262,929,279 Ordinary shares of 50 kobo each at N230.00 per share

“Underwriting” This represents the underwriter’s commitment to purchase securities

AP AFRICAN PETROLEUM PLC RC 4119 Rights Circular 3 3. ABRIDGED TIMETABLE

Date Activity Responsibility

21/08/08 Acceptance List Opens Issuing Houses

29/09/08 Acceptance List Closes Issuing Houses

13/10/08 Receiving Agents make returns Issuing Houses

10/11/08 Forward allotment proposal and draft Newspaper announcement to SEC Issuing Houses

24/11/08 Receive SEC Clearance of Allotment Issuing Houses

25/11/08 Pay net proceeds to the Offer of African Petroleum Plc Issuing Houses/Receiving Banker

26/11/08 Allotment Announcement Issuing Houses

01/12/08 Return Excess/Rejected Application Monies Issuing Houses/Receiving

12/12/08 E-Allotment/Distribute Share Certificates Registrars

15/12/08 Forward Declaration of Compliance to The Exchange Lead Stockbroker

19/12/08 Listing of African Petroleum Plc Shares/Trading Commences Lead Stockbroker

20/02/09 Forward Post Allotment Compliance on Utilization of Issue Proceeds to SEC (Form SEC QR8) Issuer/Issuing Houses

AP AFRICAN PETROLEUM PLC 4 Rights Circular RC 4119 3. SUMMARY OF THE OFFER

1. THE OFFER Rights Issue of 262,929,279 ordinary shares of 50 kobo each in African Petroleum Plc at N230.00 per share 2. ISSUER African Petroleum Plc (”the Company” or “AP”) 3. LEAD ISSUING HOUSE Zenith Capital Limited

4. JOINT ISSUING HOUSES Access Bank Plc Afribank Capital Markets Limited FCMB Capital Markets Limited Guaranty Trust Bank Plc Intercontinental Capital Markets Limited UBA Global Markets Limited UNEX Capital Limited Union Capital Markets Limited Vetiva Capital Management Limited

5. SHARE CAPITAL: Authorized: N5,000,000,000 divided into 10,000,000,000 Ordinary shares of 50 kobo each

Issued and fully paid: N394,393,919 divided into 788,787,838 Ordinary shares of 50 kobo each

Now being offered to existing shareholders: 262,929,279 ordinary shares of 50 kobo each at N230.00 per share

6. PURPOSE The purpose of this Rights Issue is to provide additional working capital, procure and upgrade existing storage facilities, lubricant plants and retail outlets.

7. USE OF PROCEEDS The estimated net Offer proceeds of N104,910,443,622.52 (Rights and Public Offer) arising from the combine Offers, after deducting the estimated Offer cost as well as the underwriting expenses both amounting to N5,330,970,797.48 (i.e 4.11% of Offer cost and 2% flat on the underwritten portion) will be applied as follows:

N % ESTIMATED COMPLETION PERIOD CONSTRUCTION OF REFINERY (LEKKI FREE TRADE ZONE) 50,000 BARRELS PER DAY 44,314,171,386.15 42.24 36 MONTHS CONSTRUCTION OF 60,000 MT PMS STORAGE IN RECLAMATION ROAD, PORT HARCOURT, RIVERS STATE 2,769,635,711.63 2.64 24 MONTHS CONSTRUCTION OF 120,000 MT PMS STORAGE AT APAPA, LAGOS STATE 5,759,583,354.88 5.49 24 MONTHS DIVERSIFICATION INTO EXPLORATION/PRODUCTION AND IMPROVEMENT IN OIL SERVICES BUSINESS 3,881,686,414.03 3.70 12 MONTHS MARKET EXPANSION WITH ACQUISITION/ CONSTRUCTION OF ADDITIONAL 350 MODERN SERVICE STATIONS NATIONWIDE 23,814,670,702.31 22.70 24 MONTHS RENOVATE/REMODEL NATIONWIDE, 300 EXISTING AFRICAN PETROLEUM OUTLETS 4,658,023,696.84 4.44 24 MONTHS EXPAND LPG, LPFO AND BITUMEN PLANTS IN APAPA, LAGOS STATE 1,657,585,009.24 1.58 24 MONTHS INCREASE IN WORKING CAPITAL 18,055,087,347.44 17.21 IMMEDIATELY (POST-OFFER) TOTAL 104,910,443,622.52 100

8. METHOD OF OFFER By way of Rights Issue to existing shareholders

9. RIGHTS PRICE N230.00 per share

10. PAYMENT In full on Acceptance

11. MARKET CAPITALIZATION N197,196,959,500 AT OFFER PRICE (PRE-OFFER)

12. MARKET CAPITALIZATION N307,438,373,920.00 (inclusive of the Offer for subscription) AT OFFER PRICE (POST-OFFER)

AP AFRICAN PETROLEUM PLC RC 4119 Rights Circular 5 3. SUMMARY OF THE OFFER (Cont’d)

13. OPENING DATE August 21, 2008

14. CLOSING DATE September 29, 2008

15. INDEBTEDNESS As at December 31, 2007 the date of its latest audited accounts, the Company had no outstanding debentures, mortgages, loans, charges or similar indebtedness or material contingent liabilities other than in the ordinary course of business. However, indebtedness from the un audited account for the period ending March 31, 2008 stood at N18,587,949,199.

16. PROVISIONAL ALLOTMENT: ONE new Ordinary share for every THREE Ordinary shares held.

17. QUALIFICATION DATE: February 20, 2008

18. CLAIMS AND LITIGATION The Company in its ordinary course of business is presently involved in 47 law suits divided into 33 cases instituted against the Company and 14 cases claimed by the Company. The total amount claimed in the suits instituted against the Company is estimated at N259,818,606.50 while the total amount claimed in favour of the Company is estimated at N1,131,062,395.26. However, the Solicitors are of the opinion that the contingent liability that may arise from the cases pending against the Company. The Directors of the Company are of the opinion that none of the aforementioned cases is likely to have any material adverse effect on the Company or the Offers and are not aware of any other pending and or threatened claims or litigation against the company.

19. QUOTATION African Petroleum Plc's issued capital is listed on The Exchange. An application has been made to the Council of The Exchange for the admission to its Daily Official List of the 262,929,279 ordinary shares now being offered by way of Rights Issue to existing shareholders.

20. STATUS The new shares now being offered by way of Rights Issue shall rank pari passu in all respects with the issued ordinary shares of the Company.

21. E-ALLOTMENT/ E-Allotment/Share certificates in respect of the shares allotted will be sent by SHARE CERTIFICATE: Electronic-Transfer to the CSCS account of allottees not later than 15working days from the date of allotment. Investors are hereby advised to state the name of their stockbroker, CSCS Account Number as well as their CSCS CHN in the space provided on the Acceptance/Renunciation Form. However, Investors without CSCS account numbers will receive their certificates by registered post not later than 15 working days from the date of Clearance of allotment.

22. COMPANY STRUCTURE Below is the graphic depiction of African Petroleum Plc subsidiaries. In view of the fact that these companies are new, their contribution is yet to be consolidated into the company's account.

AFRICAN PETROLEUM PLC

100% 100% 100% 100% AP Oil & Gas Ghana LTD AP Properties Nig LTD AP Oil Field Services AP Exploration & Production LTD

AP AFRICAN PETROLEUM PLC 6 Rights Circular RC 4119 3. SUMMARY OF THE OFFER (Cont’d)

23. FINANCIAL SUMMARY FOR 5 YEARS ENDED DECEMBER 31 (Extracted from Audited Accounts) 2007 2006 2005 2004 2003 N'000 N'000 N'000 N'000 N'000 Turnover 102,026,373 81,934,351 42,761,163 58,110,054 34,395,273 Cost of Sales (85,145,376) (71,338,703) (37,562,875) (52,886,726) (30,890,277) Gross Profit 16,880,997 10,595,648 5,198,288 5,223,328 3,504,996 Selling and Distribution Expenses (3,110,846) (1,457,055) (2,148,742) - - Administrative Expenses (5,773,042) (5,038,163) (4,689,166) (2,753,355) (1,973,453) 7,997,109 4,100,430 (1,639,620) 2,469,973 - Other Operating Income 298,761 109,121 360,749 470,773 250,720 Trading (Loss)/Profit 8,295,870 4,209,551 (1,278,871) 2,469,973 - Exceptional items 1,172,742 210,363 (637,410) (244,978) 782,205 Interest payable and similar charges (2,419,284) (1,982,282) (1,453,370) (1,668,956) (1,865,891) (Loss)/Profit on ordinary activities before taxation 7,049,328 2,437,632 (3,369,651) 1,026,812 698,577 Taxation (1,347,821) (276,102) (199,521) (136,692) (87,725) (Loss)/Profit on ordinary activities after taxation transferred to general Reserve 5,701,507 2,161,530 (3,569,172) 890,120 610,852 (Loss)/Earning per 50k share (Naira) 7.23 2.74 (4.52) 2.06 2.83

24. FORECAST OFFER STATISTICS FOR THE YEARS ENDING DECEMBER 31 2008 2009 2010 N’000 N'000 N'000 Turnover 200,000,000 250,000,000 315,000,000 Cost of sales (170,000,000) (212,500,000) (267,750,000) Gross Profit 30,000,000 37,500,000 47,250,000 Overheads (8,300,000) (9,500,000) (10,930,000) Profit before interest and taxation 21,700,000 28,000,000 36,320,000 Interest and Bank Charges (3,500,000) (4,500,000) (5,500,000) Profit before tax 18,200,000 23,500,000 30,820,000 Taxation (4,500,000) (7,000,000) (9,250,000) Profit after tax 13,700,000 16,500,000 21,570,000 Dividend Proposed (12,500,000) (15,600,000) (18,750,000) Retained Profit 1,200,000 900,000 2,820,000 Earnings per share (Naira) 11 13 17 Dividend per share (Naira) 10 13 15 Earnings Yield (at offer price %) 4.38 5.28 6.90 Dividend Yield (at offer price %) 4 5 6 Price Earning Ratio (at offer price) 22.72 19.23 14.71 Dividend Cover (times) 1.10 1.06 1.15

Forecast earnings and dividend per share for the years ending 31st December, 2008, 2009 and 2010 are based on 1,250,788,000 ordinary shares of 50 kobo each expected to be in issue on those dates.

25. ADDITIONAL INFORMATION: In addition, the Company is also embarking on a Public Offer comprising of 191,070,721ordinary shares of 50k each at N250 to the general public, concurrently with this Rights Issue. The Company is at the verge of getting its letter of no rejection from the Department of Petroleum Resources so that work can commence immediately on the construction of the Refinery.

