International Petroleum: Kazakh Field License Court Battle Continues

International Petroleum Limited (NSX: IOP) (“International Petroleum” or the “Company”), an oil and gas exploration company is pleased to present its activities report for the three months ending 30 September 2014, 31 December 2014 and 31 March 2015.

UPDATE ON KEY ISSUES

– US$4,387k cash at bank at 31 March 2015
– Update on Niger project
– Update on Kazakhstan project
– Sale of Non-Core South African Assets
– Conversion of Loans Outstanding
– NSX suspension from official quotation

CORPORATE

Niger project
As a result of the political and security instability in the Republic of Niger and the country’s declaration of the
state of emergency in the regions where the company’s licences are held, a force majeure was officially declared by the Company in February 2015 in accordance with the PSCs and accepted by the Ministry of Energy and Petroleum of Niger. The Company plans to resume all operational activities once the force majeure is lifted and the country’s security situation normalises.

Kazakhstan project

In August 2014, the Group received a notification from the Ministry of Energy of the Republic of Kazakhstan (formerly the Ministry of Oil and Gas) (“ME”) that its rights to the Alakol licence had been withdrawn by ME unilaterally. The Company did not accept this as being justified and filed a lawsuit against ME demanding that the licence be reinstated back to the Company. A first instance court hearing was held on 16 January 2015 to address our claim for the licence to be reinstated and was decided in our favour. It was also recommended by the court of first instance that the licence expiry date be extended to account for lost time since the date the licence was withdrawn. ME has appealed this decision, and recently won. Following this appeal court decision, the Company immediately submitted a cessation appeal against it on 28 April 2015 and expects an official ruling on the matter by the end of June 2015. At the date of approval of this update the dispute has not yet been resolved.

Sale of Non-Core South African Assets

During October 2009, the Company entered into a sale agreement (the “Sale Agreement”) with Nkwe Platinum Limited (ASX: NKP) (“Nkwe”) relating to the Company’s interest in a South African platinum project (“Tubatse Project”).
Owing to the continued delays to the settlement of the dispute about the ownership of two of the three mineral farms that comprise the Tubatse Project and the negotiations with suitable joint venture partners, Nkwe had not been able to pay the A$45 million consideration to the Company by the revised agreement date of 31 December 2012. The Directors are currently seeking legal advice on how to proceed.

Hoepakrantz 291 KT, together with prospecting licenses Nooitverwacht 324 KT and Eerste Geluk 327 KT, were known as the Tubatse Project (a South African platinum project). Hoepakrantz 291 KT now forms part of the Garatau Project, with 2 other prospecting licences in which the Company has no interest. During Quarter 4, 2013, NKWE announced the formation of a strategic partnership with Zijin Mining Group (“Zijin”), in respect of the development of Nkwe’s South African PGM assets and a A$20m investment by Zijin into Nkwe, all of which has been advanced.

Conversion of loans

On 8 September 2014, a General Meeting was held whereby shareholder approval was obtained for the conversion of loans to fully paid ordinary shares of the Company. A summary of the loan conversions approved is set out below:

– US$13,184,231 of loans, associated commitment fees and interest, payable to African Petroleum Corporation Limited (“African Petroleum”), into 233,890,450 fully paid ordinary shares at a deemed price of A$0.06 per share
– US$8,331,560 of loans and interest, payable to Range Resources, into 147,803,270 fully paid ordinary shares at a deemed price of A$0.06 per share
– US$5,200,000 of loans, payable to Varesona Participation Corporation (“Varesona”), into 79,070,457 fully paid ordinary shares at a deemed price of A$0.07 per share
– US$6,000,000 of loans, payable to Varesona, into 42,576,400 fully paid ordinary shares at a deemed price of A$0.15 per share

The loan conversions to fully paid ordinary shares, as detailed above, were completed on 2 October 2014. In addition to the loans converted, 5,000,000 options exercisable at A$0.06 per Option were issued to each of African Petroleum and Range Resources on 2 October 2014, and both companies will be entitled to nominate one person to the Board of the Company. As part of the agreement with Range Resources the Company paid US$500,000 on 21 October 2014, as final settlement of the borrowings owed to Range Resources. Following the cash settlement with Range Resources and the conversion of the loans and interest payable to African Petroleum, Range Resources and Varesona, the Company does not have any outstanding loans payable.

NSX suspension from official quotation

Since 27 March 2013, the Company’s shares have been suspended from trading on the NSX market, at the Company’s request, and suspension from trading is expected to be lifted in quarter 3, 2015 once the Company has held an Annual General Meeting for shareholders to approve the Group’s 2014 & 2015 Annual Reports.