AP AFRICAN PETROLEUM PLC RC 4119 Rights Circular 7 4. DIRECTORS AND PARTIES TO THE OFFER

Mr Femi Otedola (Chairman/CEO) JOINT LEAD STOCKBROKERS 54/56, Broad Street, Lagos Dynamic Portfolio Limited Dynamic House, 20, Campbell Street, Lagos Mr. Osa Osunde (Vice Chairman) 54/56, Broad Street, Lagos ICON Stockbroker Limited Medife House (3rd Floor), 58/60, Broad Street, Lagos Mr Joel Tunde Falasinnu (Chief Operating Officer) 54/56, Broad Street, Lagos JOINT STOCKBROKERS AIL Securities Limited Mr. Clement Saliu Maku Aviomoh (Executive Director) 94, Broad Street, Lagos 54/56, Broad Street, Lagos APT & Securities & Funds Limited Mrs. Grace Christopher Ekpenyong (Director) Church House (5th Floor), 29, Marina, Lagos 54/56, Broad Street, Lagos BGL Securities Limited Rev. Layi Bolodeoku Millennium House, 12A, Catholic Mission Street, Lagos 54/56, Broad Street, Lagos Bridge Securities Limited Mr. Sebastian Adigwe 31, Akin Adesola Street, Victoria Island, Lagos 54/56, Broad Street, Lagos Camry Securities Limited Mr. Segun Senbanjo Wesley House Annex, 21/22, Marina, Lagos 54/56, Broad Street, Lagos Capital Assets Limited Mr. Josiah Wukari Wasa (8th Floor) 50/52, Broad Street, Lagos 54/56, Broad Street, Lagos Cashcraft Asset Management Limited Mr. Stanley Inye Lawson Foreshore Towers, 2A, Osborne Road, Ikoyi, Lagos 54/56, Broad Street, Lagos City-Code Trust & investments Capital Limited COMPANY SECRETARY 6, Davies Street, 3rd Floor, Nmarina, Lagos Elizabeth Obiajulu Idigbe 54/56, Broad Street, Lagos Clearview Investments Company Limited 6th Floor, NCR Building , 6, Broad Street, Lagos REGISTERED OFFICE 54/56, Broad Street, Lagos Cordros Capital Limited 16 Amodu Ojikutu Street, Victoria Island, Lagos LEAD ISSUING HOUSE Union Capital Markets Limited CSL Stockbrokers Limited Plot 97, Ahmadu Bello Way, Victoria Island, Lagos Primrose Tower,17A, Tinubu Street, Lagos

JOINT ISSUING HOUSES C & I Heritage Access Bank Plc 7B, Ishawu Adewale Street, Off Bode Plot 1665, Oyin Jolayemi Street, Victoria Island, Lagos Thomas Street, Surulere, Lagos

Afribank Capital Market Limited De-Canon investments Limited PC 28, Afribank Street, Victoria Island, Lagos Wesley House (5th Floor), 21/22, Marina, Lagos

FCMB Capital Markets Limited Enterprise Stockbroker Limited Primerose Towers, 17A, Tinubu Street, Lagos 85, Ogunlana Drive, Surulere, Lagos

Guaranty Trust Bank Plc Equity Capital Solutions Limited Plural House, Plot 1669, Oyin Jolayemi Street Kingsway Building, 51/52, Marina, Lagos Victoria Island, Lagos EDC Securities Limited Intercontinental Capital Market Limited 161A, Raufu Taylor Street, Off Idejo Street, Wesley House, 21/22, Marina, Lagos Victoria Island, Lagos.

UBA Global Markets Limited Fidelity Finance Company Limited 57, Marina, Lagos Niger Insurance Plaza, 48/50, Odunlami Street, Lagos

UNEX Capital Limited FIS Securities Limited 3, Biaduo Street, Off Keffi Street, 2, Marcarthy Street, Onikan, Lagos South West, Ikoyi, Lagos Forte Asset Management Limited Zenith Capital Limited Medife House (5th Floor), 58/60, Broad Street, Lagos Plot 87, Ajose Adeogun Street, Victoria Island, Lagos FSDH Securities Limited Vetiva Capital Management Limited Niger House (3rd Floor), 1/5, Odulami Street, Lagos Plot 266B, Kofo Abayomi Street, Victoria Island, Lagos

AP AFRICAN PETROLEUM PLC 8 Rights Circular RC 4119 4. DIRECTORS AND PARTIES TO THE OFFER FutureView Financial Services Limited TRW Stockbrokers Limited Plot 161D, Audu Taylor Close, Off Idejo Street, 62/64, Campbell Street, Kajola House, Lagos Victoria Island, Lagos UBA Stockbrokers Limited Global Assets Management Limited UBA House, 10th Floor, 57, Marina, Lagos Investment House, 21/25, Broad Street, Lagos Union Capital Markets Limited Greenwich Trust Limited Plot 97, Ahmadu Bello Way, Victoria Island, Lagos Plot 1698A, Oyin Jolayemi Street, Victoria Island, Lagos Zenith Securities Limited Plot 87, Ajose Adeogun Street,Victoria Island, Lagos GTI Capital Limited (20th Floor), 2-4 Customs Street, Marina, Lagos JOINT AUDITORS Akintola Williams Delloitte Heartbeat Investments Limited (Chartered Accountant), 235, Ikorodu Road, Lagos Wesley House (7th Floor), 21/22 Marina, Lagos Aminu Ibrahim & Co. Hedge Securities & Investments Company Limited 26, Post Office, Road, Kano Nigeria Reinsurance House (7th Floor), 46, Marina, Lagos REPORTING ACCOUNTANT David Odiwo & Co. Integrated Trust & Investment Limited (Chartered Accountant) Nicon House (3rd Floor), 5 Customs Strret, Marina, Lagos Suite 287, Block A2-9, Sura Shopping Complex, Simpson Street, Lagos Kinley Securities Limited 47, Marina (1st Floor), Lagos SOLICITORS TO THE OFFER S.P.A. Ajibade & Co. Lambeth Trust & Investment Limited Suite 301, Spaaco House, 29A, Macarthy Street, Lagos 4/6, Mobolaji Bank Anthony Way, Lagos JOINT SOLICITORS TO THE COMPANY LB Securities Limited The City Law Associates Plot 932, Idejo Street, Victoria Island, Lagos 37, Ahmed Onibudo Street, Victoria Island, Lagos

Marina Securities Limited Ladi Ajose-Adeogun 10, Ahmodu Ojikutu Street, Victoria Island, Lagos Plot 15E, Muri Okunola, Suite 6, Victoria Island, Lagos

Mutual Alliance Investment & Securities Limited REGISTRARS Charter House Annex, 207B, Ikorodu road, Afribank Registrars Limited Obanikoro, Lagos 2A, Gbagada Expressway, Anthony Village, Lagos

Nova Finance Securities Limited RECEIVING BANKS Speedway House (1st Floor) Access Bank Plc 21, Araromi Street, Off Macarthy Street, Plot 1665, Oyin Jolayemi Street, Victoria Island, Lagos Onikan, Lagos. Afribank Nigeria Plc Phronesis Securities Limited 51/55, Broad Street, Lagos 7th Floor, 24A, Campbell Street, Lagos Bank PHB PML Securities Company Limited 707, Adeola Hopewell Street, Victoria Island, Lagos 55C Adebisi Omotola Close, Off Samuel Adedoyin Street, Victoria Island, Lagos First City Monumental Bank Plc Primerose Towers, 17A, Tinubu Street, Lagos Rainbow Securities & Investments Limited 13A, LSDPC Estate, O Close, Ogudu, GRA, Lagos Guaranty Trust Bank Plc Plot 1669, Oyin Jolayemi Street, Victoria Island, Lagos Reward Investments & Services Limited New Africa House (10th Floor), 31, Marina, Lagos Intercontinental Bank Plc Plot 999C Danmole Street, Victoria Island, Lagos Signet Investments and Securities Limited Signet Suite, Church House, 29, Marina, Lagos. Union Bank of Nigeria Plc Stallion Plaza, 36, Marina, Lagos Spring Trust & Securities Limited Stock Exchange House, 20th Floor United Bank for Africa 2/4, Customs Street, Lagos 57, Marina, Lagos

Strategy & Arbitrage Limited Zenith Bank Plc Bull Plaza, 15th Floor, 38/39, Marina, Lagos Plot 87, Ajose Adeogun Street, Victoria Island, Lagos

Tiddo Securities Limited Church House, (6th Floor), 29, Marina, Lagos

AP AFRICAN PETROLEUM PLC RC 4119 Rights Circular 9 5. CHAIRMAN'S LETTER

March 20, 2008 African Petroleum Plc. 54/56, Broad Street Lagos

Dear Distinguished Shareholders, RIGHTS ISSUE OF 262,929,279 ORDINARY SHARES OF 50K EACH AT N230.00 PER SHARE You will recall that at the Annual General Meeting our Company held on 10th August 2007, you were informed of the plans by our Company to raise additional capital through a combination of an Offer for Subscription and Rights Issue. The necessary resolutions were subsequently passed authorizing the commencement of the exercise. I am pleased to announce that arrangements for the Rights Issue have now been concluded and 262,929,279 Ordinary Shares of 50k each are being offered to existing shareholders. The new shares will be offered to existing shareholders on the basis of ONE new Ordinary share for THREE Ordinary shares held, which will result in an increase in our Company's paid-up share capital. The new shares will be offered at a price of N230 per share to those shareholders whose names appeared in the Register of Members at the close of business on February 20, 2008. PURPOSE OF THE RIGHTS ISSUE This rights issue is part of the long-term strategic plan designed to sustain and position African Petroleum Plc as a front liner in the Oil Marketing sector of the economy, with a view to tapping the increasing opportunities in the sector. These opportunities include the need to diversify into exploration/production as well as improvement in Oil service business, market expansion through acquisition and construction of additional service stations, construction of refineries amongst others to meet the ever-dynamic customer demands. Directly deriving from these are the need for economies of scale through the planned expansion and upgrading of our service stations, delivery channels by the addition of over 350 modern stations nationwide. Also, the Rights Issue is to provide additional working capital for the Company's operations. Furthermore, there is the need for quantum investment in the Company's human capital to build a knowledge-based workforce required for all aspects of the operations of the Company given the paradigm shift. FUTURE DEVELOPMENT PLANS Our Company has two broad strategic imperatives for achieving its future development plans of Growth and Modernization of storage facilities, lubricant plants and retail outlets which is why we are embarking on the under listed facilities improvement and capacity building projects. Ø The Onne Tank Farm Phase I with a capacity of 15,000 MT will be commissioned in March 2008, whilst the construction work on Onne Tank Farm Phase 2 for 15,000 MT will soon commence. This will enhance our service delivery in the South Eastern part of Nigeria and improve our market share. Ø Market expansion with acquisition and construction of additional 350 service outlets to enhance our sales and services to our numerous customers nationwide. Ø Diversification into upstream sector. The Company has incorporated AP Exploration and Production Company Ltd to take strategic advantage of the exploration and production of crude for export in the Niger Delta. Ø Reactivation of facilities. The Bitumen Plant in Apapa is being reactivated and expanded to provide Bitumen for the nation's road constructions and Civil Engineering Sector. Whilst the LPG Plant is also being expanded to provide domestic cooking gas to numerous customers. In addition there is plan to renovate and remodel about 300 existing African Petroleum outlets. Ø Change Management and Process re-engineering for better performance. The International consulting firm of KPMG Professional Services is engaged by the Company to drive a change management that will usher in better trained personnel, improved processes and enhanced service delivery. Ø AP Refinery at Lekki Free Trade Zone - The Company is also prospecting building an Ultra Modern Petroleum Refinery in Lekki Free Trade Zone. It will be one of the first privately funded Refineries in Nigeria. Ø AP Oil & Gas Ghana Ltd. This subsidiary is engaged in Petroleum Marketing in Ghana. This will surely expand our marketing frontier in the West African sub-region. PARTICIPATION IN THE RIGHTS ISSUE This Rights Circular contains a summary of the financial and general information relating to our Company. It also contains a provisional allotment letter detailing full instructions for acceptance, payment and renunciation of your rights. As you may be aware, shareholders who wish to renounce their rights partially or in full may trade these rights on the floors of The Nigerian Stock Exchange. Such shareholders are advised to contact their stockbrokers for guidance. However, in the event that any shareholder renounces his/her rights either partially or wholly, such renounced shares will be offered to other existing shareholders who apply for additional shares above their rights under the terms and conditions of the Issue. It is my recommendation that each shareholder should take up his/her rights in full to ensure that you continue to enjoy, undiluted, the fruits of your investment in our Company. Yours faithfully, Femi Otedola Chairman

AP AFRICAN PETROLEUM PLC 10 Rights Circular RC 4119 6. THE PROFIT FORECAST

6.1. The Profit Forecast The Directors are of the opinion that subject to any unforeseen circumstances and based on the assumptions stated below, the profit before taxation for the years ending 31st December 2008, 2009 and 2010 will be in the order of N18.2 billion, N23.5 billion and N30.82 billion respectively as detailed below:

……….…For the years ending 31 December……………..

2008 2009 2010 N'000 N'000 N’000 Turnover 200,000,000 250,000,000 315,000,000 Cost of sales (170,000,000) (212,500,000) (267,750,000) Gross Profit 30,000,000 37,500,000 47,250,000 Overheads (8,300,000) (9,500,000) (10,930,000) Profit before interest and taxation 21,700,000 28,000,000 36,320,000 Interest and Bank Charges (3,500,000) (4,500,000) (5,500,000) Profit before tax 18,200,000 23,500,000 30,820,000 Taxation (4,500,000) (7,000,000) (9,250,000) Profit after tax 13,700,000 16,500,000 21,570,000 Dividend Proposed (12,500,000) (15,600,000) (18,750,000) Retained Profit 1,200,000 900,000 2,820,000 Earnings per share (Naira) 11 13 17 Dividend per share (Naira) 10 13 15 Earnings Yield (at offer price %) 4.38 5.28 6.90 Dividend Yield (at offer price %) 4 5 6 Price Earning Ratio (at offer price) 22.72 19.23 14.71 Dividend Cover (times) 1.10 1.06 1.15

Comments *Forecast earnings and dividend per share for the years ending 31st December, 2008, 2009 and 2010 are based on 1,250,788,000 ordinary shares of 50 kobo each expected to be in issue on those dates.

AP AFRICAN PETROLEUM PLC RC 4119 Rights Circular 11 6. THE PROFIT FORECAST (CONT'D)

6.2 Bases and Assumptions for the Profit Forecast of African Petroleum Plc: The forecast has been arrived at on the following bases and assumptions: Bases (a) Basis of Preparation The projected financial statements have been prepared under the historical cost convention and in accordance with the Company's normal accounting policies. (b) Political and Economic Factors There will be no changes in the political and economic environment of the country that will adversely affect the operations of the Company. (c) Turnover At current selling prices and based on the projected level of demand and production capacity, the turnover of the company for the years ending 31st December, 2008, 2009 and 2010 will be approximately N200 billion, N250 billion and N315 billion respectively. Representing a growth rate of 96%, 25 % and 26% for the years ending 31st December 2008, 2009 and 2010 respectively. (d) Cost of Sales Cost of sales percentage is expected to increase by 98%, 25% and 26% in 2008, 2009 and 2010 respectively. (e) Overhead Expenses Overhead expenses are projected to increase by 20%, 14% and 15% for 2008, 2009 and 2010 respectively. (f) Taxation Company income tax and education tax will remain at 30% and 2% respectively during the forecast period. The company's effective tax rate during the period will however be 25% in 2008 and 30% in 2009 and 2010 respectively. (g) Dividends Dividend payout will be approximately 91%, 95% and 87% of profit after tax in 2008, 2009 and 2010 respectively. (h) Cost Structure There will be no adverse change in existing price structure for the Company's products, other than as provided in the forecast. (i) Market Share The total national demand for the Company's products will be sustained and its market share will not be significantly reduced. (j) Raw Materials and Machinery No import restriction or ban will be imposed on the raw materials and machinery spares requirements of the Company. (k) Cost Structure There will be no change in existing cost structure. (l) Foreign Exchange There will be no material change in international currency exchange rates, or import duties pertaining to the Company's business. (m) Shipping Shipping arrangements with oversea suppliers of raw materials, products and spares will be executed on schedule. (n) Interest Rates Interest rates and bases for taxation, both direct and indirect, will not change materially. (o) Subscription and Offer Proceeds The shares being issued will be fully subscribed and the proceeds received by the end of the second quarter of the 2008 financial year and applied in the manner specified in the offer prospectus. (p) Customers The Company will continue to enjoy the goodwill and confidence of existing and potential customers. (q) Management The quality of the Company's management will be sustained during the forecast period. (r) Acquisition / Disposal of Assets There will be no material acquisitions or disposal of fixed assets, other than as shown in the forecast. (s) Trading Results Trading results will not be affected by industrial disputes within the company and those of its principal suppliers. (t) Contingent Liabilities There will be no material successful claims for damages against the company.

AP AFRICAN PETROLEUM PLC 12 Rights Circular RC 4119 6. THE PROFIT FORECAST (CONT'D)

LETTER FROM THE JOINT ISSUING HOUSE

6.3 This is a copy of the Letter on the Profit Forecast received from the Joint Issuing Houses:

March 20, 2008 LEAD ISSUING HOUSE

JOINT ISSUING HOUSES

FCMB Capital Markets Limited RC 642476

RIGHTS ISSUE OF 262,929,279 ORDINARY SHARES OF 50 KOBO EACH AT N230 PER SHARE

We write with reference to the Rights Circular dated ddmm, 2008 issued in respect of the above-Rights Issue of 262,929,279 Ordinary Shares of 50k each in African Petroleum Plc for which we have the privilege of acting as Joint Issuing Houses. The Rights Circular contains forecast of the profit of African Petroleum Plc for the years ending 31 December 2008, 2009 and 2010 respectively.

We have discussed with you the assumptions upon which the forecasts were made as well as the accounting basis and calculations upon which the forecast were compiled.

However, having considered the assumptions made by you as well as the accounting basis and calculations, we consider that the forecast (for which you as Directors are solely responsible) have been made by you after due and careful enquiry.

Yours faithfully, For: The Joint Issuing Houses

CHINA ONYEMELUKWE NIYI OPEODU Zenith Capital Limited Union Capital Markets Limited

FRANCIS WOOD AIG IMOUKHUEDE OLA IFEZULIKE FCMB Capital Markets Limited Access Bank Plc Afribank Capital Markets Limited

TAYO ADERINOKUN AYODELE THOMAS SONNIE AYERE Guaranty Trust Bank Plc Intercontinental Capital Markets Limited UBA Global Markets Limited

DR. CHUKWUJAMAH CHUKA ESEKA UNEX Capital Limited Vetiva Capital Management Limited

AP AFRICAN PETROLEUM PLC RC 4119 Rights Circular 13 7. CONFIRMATION OF THE GOING CONCERN STATUS

7.1. DIRECTOR'S CONFIRMATION ON THE GOING CONCERN STATUS The following is the text of a letter received from the Directors of African Petroleum Plc on the Going Concern Status of the Company.

The Directors The Directors Zenith Capital Limited Union Capital Markets Limited Plot 87, Ajose Adeogun Street Plot 97, Ahmadu Bello Way Victoria Island, Lagos Victoria Island, Lagos

The Directors The Directors FCMB Capital Markets Limited Afribank Capital Market Limited Primerose Towers PC 28, Afribank Street, Tinubu, Lagos Victoria Island, Lagos

The Directors The Directors The Directors Guaranty Trust Bank Plc Access Bank Plc Intercontinental Capital Market Limited Oyin Jolayemi Street 1665, Oyin Jolayemi Street Wesley House Victoria Island, Lagos Victoria Island, Lagos 21/22, Marina, Lagos

The Directors The Directors The Directors UBA Global Markets Limited UNEX Capital Limited Vetiva Capital Management Limited 57, Marina, Lagos 3, Biaduo Street, Off Keffi Street Plot 266B, Kofo Abayomi Street South West, Ikoyi, Lagos Victoria Island, Lagos

AFRICAN PETROLEUM PLC RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENT

The Directors of African Petroleum Plc are required to prepare financial statements as at the end of each financial period, which give a true and fair view of the state of affairs and of the profit or loss of the Company. They are also responsible for maintaining proper accounting records, for safe guarding assets and for taking reasonable steps to prevent and detect fraud and other irregularities. The Directors are also responsible for selecting suitable accounting policies and applying them on a consistent basis, making judgements and estimates that are prudent and reasonable.

Applicable accounting standards have been followed and African Petroleum Plc financial statements have been prepared using accounting policies, which comply with the generally accepted accounting standards in Nigeria and the Companies and Allied Matters Act, 2004.

GOING CONCERN The Directors of African Petroleum Plc, having made appropriate enquiries, reviewed budgets, projected cash flows and other relevant information, consider that adequate resources exist for the business to continue in existence for the foreseeable future and that, therefore, it is appropriate to adopt the going concern basis in preparing the financial statement.

Yours faithfully, FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

Mr Joel Tunde Falasinnu Mr. Clement Sulu Maku Aviomoh Chief Operating Officer Executive Director

AP AFRICAN PETROLEUM PLC 14 Rights Circular RC 4119 7. CONFIRMATION OF THE GOING CONCERN STATUS (CONT'D)

7.2 AUDITOR'S CONFIRMATION ON THE GOING CONCERN STATUS The following is the text of a letter received from Akintola Williams Delloitte and Aminu Ibrahim & Co. Joint Auditors to African Petroleum Plc, on the Going Concern Status of the Company.

March 20, 2008

Akintola Williams Delloitte (Chartered Accountants) 235, Ikorodu Road, Lagos

And

Aminu Ibrahim & Co. 26, Post Office, Road Kano

The Directors African Petroleum Plc 54/56, Broad Street Lagos

And The Directors The Directors Zenith Capital Limited Union Capital Markets Limited Plot 87, Ajose Adeogun Street Plot 97, Ahmadu Bello Way Victoria Island, Lagos Victoria Island, Lagos

The Directors The Directors FCMB Capital Markets Limited Afribank Capital Market Limited Primerose Towers PC 28, Afribank Street, Tinubu, Lagos Victoria Island, Lagos

The Directors The Directors The Directors Guaranty Trust Bank Plc Access Bank Plc Intercontinental Capital Market Limited Oyin Jolayemi Street 1665, Oyin Jolayemi Street Wesley House Victoria Island, Lagos Victoria Island, Lagos 21/22, Marina, Lagos

The Directors The Directors The Directors UBA Global Markets Limited UNEX Capital Limited Vetiva Capital Management Limited 57, Marina, Lagos 3, Biaduo Street, Off Keffi Street Plot 266B, Kofo Abayomi Street South West, Ikoyi, Lagos Victoria Island, Lagos Gentlemen,

CONFIRMATION OF THE GOING CONCERN STATUS

Based on confirmation received from the Directors of African Petroleum Plc and our review of past results of the Company, as well as existing operational position, we do not have reasons to doubt that the Company will continue in operation in the foreseeable future.

Yours faithfully,

Akintola Williams Delloitte and Aminu Ibrahim & Co.

AP AFRICAN PETROLEUM PLC RC 4119 Rights Circular 15 8. FINANCIAL INFORMATION

8.1. PROFIT AND LOSS ACCOUNT FOR YEAR ENDED 31ST DECEMBER

2007 2006 2005 2004 2003 Note N'000 N'000 N'000 N'000 N'000 Turnover 3 102,026,373 81,934,351 42,761,163 58,110,054 34,395,273 Cost of sales (85,145,376) (71,338,703) (37,562,875) (52,886,726) (30,890,277) Gross profit 16,880,997 10,595,648 5,198,288 5,223,328 3,504,996 Selling and distribution expenses (3,110,846) (1,457,055) (2,148,742) - - _ Administrative expenses (5,773,042) (5,038,163) (4,689,166) (2,753,355) (1,973,453) 7,997,109 4,100,430 (1,639,620) 2,469,973 - Other operating income 4 298,761 109,121 360,749 470,773 250,720 Trading (Loss)/Profit 8,295,870 4,209,551 (1,278,871) 2,940,746 1,782,263 Exceptional items 5 1,172,742 210,363 (637,410) (244,978) 782,205 Interest payable and similar charges (2,419,284) (1,982,282) (1,453,370) (1,668,956) (1,865,891) (loss)/Profit on ordinary activities before taxation 6 7,049,328 2,437,632 (3,369,651) 1,026,812 698,577 Taxation 7 (1,347,821) (276,102) (199,521) (136,692) (87,725) (loss)\Profit on ordinary activities after taxation transferred to general reserve 22 5,701,507 2,161,530 (3,569,172) 890,120 610,852 (loss) / Earning per 50k Share (Naira) 9 7.23 2.74 (4.52) 2.06 2.83

The accounting policies on pages 32 to 33 and the notes on pages 37 to 52 form part of these financial statements.

8.2 BALANCE SHEET FOR YEAR ENDED 31ST DECEMBER

2007 2006 2005 2004 2003 Note N'000 N'000 N'000 N'000 N'000 FIXED ASSETS 10 9,345,908 8,760,208 8,245,385 7,784,173 2,969,955 LEASED ASSETS 11 98,486 ____ LONG TERM INVESTMENTS 12 115,539 1,971,967 2,030,812 2,265,790 584,792 CURRENT ASSETS Stocks 13 5,643,507 5,833,706 1,716,214 1,643,957 1,183,776 Debtors 14 12,996,321 9,752,640 5,155,652 4,296,173 5,650,134 Bank and cash balances 4,602,424 1,900,369 2,074,674 3,835,056 878,435 23,242,252 17,486,715 8,946,540 9,775,186 7,712,345 CREDITORS: Amounts falling due within one year Bank loans and overdraft 15 (16,077,666) (16,778,177) (7,781,265) (6,729,700) (5,974,675) Trade and other creditors 16 (3,082,506) (3,111,090) (3,192,362) (17,608,035) (21,380,940) Other creditors 17 (3,888,683) (3,113,909) (5,051,314) _ _ Taxation 7 (1,455,740) (408,375) (386,826) (187,305) (195,529) Net Current liabilities (1,262,343) (5,924,836) (7,465,227) (14,749,854) (19,838,799) Total assets less current liabilities 8,297,590 4,807,339 2,810,970 (4,699,891) (16,284,052) CREDITORS: Amounts falling due after more than one year Term loans 18 _ (1,985,697) (2,159,212) (2,712,581) (4,356,189) provision for liabilities and charges Gratuity provision 19 (929,641) (366,412) (358,058) (156,313) _ Total assets less total liabilities 7,367,949 2,455,230 293,700 (7,568,785) (20,640,241)

CAPITAL AND RESERVES Share capital 20 394,394 394,394 394,394 216,000 108,000 Revaluation Reserve 4,749,621 4,749,621 4,749,621 4,749,621 _ Share premium account 21 19,320,887 19,320,887 19,320,887 8,067,624 94,279 General reserve 22 (17,096,953) (22,009,672) (24,171,202) (20,602,030) (20,842,520) 7,367,949 2,455,230 293,700 (7,568,785) (20,640,241)

AP AFRICAN PETROLEUM PLC 16 Rights Circular RC 4119 8. FINANCIAL INFORMATION (CONT'D)

8.3. STATEMENT OF CASH FLOWS FOR YEAR ENDED 31ST DECEMBER

2007 2006 2005 2004 2003 Notes N'000 N'000 N'000 N'000 N'000 Cash flows from operating activities

Cash receipts from customers 102,045,586 79,233,404 42,971,766 60,011,591 36,218,379 Cash paid to suppliers and employees (91,726,011) (84,862,628) (44,031,635) (60,228,427) (31,818,704) Cash used in operations 10,319,575 (5,629,224) (1,059,869) (216,836) 4,399,675 Taxes paid (300,456) (254,553) - (144,916) (152,876) Net cash provided by operating activities 24 10,019,119 (5,883,777) (1,059,869) (361,752) 4,246,799 Cashflow from Investing activities Purchase of fixed assets (1,391,805) (1,183,235) (1,037,766) (545,813) (594,728) Purchase of investment (20,539) - (10,000) (1,680,998) (90,000) Proceeds from sale of fixed assets 27,299 16,824 65,769 21,378 114,503 Interest received on term deposits 4 45,156 34,768 _ _ _ Net cash provided investing activities (1,339,889) (1,131,643) (981,997) (2,205,433) (570,225) Cash flows from financing activities Interest paid on loan (2,419,284) (1,982,282) (1,453,370) (1,668,956) (1,865,891) Interest paid on finance lease (17,291) ____ Dividend paid 22 (788,788) ____ Finance lease repayment (65,604) ____ Loan taken 25,861,423 14,534,659 2,311,873 - 1,238,253 Repayment of term loan (29,479,785) (9,016,084) (941,508) (2,624,851) (2,421,404) Proceeds of share issue _ _ 1,236,657 8,081,345 - Net cash provided by financing activities (6,909,329) 3,536,293 1,153,652 3,787,538 (3,049,042) Net increase / (decrease) in cash and cash equivalents 1,769,901 (3,479,127) (888,213) 1,220,353 627,532 Cash and cash equivalents at 1st january (5,740,753) (2,261,626) (1,373,413) (2,593,766) (3,221,298)

Cash and cash equivalents at 31st December 25 (3,970,852) (5,740,753) (2,261,626) (1,373,413) (2,593,766)

AP AFRICAN PETROLEUM PLC RC 4119 Rights Circular 17 8. FINANCIAL INFORMATION (CONT'D)

8.4 NOTES TO THE FINANCIAL STATEMENT

1. The Company African petroleum Plc was incorporated on 11th December, 1964. African petroleum Plc is engaged in the marketing of petroleum products which is directed at four main market segments namely the Automobile, industrial, aviation and marine markets. In addition, the company operates a lubricating oil blending plant. During the year ended 31st December, 2000 under its privatization programme, the Federal Government sold 30% of the company together with management control to Sadiq Petroleum Limited as a core investor. During the year ended 31st December, 2005, Sadiq petroleum limited which hitherto was the core investor of the company divested its holdings to Afribank Plc while the debt owed to Nigerian national petroleum corporation was converted to equity. As at 31 December 2007, Asset Management Nominees Limited and Zenon Oil and Gas Limited are the core investors.

2 Going Concern Considerations The company has suffered consistent working capital deficiencies for the past five years, amounting to N1.26 billion, N5.92 billion, N7.46 billion, 14.75 billion and 19.84 billion as at 31st December 2007, 2006, 2005, 2004 and 2003 respectively. However, the funding to be provided by these Offers is expected to significantly ameliorate and improve the working capital / cash flow situation of the company.

3 Analysis of turnover 2007 2006 2005 2004 2003 N'000 N'000 N'000 N'000 N'000 Fuels 98,910,439 73,704,596 36,077,760 55,178,355 32,872,814 Lubricants and Greases 2,683,267 4,999,141 1,588,622 2,299,098 1,522,429 Other Products 432,667 3,230,614 5,094,781 632,601 30 102,026,373 81,934,351 42,761,163 58,110,054 34,395,273

4. Other income 2007 2006 2005 2004 2003 N'000 N'000 N'000 N'000 N'000 Rental income 124,384 55,403 76,510 69,220 62,265 Interest on call and other deposits 45,156 34,768 _ _ _ Exchange gain _ 9,669 _ _ _ Profit / (loss) on disposal of fixed assets 9,241 (536) 59,223 21,378 99,161 Income from blending for third parties 71,749 _ _ _ _ Sundry income 48,231 9,817 225,016 380,175 89,294 298,761 109,121 360,749 470,773 250,720

5. Exceptional items Provision for dividend no longer required _ 382,418 -- Principal and interest waiver received from banks _--1,006,128 Severance cost _ (172,055) -- - Undeducted withholding taxes in prior years _-(373,672) - - Accrual no longer required _-- - 266,033 Provision for dimunition in investments _ - (263,738) (244,978) (489,956) Profit on sale of Investment(Note 5.1) 1,172,742 - - - - 1,172,742 210,363 (637,410) (244,978) 782,205

5.1 The profit on sale of investments arose as a result of the disposal of the company's 313,788,960 shareholding in First Inland Bank Plc towards the end of 2007.

AP AFRICAN PETROLEUM PLC 18 Rights Circular RC 4119 8. FINANCIAL INFORMATION (CONT'D)

6 Profit before taxation is stated after charging (crediting) 2007 2006 2005 2004 2003 N'000 N'000 N'000 N'000 N'000 Directors' emolument 30,914 47,249 3,067 9,025 8,458 Auditors' remuneration 20,000 18,000 17,000 14,000 - Exchange loss _ 9,669 8,469 26,895 39,264 Depreciation 820,875 4,829 570,006 481,216 402,595 Lease finance charges 17,291 Profit on sale of fixed assets (9,241) 536 (59,223) (21,378) (99,161)

7. Taxation Income tax 1,183,183 236,636 81,246 100,916 61,772 Education tax 164,638 62,611 - 35,776 25,953 Adjustment in respect of prior years _ (23,145) 109,678 _ _ capital gains Tax _ - 8,597 _ _ As per profit and loss account 1,347,821 276,102 199,521 136,692 87,725 Balance brought forward 408,375 386,826 187,305 195,529 260,680 Payment during the year (300,456) (254,553) - (144,916) (152,876) As per balance Sheet 1,455,740 408,375 386,826 187,305 195,529

The charge for taxation has been computed in accordance with the provisions of the Companies Income Tax Act, CAP C21 LFN 2004 and the Education Tax Act CAP E4 LFN 2004.

7.2. Deferred Tax The deferred tax has been computed in line with Statement of Accounting Standards 19 resulting in deferred tax assets of N19, 019,102, N1, 169,603,955 and N882, 246,019 for the years ended 31st December 2007, 2006 and 2005 respectively. These assets have not been recognized in these financial statements.

8. Dividends 2007 2006 2005 2004 2003 N'000 N'000 N'000 N'000 N'000

At 1 January _ 382,418 382,418 382,418 382,418 Balance written back in the year _ (382,418) _ _ _ At 31 December _ _ 382,418 382,418 382,418

In accordance with SAS 23, proposed dividend no longer qualify to be recognized as provisions in the financial statements as they do not constitute present obligations of the Company since they are usually proposed and declared after balance sheet date.

9. Earning per share Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares in issue during the year. 2007 2006 2005 2004 2003 Earnings for the year attributable to shareholders N'000 5,701,507 2,161,530 (3,569,172) 890,120 610,852 Number of ordinary shares in issue ('000 units) 788,788 788,788 788,788 432,000 216,000 Earnings / loss per share (Naira) - basic 7.23 2.74 (4.52) 2.06 2.83

AP AFRICAN PETROLEUM PLC RC 4119 Rights Circular 19 8. FINANCIAL INFORMATION (CONT'D)

10. Fixed assets 2007 2006 2005 2004 2003 N'000 N'000 N'000 N'000 N'000 COST / VALUATION Freehold Land and Buildings 7,085,091 6,568,968 6,254,420 6,450,134 2,437,800 Plant, Equipment and Tanks 3,512,033 3,140,260 2,485,650 3,107,287 1,966,888 Motor Vehicles 590,532 594,443 419,949 392,866 250,162 Furniture and Fittings 68,675 57,571 60,960 _ _ Capital Work -in -Progress 733,632 280,564 219,471 66,233 86,965 At 31 December 11,989,963 10,641,806 9,440,450 10,016,520 4,741,815 Accumulated Depreciation Freehold Land and Buildings 977,054 722,133 473,361 689,852 456,232 Plant, Equipment and Tanks 1,218,542 801,460 443,884 1,314,053 1,104,815 Motor Vehicles 399,619 322,120 253,955 228,442 210,813 Furniture and Fittings 48,840 35,885 23,865 _ _ Capital Work -in -Progress _ _ _ _ _ At 31 December 2,644,055 1,881,598 1,195,065 2,232,347 1,771,860 Net book Value Freehold Land and Buildings 6,108,037 5,846,835 5,781,059 5,760,282 1,981,568 Plant, Equipment and Tanks 2,293,491 2,338,800 2,041,765 1,793,234 862,073 Motor Vehicles 190,913 272,323 165,994 164,424 39,349 Furniture and Fittings 19,835 21,686 37,096 _ _ Capital Work -in -Progress 733,632 280,564 219,471 66,233 86,965 At 31 December 9,345,908 8,760,208 8,245,385 7,784,173 2,969,955

10.1 The company's assets were revalued on 8 March 2004 on the open market basis. The revaluation was carried out by Osas & Oseji (Estate Surveyors & Valuers). The net surplus on revaluation amounting to N4, 749,620,768 as at that date was transferred to revaluation reserve. Subsequent additions are stated at cost. 10.2 Capital work in progress relates principally to tank farms in course of construction during the year.

11. Leased assets 2007 2006 2005 2004 2003 N'000 N'000 N'000 N'000 N'000 Motor Vehicles Cost Additions during the year 131,314 _ _ _ _ At 31 December 131,314 _ _ _ _ Depreciation charge for the year 32,828 _ _ _ _ At 31 December 32,828 _ _ _ _ Net book value At 31 December 98,486 _ _ _ _ The leased assets were acquired under finance lease arrangements. 12. Long term investments Star-Ap joint venture 979,911 979,911 979,911 979,911 979,911 Joint Hydrant Depot - - 53,877 53,877 - AP marginal oil Field investment 10,000 10,000 10,000 10,000 - AP Investment in AP Tchad 7,677 7,677 7,677 7,677 - AP Sunlite - - 4,968 4,968 - AP Properties Ltd 75,000 75,000 75,000 75,000 - Gasland Company Ltd - 6,000 6,000 6,000 - Sundry investments - - - - 94,837 AP Drilling & Completion Fluids 10,000 10,000 10,000 - - AP Ghana Limited 20,539 _ _ _ _ 1,103,127 1,088,588 1,147,433 1,137,433 1,074,748 Other investments: First Inland Bank Plc (313,788,960 shares) Market value -N1,107,675,029 - 2005 and N2,947,924,526 - 2006 _ 1,870,967 1,870,967 1,870,967 _ 1,103,127 2,959,555 3,018,400 3,008,400 1,074,748 Provision for dimunition in investments (987,588) (987,588) (987,588) (742,610) (489,956) 115,539 1,971,967 2,030,812 2,265,790 584,792

AP AFRICAN PETROLEUM PLC 20 Rights Circular RC 4119 8. FINANCIAL INFORMATION (CONT'D)

13. Stocks 2007 2006 2005 2004 2003 N'000 N'000 N'000 N'000 N'000 Raw materials 2,305,537 1,181,597 946,769 505,831 468,159 Finished goods 3,257,457 4,515,780 568,066 1,034,910 611,199 Consumable stores 353,715 209,606 274,656 151,841 104,418 5,916,709 5,906,983 1,789,491 1,692,582 1,183,776 Less: provision (273,202) (73,277) (73,277) (48,625) - 5,643,507 5,833,706 1,716,214 1,643,957 1,183,776

14. Debtors Trade debtors 5,301,857 7,356,901 4,556,683 3,378,409 924,566 Less provision (3,406,078) (2,915,398) (1,765,346) (507,275) _ 1,895,779 4,441,503 2,791,337 2,871,134 924,566 Bridging claim receivable 2,230,320 1,429,352 _ _ 3,060,490 Other debtors 1,698,592 3,095,960 1,389,396 1,272,639 1,625,947 Prepayments 1,194,757 785,825 974,919 152,400 39,131 Receivable from sale of investment 3,043,708 _ _ _ _ Receivable from Petroluem Stabilisation fund 2,933,165 _ _ _ _ 12,996,321 9,752,640 5,155,652 4,296,173 5,650,134 15. Bank loans and overdraft Bank overdraft (Note 15.1) 8,573,276 7,641,122 4,336,300 5,208,469 3,472,201 Short-term loan (Note 18) 7,504,390 9,137,055 3,444,965 1,521,231 2,502,474 16,077,666 16,778,177 7,781,265 6,729,700 5,974,675 15.1 The bank overdrafts are secured by a negative pledge.

16. Trade creditors 2007 2006 2005 2004 2003 N'000 N'000 N'000 N'000 N'000 One year and above _ 2,502 38,595 10,936,277 11,694,684 within one year 3,082,506 3,108,588 3,153,767 3,228,765 3,829,806 3,082,506 3,111,090 3,192,362 14,165,042 15,524,490 Other creditors _ _ _ 2,364,880 1,683,156 Bridging allowance payable _ _ _ 5,549 3,243,362 Accruals _ _ _ 627,957 470,237 Payment received in advance _ _ _ 62,189 77,277 Dividend _ _ _ 382,418 382,418 _ _ _ _ _ 3,082,506 3,111,090 3,192,362 17,608,035 21,380,940 The amount due to NNPC is Further analysed as to: Invoviced liftings 3,082,506 3,111,090 3,192,362 13,500,905 15,403,801 Uninvoiced liftings _ - - 664,137 120,689 3,082,506 3,111,090 3,192,362 14,165,042 15,524,490

17. Other creditors Other Creditors 3,558,611 2,365,587 3,682,746 _ _ Bridging allowance payable _ - 555,457 _ _ Accruals 135,222 690,408 397,161 _ _ Payment received in advance 69,328 57,914 33,532 _ _ Obligations under finance leases 125,522 _ _ Dividend _ - 382,418 _ _ 3,888,683 3,113,909 5,051,314 _ _

18. Term loans 2007 2006 2005 2004 2003 N'000 N'000 N'000 N'000 N'000 At 1 January 11,122,752 5,604,177 4,233,812 6,858,663 7,407,214 Addition in the year 25,861,423 14,534,659 2,311,873 - 1,238,253 36,984,175 20,138,836 6,545,685 6,858,663 8,645,467 Payment made in the year (29,479,785) (9,016,084) (941,508) (2,624,851) (1,786,804) 7,504,390 11,122,752 5,604,177 4,233,812 6,858,663

less:Current portion transferred to short term loans (7,504,390) (9,137,055) (3,444,965) (1,521,231) (2,502,474) At 31 December _ 1,985,697 2,159,212 2,712,581 4,356,189

Term loans are short term facilities obtained from financial institutions and are secured by a negative pledge.

AP AFRICAN PETROLEUM PLC RC 4119 Rights Circular 21 8. FINANCIAL INFORMATION (CONT'D)

19 Gratuity At 1 January 366,412 358,058 156,313 - _ Provision for the year 779,303 182,307 641,122 156,313 _ 1,145,715 540,365 797,435 156,313 _ Payment during the year (216,074) (173,953) (439,377) - _ At 31 December 929,641 366,412 358,058 156,313 _

In accordance with Statement of Accounting Standard No. 8 (Accounting for Employees' Retirement Benefits) issued by the Nigerian Accounting Standards Board (NASB), total staff gratuity as at 31st December 2006 amounting to N587,543,237 should have been fully provided for in the financial statements for 2006. However, a concession of two years was granted the Company by the NASB to spread the amount over a two year period. Consequently, 50% of the amount was provided for in the financial statements for 2006 while the balance of N293, 771,618 was provided for in the 2007 financial statements.

20. Share capital 2007 2006 2005 2004 2003 N'000 N'000 N'000 N'000 N'000 Authorised: 10,000,000,000 ordinary shares of 50k each 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 Issued and fully paid: 788,787,838 ordinary shares of 50k each At 1 January 394,394 394,394 216,000 108,000 108,000 Issued during the year: Debt to equity Conversion _ _ 113,278 - _ Right Issue _ _ 18,263 108,000 _ Bonus Issue _ _ 46,853 - _ At 31 December 394,394 394,394 394,394 216,000 108,000

21 Share premium 2007 2006 2005 2004 2003 N'000 N'000 N'000 N'000 N'000 At 1 January 19,320,887 19,320,887 8,067,624 94,279 94,279 Right Issue - - 1,442,813 8,532,000 - Debt to equity conversion - - 10,081,722 - - Nominal value of share capital (bonus) - - (46,853) - - Share issue expenses - - (224,419) (558,655) - At 31 December 19,320,887 19,320,887 19,320,887 8,067,624 94,279

22. General Reserve Balance at 1 January (22,009,672) (24,171,202) (20,602,030) (20,842,520) (20,362,018) Retained profit\(loss) for the year 5,701,507 2,161,530 (3,569,172) 890,120 610,852 Prior year adjustments _ _ (649,630) (1,091,354) Dividends paid (788,788) _ _ _ _ Balance at 31 December (17,096,953) (22,009,672) (24,171,202) (20,602,030) (20,842,520)

22.1 As stated in note 19, staff gratuity provision was spread over two years following concessions granted the company by the Nigerian Accounting Standards Board. Had the full provision of N587million been made in the 2006 financial statements, the profit for that year would have been reduced by N293 million. 22.2 The Directors propose that a dividend of 700k per ordinary share will be paid to shareholders in respect of the current year (2006: 100k). The dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as liability in these financial statements. Dividend to shareholders is accounted for on the date of declaration as they do not meet the criteria of present obligation as required in the Statement of Accounting Standards (SAS 23). Proposed dividend is subject to with holding tax at the appropriate rate and is payable to all shareholders on the register of members as at closure date. The total estimated dividend to be paid for the current year is N5.522 billion (2006: N788.8 million). 23. Prior year adjustments 2007 2006 2005 2004 2003 N'000 N'000 N'000 N'000 N'000 Balance at 1 January _ _ _ (12,318) - Retained (loss)\profit for the year _ _ _ - (449,768) prior year adjustments ___ - Net bridging claim _ _ _ - (647,330) Unreconciled debit balances _ _ _ (637,312) 5,744 Balance at 31 December _ _ _ (649,630) (1,091,354)

AP AFRICAN PETROLEUM PLC 22 Rights Circular RC 4119 8. FINANCIAL INFORMATION (CONT'D)

24 Reconciliation of profit / (loss) after tax to net cash flow from operating activities 2007 2006 2005 2004 2003 N'000 N'000 N'000 N'000 N'000 Net income after tax 5,701,507 2,161,530 (3,569,172) 890,120 610,852 Adjustments to reconcile net income to net cash provided: Provision for doubtful debts and investments 690,604 1,150,052 1,546,441 - 489,956 Depreciation 820,875 704,929 570,006 481,216 402,595 Profit on sale of investments (1,172,742) ____ Interest expenses 2,419,284 1,982,282 1,453,370 1,668,956 1,865,891 loss/(profit) on diposal of fixed assets (9,241) 536 (59,223) (21,378) (98,298) Interest paid on finance lease 17,291 ____ Interest received (45,156) (34,768) ___ prior year adjustments ___(649,630) (1,091,354) Changes in assets and liabilities: Transfer of investment to receivables _ 4,968 - _ _ Decrease\(increase) in trade debtors 2,055,044 (2,800,218) (1,178,274) (1,946,568) 251,452 Increase in stock (9,726) (4,117,492) (96,910) (460,181) (289,601) (Increase)\ decrease in prepayment and other debtors (2,805,405) (2,946,822) (958,035) 3,300,529 1,629,283 Decrease in trade creditors (28,584) (81,272) (10,972,679) (1,359,448) 380,258 Increase \ (decrease) in accruals and other credit balances 774,774 (1,937,405) 1,608,321 (2,413,457) 160,916 Increase\(decrease) in tax payable 1,047,365 21,549 199,521 (8,224) (65,151) Debt to equity conversion/ _ - 10,195,020 - - Increase in pension fund 563,229 8,354 201,745 156,313 _ Net cah provided by operating activites 10,019,119 (5,883,777) (1,059,869) (361,752) 4,246,799

24.1Non cash financing and investment activities As stated in Note 9, the company entered into finance lease arrangements in the 2007 financial year inrespect of assets with a total cost at the inception of the leases of N208.4 million.

25. Reconciliation of cash 2007 2006 2005 2004 2003 N'000 N'000 N'000 N'000 N'000 Cash at hand and in bank 4,602,424 1,900,369 2,074,674 3,835,056 878,435 Bank overdraft (8,573,276) (7,641,122) (4,336,300) (5,208,469) (3,472,201) (3,970,852) (5,740,753) (2,261,626) (1,373,413) (2,593,766)

26. Information regarding Directors and employees

1 Emoluments of Directors of the company were: Fees 4,050 3,250 820 820 740 Others emoluments 26,864 44,124 2,247 8,205 7,718

2 The Directors, remuneration shown above (excluding pension contributions) include: Chairman 450 450 208 208 172 Highest paid Director 14,798 8,948 8,021 7,437 7,396

3. The table below shows the number of Directors whose emoluments during the year excluding pension contributions were within the ranges stated: Number Number Number Number Number N120,001 - N3,000,000 8 8 8 8 7 N3,000,001- N8,000,000 0 1 2 2 2 N8,000,001 - N13,000,000 1 1 _ _ _ N13,000,001 - N18,000,000 1 _ _ _ _

AP AFRICAN PETROLEUM PLC RC 4119 Rights Circular 23 8. FINANCIAL INFORMATION (CONT'D)

4 Employees 2007 2006 2005 2004 2003 Number Number Number Number Number Average number of employees including Directors during the year. 346 343 339 367 326 N'000 N'000 N'000 N'000 N'000

Employment cost including directors salaries and wages social security and benefit scheme. 1,393,289 1,162,437 986,283 922,098 691,476

5 Table below shows the number of staff of the company whose emoluments during the year excluding pension contributions were within the ranges stated: 2007 2006 2005 2004 2003 Number Number Number Number Number N100,001 - N500,000 ___47 12 N500,001 - N1,000,000 _ 93 88 118 128 N1,000,001 - N2,000,000 136 146 160 171 153 N2,000,001 - N3,000,000 124 67 72 21 15 N3,000,001 - N4,000,000 44 14 11 6 12 Above N4,000,000 42 23 8 4 6 346 343 339 367 326

27. Capital commitments: 2007 2006 2005 2004 2003 N'000 N'000 N'000 N'000 N'000 Outstanding capital expenditure contracted but not provided for in the accounts _ 15,294 45,593 _ 1,500,000 Capital expenditure approved by the Board but not yet committed _ _ 2,617,009 _ _ _ 15,294 2,662,602 _ 1,500,000

28 Contingent Liabilities Pending legal actions against the company which in the opinion of the directors would not result in material losses to the company. 55,765 3,539,747 3,256,759 3,842,598 3,670,388

During the year 2006 the company guaranteed a $1,000,000 loan facility from Afribank Plc to AP Oilfield services limited, a subsidiary company.

29. Reclassification of Balances Certain comparative balances have been reclassified to ensure proper disclosure and uniformity.

30. Related Party Transactions During the 2007 financial year, the company traded with related parties on terms similar to such transaction entered into with third parties as follows: Amounts owed by Amount owed to related Purchase of Goods related parties parties N'000 N'000 N'000 NNPC 43,224,544 - - Afribank Nigeria Plc - - 3,082,502 AP Oil Field Services - 800 7,811,054 43,224,544 800 10,893,556

31. Post balance sheet events There were no post balance sheet events that could have had material effect on the state of affairs of the company as at 31st December, 2007 and on the financial performance for the year ended on that date.

AP AFRICAN PETROLEUM PLC 24 Rights Circular RC 4119 8. FINANCIAL INFORMATION (CONT'D)

VALUE ADDED STATEMENT FOR YEAR ENDED 31ST DECEMBER

2007 2006 2005 2004 2003 N'000 % N'000 % N'000 % N'000 % N'000 % Sales Value 102,026,373 81,934,351 42,761,163 58,110,054 34,395,273 Other Operating

income 298,761 109,121 _ _ _ 102,325,134 82,043,472 42,761,163 58,110,054 34,395,273 Bought in materials and services: Local (58,610,891) (60,278,858) (39,871,861) (43,279,745) (30,049,508) Imported (32,014,176) (15,477,334) (3,249,294) (10,731,227) (687,226) VALUE ADDED 11,700,067 100 6,287,280 100 (359,992) 100 4,099,082 100 3,658,539 100

Distribution: To pay employees: Salaries, wages and other staff costs 1,393,289 12 1,162,437 19 986,283 274 922,098 22 691,476 19

To pay Government: Income tax 1,347,821 11 276,102 4 199,521 55 136,692 3 87,725 2 To pay providers of capital Interest on borrowings 2,419,284 21 1,982,282 32 1,453,370 404 1,668,956 41 1,865,891 51 Interest on finance lease 17,291 0 _ _ _ _ Maintenance and expansion of assets: Depreciation 820,875 7 704,929 11 570,006 158 481,216 12 402,595 11 Profit retained/(loss) sustained in the business 5,701,507 49 2,161,530 34 (3,569,172) (991) 890,120 22 610,852 17 11,700,067 100 6,287,280 100 (359,992) (100) 4,099,082 100 3,658,539 100

AP AFRICAN PETROLEUM PLC RC 4119 Rights Circular 25 9. STATUTORY AND GENERAL INFORMATION

9.1. INCORPORATION AND SHARE CAPITAL HISTORY The history of AFRICAN PETROLEUM PLC dates back to 1964, when the BP Nigeria Limited, was incorporated in Nigeria with an authorized share capital of N6,000,000 which has progressively increased over the years; The following changes have taken place in the Company's authorized share capital.

Date Authorized Changes N Cumulative Date Units Issued Changes N Cumulative Consideration Share Value N Value N Capital N 11/12/64 6,000,000 - 6,000,000 11/12/64 100 - 200 (100) Cash 22/06/78 6,000,000 1,500,000 7,500,000 28/02/79 6,000,000 3,000,000 7,500,000 Cash 17/07/80 7,500,000 3,750,000 11,250,000 17/07/80 7,500,000 3,750,000 11,250,000 Bonus 28/08/82 11,250,000 11,250,000 22,500,000 24/08/82 22,500,000 11,250,000 22,500,000 Bonus 04/08/84 22,500,000 7,500,000 30,000,000 10/08/84 15,000,000 7,500,000 30,000,000 Bonus 06/08/86 30,000,000 6,000,000 36,000,000 16/09/86 12,000,000 6,000,000 36,000,000 Bonus 12/07/88 36,000,000 7,200,000 43,200,000 03/08/88 14,400,000 7,200,000 43,200,000 Bonus 29/06/90 43,200,000 28,800,000 72,000,000 24/09/90 57,600,000 28,800,000 72,000,000 Bonus 29/07/93 72,000,000 14,400,000 86,400,000 - 28,800,000 14,400,000 86,400,000 - 28/11/97 86,400,0000 21,600,000 108,000,000 - 43,200,000 21,600,000 108,000,000 Bonus 19/02/99 108,000,000 36,000,000 144,000,000 03/09/2004 216,000,000 108,000,000 216,000,000 Rights 15/11/2002 144,000,000 4,856,000,000 5,000,000,000 05/06/2005 36,526,901 18,263,450.5 234,263,450.5 Placement 30/09/2005 93,705,381 46,852,690.5 281,116,141 Bonus 28/12/2006 226,555,556 113,277,778 394,393,919 Placement (NNPC Debt Conversion) 9.2. SHAREHOLDING STRUCTURE As at December 31, 2007, the issued Ordinary share Capital of the Company was N394,393,919 made up of 788,787,838 Ordinary Shares of 50 kobo each and beneficially owned as follows; Name No. of shares % holding Zenon Petroleum & Gas Limited 239,315,379 30.34 Asset Management Nominee Limited 127,727,272 16.19 ZSL A/C FOZ 115,387,676 14.63 Other Nigerians 306,357,511 38.84 Except as stated above, no shareholder holds more than 5% of the issued share capital of the Company. 9.3. SUBSIDIARIES As at the date of this Prospectus, African Petroleum Plc have 4 subsidiaries: Name of Subsidiary/ies Percentage Held (%) African Petroleum Oilfield Services Limited 100 African Petroleum Properties Nigeria Limited 100 African Petroleum Exploration and production Limited 100 AP Oil and Gas (Ghana) Limited 100 9.4. DIRECTORS' INTERESTS The interests of the Directors of African Petroleum Plc in the issued share capital of the Company as recorded in the Register of Members on December 31, 2007 and as notified for the purpose of Section 275(1) of the Companies & Allied Matters Act Cap C20 LFN 2004 are as follows: Name Direct Holdings Indirect Holdings **Mr. Femi Otedola Chairman Nil 354,703,055 Mr. Osa Osunde - Vice Chairman 18,022,265 Nil Mr. Joel Tunde Falasinnu 50,000 Nil Rev. Bankole Olayiwola Bolodeoku Nil Nil Dr. ( Mrs.) Grace C. Ekpenyong 12,248 Nil Mr. Sebastian Adigwe Nil Nil Mr. Stanley Inye Lawson Nil Nil Mr. Segun Senbanjo Nil Nil Engr. Josiah W. Wasa Nil Nil Mr. Clement Aviomoh Nil Nil **Mr. Femi Otedola (Zenon Petroleum & Gas Limited - 239,315,379 and ZSL A/C FOZ - 115,387,676

9.5. INDEBTEDNESS As at the date of this Prospectus, the Company had no outstanding debentures, mortgages, loans, charges material contingent liabilities or other similar indebtedness, other than in the ordinary course of business.

Indebteness from the unaudited for the period ending march 31, 2008 stood at N18,587,949,199.

AP AFRICAN PETROLEUM PLC 26 Rights Circular RC 4119 STATUTORY AND GENERAL INFORMATION (CONT'D)

9.6. CLAIMS AND LITIGATION The Company in its ordinary course of business is presently involved in 47 law suits divided into 33 cases institute against the Company and 14 cases claimed by the Company. The total amount claimed in the suits instituted against the Company is estimated at N259,818,606.53 while the total amount claimed in favour of the Company is estimated at N1,131,062,359.26. However, the Solicitors are of the opinion that the contingent liability that may arise from the cases pending against the Company is not likely to exceed the sum of N50 million. The Directors of the Company are also of the opinion that none of the aforementioned cases is likely to have any material adverse effect on the Company or the Offers and are not aware of any other pending and or threatened claims or litigation.

9.7. DECLARATIONS Except as otherwise disclosed in this Prospectus: (a) No share of African Petroleum Plc is under option or agreed conditionally or unconditionally to be put under option. (b) No commissions, discounts, brokerages or other special terms have been granted by African Petroleum Plc to any person in connection with the offer or sale of any share of the Company; (c) Save as disclosed herein, the Directors of African Petroleum Plc have not been informed of any other holding representing 5% or more of the issued share capital of the Company. (d) There are no founders, management or deferred shares or any options outstanding in African Petroleum Plc; (e) There are no material service agreements between African Petroleum Plc or any of its Directors and employees other than in the ordinary course of business. (f) There are no long term service agreements between African Petroleum Plc or any of its Directors and employees except Pension Agreements; (g) No Director of the Company has had any interest, direct or indirect, in any property purchased or proposed to be purchased by the Company in the five years prior to the date of this Prospectus. h) No Director or key management staff of the Company is or has been involved in any of the following (whether in or outside Nigeria): 1. A petition under any bankruptcy or insolvency laws filed (and not struck out) against such person or any partnership in which he was a partner or any company of which he was a director or key personnel or 2. A conviction in a criminal proceeding or is named subject of pending criminal proceedings relating to fraud or dishonesty or The subject of any order, judgment or ruling of any court of competent jurisdiction or regulatory body relating to fraud or dishonesty, restraining him from acting as investment adviser, dealer in securities, director or employee of financial institution and engaging in any type of business practice or activity.

9.8. MATERIAL CONTRACTS The following agreement has been entered into and is considered material to this Offer:

A Vending Agreement dated August 5, 2008 by which Union Capital Markets Limited, Zenith Capital Limited, FCMB Capital Markets Limited, Access Bank Plc, Afribank Capital Markets Limited, Guaranty Trust Bank Plc, Intercontinental Capital Markets Limited, UBA Global Markets, UNEX Capital Limited and Vetiva Capital Management Limited have agreed to offer for subscription 262,929,272 Ordinary shares of 50 kobo each in African Petroleum Plc by way of Rights Issue existing shareholders. Other than as stated above, the Company has not entered into any material contract except in the ordinary course of business.

9.9 RISK AND MITIGATING FACTORS The business activities of the Company are subject to risks as well as other factors which may affect the Company's future performance. However, some of these risks can be minimized or even overcome by the use of mitigating factors and instituting appropriate systems and actions, while there are others which are outside the control of the Company and the Directors and cannot be minimized or avoided. The principal risk factors which investors should consider before making a decision on whether or not to participate in this Rights Issue include, but are not limited to:

(a) Specific Risk African Petroleum Plc currently enjoys the benefits associated with the increasing demand for petroleum products in Nigeria as other companies in the marketing of oil and gas products. Hence a decline in the markets share could result in a substantial decline in its financial performance. However, the company has beam its search light on other investment opportunities to cushion this effect on its operations by way of diversification into other investments that would yield positive returns. In addition, the company has put in place sound risk and remedial management systems that enable it meet its customers demands as at when due.

AP AFRICAN PETROLEUM PLC RC 4119 Rights Circular 27 STATUTORY AND GENERAL INFORMATION (CONT'D)

(b) Sectoral Risks The Petroleum Marketing Industry is faced with a lot of challenges amongst which are the low profit margin in the sector, the various government policies on pricing products as well as changes in government regulations on importation of refined products in the past years. In a bid to mitigate against the tide of low profit margins, government has shown interest by embarking on deregulation initiatives which have significantly improved the income margins of operators in the sector.

(c) Currency Risk The risk created by the frequent changes in the exchange rate of the Naira to other currencies have been relatively reduced over the years particularly with reference to foreign investors who are likely to be exposed to the Naira depreciating against other foreign currencies thereby reducing their investments. However, the Company makes investments with returns that adequately surpass the inflation rate and the effect of exchange rate fluctuations, hence protecting it from occurrences that may negatively impact its performance and/or profitability. In addition, the Central Bank of Nigeria (CBN) policy on foreign exchange in Nigeria has helped to stabilise the fluctuations in the exchange rate parity and we believe that this trend will continue over the long to medium term.

(d) Political Risk Nigeria being an emerging democracy is not completely immune from such uncertainties like frequent changes in government policies, religious instability, ethnic disturbances, etc. However, the Nigerian government over the past six years has instituted reforms which we expect should outlive the present regime. The country has obtained sovereign rating of BB-by Fitch. Adverse changes in macro-economic, social-political and regulatory environment may therefore only have minimum effect on the risk attributed to further exposure to the Company.

(e) Environmental Risk It is the policy of African Petroleum Plc to carry out its activities in such a manner that guarantees the health and safety of it's workers and other Stakeholders, protection of the environment and comply with all regulatory and industry requirements. To this end, African Petroleum Plc shall at all times provide, as far as is reasonably practicable, safe processes, premises and equipment to guarantee accident-free operations and adhere to safe work practices.

The Company shall also provide competent resources and pursue vigorous programmes required to meet the tenets of this policy, continuously improve performance and compliance with statutory and industry standards.

9.10 UNCLAIMED DIVIDEND/UNPAID DIVIDEND The unclaimed dividend as at 31st December 2007 is N86,586,737 domiciled at Afribank Nigeria Plc, 27 Keffi Street Branch, South West, Ikoyi, Lagos. Some of the shareholders whose names appeared in the list of unclaimed dividends have been approaching the Registrars from time to time to claim such dividends or have their warrants revalidated. We shall strife to ensure that our shareholders get their dividend warrants on time and also continue to publish the list of unclaimed dividends and make efforts to have them claimed without any further delay. The Company does not have any unpaid dividend.

9.11 TRAINING, RESEARCH AND DEVELOPMENT The Company places a lot of premium on research and development with a view to continuously improving performance in the years ahead. African Petroleum Plc will continue to pay special attention to research and development as well as training of its staff aimed at having a motivated workforce that will constantly be ready to meet the ever changing customer's demand.

9.12 Issue Costs and General Expenses The estimated net Offer proceeds of N104,910,443,622.52 (Rights and Public Offer) arising from the combine Offers, after deducting the estimated Offer cost as well as the underwriting expenses both amounting to N5,330,970,797.48 (i.e 4.11% of Offer cost and 2% flat on the underwritten portion) are payable by the Company:

9.13 Relationship between the Issuer and its Advisers There are no known relationship between the Issuer and its Advisers other than in the ordinary course of business.

AP AFRICAN PETROLEUM PLC 28 Rights Circular RC 4119 STATUTORY AND GENERAL INFORMATION (CONT'D)

9.14 Changes in Financial or Trading Position Save as disclosed herein, there has been no material change in the financial or trading position of the Company other than in the ordinary course of its business since December 31, 2007 the date of the latest audited accounts of the Company.

9.15 Related Party Transaction As at the date of this Prospectus, there were no related party transactions.

9.16 Off Balance Sheet Items As at the date of this Prospectus the Company had no off balance sheet items.

9.17 Mergers and Takeovers The Company intends to open a merger discussion with Zenon Petroleum and Gas Limited after the close of this Offer.

9.18. Consents The following have given and not withdrawn their consents to the Offer with their names and reports (where applicable) included in the form and context in which they appear.

The Directors and Company Secretary/Legal Adviser of the Company.

Leading Issuing House Zenith Capital Limited Joint Issuing Houses Access Bank Plc Afribank Capital Markets Limited FCMB Capital Markets Limited Guaranty Trust Bank Plc Intercontinental Capital Market Limited UBA Global Markets Limited UNEX Capital Markets Limited Union Capital Markets Limited Vetiva Capital Management Limited

Underwriters Access Bank Plc Afribank Nigeria Plc Bank PHB Diamond Bank Plc First City Monumental Bank Plc Greenwich Trust Limited Guaranty Trust Bank Plc Intercontinental Bank Plc Sterling Bank Plc United Bank for Africa Plc Union Capital Markets Limited Zenith Capital Limited

Joint Lead Stockbrokers Dynamic Portfolio Limited/ICON Stockbroker Limited

Joint Stockbrokers AIL Securities Limited APT Securities & Funds Limited BGL Securities Limited Bridge Securities Limited Capital Assets Limited Camry Securities Limited Cashcraft Asset Management Limited C&I Heritage Limited City-Code Trust & InvestmentsCapital Limited Clearview Investments Company Limited Cordros Capital Limited CSL Stockbrokers Limited De-Canon Investment Limited Enterprise Stockbrokers Limited Equity Capital Solutions Limited EDC Securities Limited Fidelity Finance Company Limited

AP AFRICAN PETROLEUM PLC RC 4119 Rights Circular 29 STATUTORY AND GENERAL INFORMATION (CONT'D)

FIS Securities Limited Forte Asset Management Limited FSDH Securities Limited Future View Limited Global Assets Management Limited Greenwich Trust Limited GTI Capital Limited Heartbeat Investment Limited Hedge Securities & Investments Limited Integrated Trust & Investment Limited LB Securities Limited Mutual Alliance Investment & Securities Limited Kinley Securities Limited Lambath Trust & Investment Company Limited Marina Securities Limited Nova Finance & Securities Limited Phronesis Securities Limited PML Securities Limited Rainbow Securities & Investment Company Limited Reward Investment and Services Limited Signet Investment & Securities Limited Spring Securities Limited Strategy & Arbitrage Limited Tiddo Securities Limited TRW Stockbrokers Limited UBA Stockbroker Limited Union Capital Markets Limited Zenith Securities Limited

Receiving Bankers: Access Bank Plc Afribank Nigeria Plc Bank PHB First City Monument Bank Plc Guaranty Trust Bank Plc Intercontinental Bank Plc Union Bank of Nigeria Plc United Bank for Africa Plc Zenith Bank Plc

Joint Auditors: Akintola Williams Delloitte Aminu Ibrahim & Co.

Reporting Accountant: David Odiwo & Co.

Registrars Afribank Registrars Limited Joint Solicitors to the Company: The City Law Associates Ladi Ajose-Adeogun

Solicitors to the Offer: SPA Ajibade & Co.

AP AFRICAN PETROLEUM PLC 30 Rights Circular RC 4119 STATUTORY AND GENERAL INFORMATION (CONT'D)

Documents Available for Inspection Copies of the following documents may be inspected at the offices of African Petroleum Plc, Union Capital Markets Limited, Zenith Capital Limited, FCMB Capital Markets Limited, Access Bank Plc, Afribank Capital Markets Limited, Guaranty Trust Bank Plc, Intercontinental Capital Markets Limited, UBA Global Markets, UNEX Capital Limited and Vetiva Capital Management Limited during normal business hours on weekdays during the offer period.

1. Certificate of Incorporation of the Company 2. Memorandum and Articles of Association of the Company 3. Certified copy of Resolution of the Shareholders at the Annual General Meeting of the Company dated 10th August, 2007 authorizing the Offers 4. Resolution of the Board authorizing the Offers 5. Consents of the Directors and other parties to the Offers 6. The Rights Circular issued to existing shareholders in respect of the Offer; 7. Audited Financial statements of the Company for five years ended December 31st 2007. 8. The list of outstanding claims and litigation referred to in (9.6) above 9. The material contracts referred to in (9.8) above; 10. The written consents referred to in (9.18) above. 11. SEC letter approving the offer documents 12. NSE letter approving the listing 13. Certificate of Increase in Share Capital 14. Memorandum of Understanding between the Joint Issuing Houses 15. Three (3) years profit forecast ending December 31, 2008, 2009, 2010

AP AFRICAN PETROLEUM PLC RC 4119 Rights Circular 31 PROVISIONAL ALLOTMENT LETTER

African Petroleum Plc 54/56 Broad Street Lagos March 31, 2008

Rights Issue of 262,929,279 Ordinary shares of 50k each at N230 per share payable on acceptance not later than September 29, 2008.

Dear Sir/Madam,

1. Provisional Allotment The letter from the chairman dated March 20, 2008 on page 12 of the Rights Circular contains particulars of the Rights Issue of 262,929,279 Ordinary shares of 50k each at N 230 per share, now being made. The Securities and Exchange Commission (“SEC”) has approved the Rights Issue and the Directors of your Company have provisionally allotted to you the number of new ordinary shares set out in column 2 of the Acceptance/Renunciation Form, being the proportion of ONE new ordinary share for every THREE ordinary shares registered in your name at the close of business on February 20, 2008. Fractions of shares, if any, will be aggregated and sold for the benefit of shareholders of the Company.

The new ordinary shares shall rank, in all respects, pari-passu with the existing ordinary shares of the Company. You may accept all or any number of the new ordinary shares offered to you or renounce your rights to any or all of them. You may also indicate your willingness to subscribe to additional shares, and the number of such shares desired. All rights accepted must be paid for in full by the shareholder.

2. Acceptance and Payment a) Full Acceptance If you wish to accept this provisional allotment in full, please complete box (B) of the enclosed Acceptance/Renunciation Form. The completed Acceptance/Renunciation Form together with a cheque or bank draft for the full amount payable must be submitted to any of the Receiving Agents listed on page 44 of this document not later than September 29, 2008. The cheque or draft must be drawn on a bank in the same town or city in which the Receiving Agent is located and crossed “AFRICAN PETROLEUM PLC” with your name, address and daytime telephone number (if any) written on the back of the cheque or draft. All cheques and drafts will be presented upon receipt and all Acceptance/Renunciation Forms in respect of which cheques are returned unpaid will be rejected and returned through registered post.

b) Partial Acceptance To accept your provisional allotment partially, please complete box C and submit your Acceptance/Renunciation Form to any of the Receiving Agents listed on page xx of this document together with a cheque or bank draft made payable to the Receiving Agent for the full amount payable in respect of the number of shares you have decided to accept.

If you wish to renounce your provisional allotment partially or in full and to trade all or some of your renounced rights on the floor of The Nigerian Stock Exchange (“The Exchange”), please complete item (iii) of box C and submit your Acceptance/Renunciation Form to a stockbroker (NOT A BANK) of your choice together with payment for any provisional allotment you are accepting partially. Payment should be made in accordance with (a) above. The stockbroker will guide you on the procedure for trading your rights.

b) Applying for Additional Shares This may be done by any one or both of these processes: i. Purchasing rights on the floor of The Exchange: Rights can only be purchased through any of the stockbrokers listed on page 44 of this document. The stockbroker will guide you regarding payment. Shareholders who purchase rights on the floor of The Exchange are guaranteed the number of ordinary shares purchased-they will not be subject to the allotment process in respect of the number of ordinary shares so purchased (please refer to item 3 on the next page).

ii. Completing item (ii) of box B of the Acceptance/Renunciation Form: Payment should be made in accordance with (a) above. Shareholders who apply for additional shares using the Acceptance/Renunciation Form will be subject to the allotment process and may therefore be allotted less than the number of additional shares applied for. The receipt of any payment with your Acceptance/Renunciation Form will constitute an acceptance of all or part of this allotment on the terms of this letter, subject to the Memorandum and Articles of Association of the Company and to the clearance of the SEC. If payment is not received by September 19 2008, the provisional allotment will be deemed to have been declined and will be cancelled.

AP AFRICAN PETROLEUM PLC 32 Rights Circular RC 4119 PROVISIONAL ALLOTMENT LETTER

3. Trading in Rights The approval of The Exchange has been obtained for trading in rights of the Company. The rights will be tradable between August 21, 2008 and September 29, 2008 at the bid/offer price quoted on the Exchange. Any shareholder wishing to renounce his/her rights, partially or in full, may trade the renounced rights on the floor of The Exchange between these dates. Please, complete item (iii) of box C of the Acceptance/Renunciation Form and contact your stockbroker for assistance. If you wish to purchase renounced rights, please contact your stockbroker who will guide you regarding payment and the procedure for purchasing renounced rights. Any purchaser of rights may also trade those rights between these dates.

4. Allotment of Additional Shares All shares on Offer through this Rights Issue which are not taken up by the close of the Acceptance List will be allotted to existing shareholders who have applied for additional shares over and above their rights under the terms of the Issue on a basis to be determined by the Bank and the Issuing Houses and cleared by the SEC. After the allotment of the additional requests by shareholders, any unsubscribed shares should be reverted back to the unissued share capital of the Company based on the Commission's rule.

5. Subscription Monies Acceptance/Renunciation Forms must be accompanied by bank drafts or cash for the full amount due on acceptance. The bank draft should be made payable to the bank or stockbroker at whose branch or office the Acceptance/Renunciation Form is lodged and should be crossed and marked “AFRICAN PETROLEUM PLC”. Thereafter, all subscription monies will be retained in separate interest yielding Bank Accounts by the Receiving Banks. Receipt for application monies shall be issued by the Receiving Agents for amounts collected by them from prospective investors. If any application is rejected or accepted for fewer shares than the number applied for, a cheque for the full amount or the balance (as the case may be) will be returned through registered post or reputable courier services within five (5) working days of allotment.

7. E-Allotment/Share Certificates E-Allotment/Share certificates in respect of the shares allotted will be sent by Electronic-Transfer to the CSCS account of allottees not later than 15 working days from the date of allotment. Investors are hereby advised to state the name of their stockbroker as well as their CSCS account number/Clearing House number in the space provided on the Application Form. However, Investors without CSCS account numbers will receive their certificates by registered post not later than 15 working days from date of Allotment.

8. Surplus monies If any application for additional shares is accepted for fewer shares than the number applied for, a cheque for the balance of the amount paid will be returned through registered post or reputable courier services within five (5) working days of allotment. Where monies are not returned within the stipulated period, accrued interest will be paid at a rate not below MPR + 1.

Yours faithfully,

Mrs Elizabeth Idigbe Company Secretary

AP AFRICAN PETROLEUM PLC RC 4119 Rights Circular 33 RECEIVING AGENTS

Completed Application Forms for which cash or bank drafts / cheques for the full amount payable may be submitted to any of the following Receiving Agents duly registered as market operators by SEC, to whom brokerage will be paid at the rate of 75 kobo per N100 worth of shares allotted in respect of applications bearing their stamps.

The Joint Issuing Houses can not accept responsibility for the conduct of any of the institutions listed below. Investors are therefore advised to conduct their own independent enquiries before choosing an agent to act on their behalf. Evidence of lodgment of funds at any of the Receiving Agents listed below, in the absence of corresponding evidence of receipt by the Issuing Houses, can not give rise to a liability on the part of the Issuing Houses under any circumstances.

BANKS Access Bank Plc Guaranty Trust Bank Plc Afribank Nigeria Plc Intercontinental Bank Plc Standard Chartered Bank Limited Diamond Bank Ltd IBTC-Stanbic Bank Plc Sterling Bank Plc Eco Bank Nigeria Plc Oceanic Bank International Plc United Bank for Africa Plc Equitorial Trust Bank Ltd Platinum Habib bank Plc Union Bank of Nigeria Plc Fidelity Bank Plc Nigeria International Bank Limited (Citigroup) Unity Bank Plc First Bank of Nigeria Plc Skye bank Plc Wema Bank Plc First City Monument Bank Plc Spring Bank Plc Zenith Bank Plc First Inland Bank Plc STOCKBROKERS AND OTHERS

AAA Stockbrokers Ltd Forte Asset Management Ltd Premium Securities Ltd Adamawa Securities Ltd Forthright Securities & Investments Ltd Professional Stockbrokers Ltd Afribank Capital Markets Limited Fountain Securities Ltd Pivot Trust & Investment Ltd AIL Securities Ltd FSDH Securities Limited Profund Securities Ltd Alangrange Securities Limited Future View Financial Services Ltd PSL Securities Ltd Alliance Capital Mgt co. Ltd Gidauniya Investments & Securities Ltd Pyramid Securities Ltd Altrade Securities Ltd Global Assets & Management Ltd Quantum Securities Ltd AMYN Investments Ltd Golden Securities Ltd Reading Investments Ltd Anchoria Investment & Securities Ltd Greenwich Trust Ltd Regency Assets Management Ltd APT Securities & Funds Ltd GTI Capital Ltd Resano Securities Ltd Associated Asset Managers Ltd Heartbeat Investments Ltd Resort Securities & Trust Ltd Atlas Portfolio Ltd Hedge Securities & Investments Ltd Reward Investments & Securities Ltd Belfry Investment & Sec. Ltd Horizon Stockbrokers Ltd Rivtrust Securities Ltd Best Link Investment Ltd IBTC Asset Management Ltd Rolex Securities Ltd Bestworth Assets & Trust Ltd ICMG Securities Ltd Rostrum Investments & Securities Ltd BFCL Assets & Securities Ltd ICON Stockbrokers Ltd Royal Crest Finance Ltd BGL Securities Ltd Ideal Securities & Investments Ltd Santrust & Securities Ltd BSD Securities Ltd Independent Securities Securities Solutions Ltd Bytofel Trust & Securities Ltd Intercontinental Securities Ltd Securities Trading & Investment Ltd Calyx Securities Limited Integrated Trust & Investments Ltd Securities Transaction & trust Co Ltd Cashcraft Asset Management Limited International Standard Securities Ltd Security Swaps Ltd Camry Securities Limited Interstate Securities Ltd Shelong Investment Ltd Capital Assets Ltd Investment Centre Ltd Sigma Securities Ltd Capital Bancorp Ltd Investment Masters & Trust Ltd Signet Investments Securities Ltd Capital Express Securities Ltd Jenkins Investment Ltd SMADAC Securities Ltd Capital Trust Brokers Ltd Kapital Care Trust & Securities Ltd Solid Rock Securities & Investment Ltd Calyx Securities Ltd. Kinley Securities Ltd Spring Stockbrokers Limited Centre Point Investment Ltd Kundila Finance Services Ltd Springboard Trust & Investment Ltd Century Securities Ltd Lambeth Trust & Investment Co Ltd Stanbic Equities Nigeria Ltd Chapel Hill Advisory Partners Limited LB Securities Ltd Stanwal Securities Ltd Clearview Investment Company Ltd. Lead Capital Ltd Strategy & Arbitrage Ltd Citi Investment Capital Limited Lighthouse Asset Management Ltd Summa Guaranty & Trust Co Ltd City-Code Trust & Investment Co Ltd Lion Stockbrokers Limited Summit Finance Company Ltd Compass Investment & Securities Limited Maclaize Trust & Securities Ltd Supra Commercial Trust Ltd Consolidated Investment Ltd Magnartis Finance & Investment Limited TFS Securities Ltd Cooper Fleming Stockbrokers Ltd Mainland Trust Ltd The Bridged Securities Ltd Core Trust & Investment Ltd Maninvest Securities Ltd Tiddo Securities Ltd Counters Trust Securities Ltd Marimpex Finance & Investment Ltd Tomil Trust Ltd Cowry Asset Management Ltd Marina Securities Ltd Topmost Finance & Investment Ltd Crossworld Securities Ltd Maven Asset Management Ltd Tower Assets Management Ltd CSL Stockbrokers Ltd Maxifund Investments & Securities Ltd Tower Assets Management Ltd Davandy Finance & Sec. Ltd Mayfield Investment Ltd Tower Securities & Investment Co Ltd De-Canon Investment Ltd MBC Securities Ltd Traders Trust & Investment Co Ltd De-Lords Securities Ltd MBL Financial Services Ltd Trans Africa Financial Services Ltd Denham Management Ltd Mega Equities Ltd Transworld Investment Ltd Dependable Securities Ltd Mercov Securities Ltd Tropics Securities Ltd Dynamic Portfolio Ltd Meristem Securities Ltd Trust Yield Securities Ltd EBN Securities Ltd Metropolitan Trust Nigeria Ltd Trusthouse Investment Ltd Emerging Capital Ltd Midas Stockbrokers Ltd TRW Stockbrokers Ltd td Empire Securities Ltd Midland Capital Markets Limited UBA Global Markets L Enterprise Stockbroker Plc Mission Securities Ltd UIDC Securities limited ESL Securities Limited Molten Trust Ltd UNEX Securities & Investment Ltd ESS Investment & Trust Ltd Mountain Investment & Securities Ltd Union Capital Markets Ltd Eurocomm Securities Ltd Newdevco Finance Securities Ltd Valmon Securities Ltd Excel Securities Ltd Nigerian International Securities Ltd Valueline Securities & Investment Ltd Express Portfolio Services Ltd Nigerian Stockbrokers Ltd Vetiva Capital Management Limited F & C Securities Ltd Omas Investments & Trust Ltd Vision Trust & Investment Ltd Falcon Securities Ltd OMF Securities & Finance Ltd Viva Securities Ltd FBN Capital Limited Options Securities Ltd Wizetrade Capital Asset Management Ltd Finmal Finance Services Ltd P.S.I. Securities Ltd WSTC Financial Services Ltd Fidelity Union Securities Ltd Partnership Investment Co Ltd Yobe Investment & Securities Ltd First Alstate Securities Peninsula Asset Management & Inv. Co. Ltd Zenith Securities Limited First Equity Securities Ltd Perfecta Investment Trust Ltd First Stockbrokers Ltd Phronesis Securities Company Ltd FIS Securities Ltd Pilot Securities Limited Foresight Securities Investments Ltd Pinefields Investment Services Ltd

AP AFRICAN PETROLEUM PLC 34 Rights Circular RC 4119 Acceptance List Acceptance List Opens August 21, 2008 Closes September 29, 2008

September 19, 2008,

AP AFRICAN PETROLEUM PLC RC 4119 Rights Circular 35 To the: LEAD ISSUING HOUSE

JOINT ISSUING HOUSE

FCMB Capital Markets Limited RC 642476

AP AFRICAN PETROLEUM PLC 36 Rights Circular RC 4119