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Arawak terminates MENA collaboration with Gulfsands Petroleum

23rd January 2015

Gulfsands Petroleum plc has given an update regarding its relationship with Arawak Energy International Limited (Arawak) concerning the Strategic Cooperation Agreement for the acquisition and development of new business opportunities in the Middle East and North Africa (MENA) region and the USD 20m Convertible Loan Facility announced on 19 November, 2014

Gulfsands Petroleum plc has given an update regarding its relationship with Arawak Energy International Limited (Arawak) concerning the Strategic Cooperation Agreement for the acquisition and development of new business opportunities in the Middle East and North Africa (MENA) region and the USD 20m Convertible Loan Facility announced on 19 November, 2014

Late on 22nd January, 2015, Gulfsands was advised by Arawak that as a result of its dialogue with Gulfsands over recent days and corporate developments over the last few weeks including public statements made by certain shareholders of Gulfsands and non-executive directors of Gulfsands, Arawak has determined that it should terminate the Strategic Cooperation Agreement.

Further, Arawak has confirmed that in view of these events, it reserves all of its rights under the Facility Agreement. Arawak's rights under the Facility Agreement may in certain circumstances, include the right to terminate the Loan Facility and to require repayment of all moneys advanced under the Loan Facility.

Arawak has also advised Gulfsands that in the event the removal of Messrs Sajjad and Judge as executive directors of the company, whose removal as directors of Gulfsands are matters the subject of resolutions to be considered at a General Meeting of the company on 3 February, 2015, takes effect, it will not hesitate to act to enforce its rights under the Loan Facility.

At the present time, USD 10m has been advanced by Arawak under the Loan Facility. In the event the Loan Facility is cancelled and repayment is required in the circumstances to which Arawak has referred, Gulfsands would be obligated to repay all moneys advanced by Arawak together with additional fees and expenses estimated at approximately USD 1m, within approximately 90 days of the date of receiving Arawak's notice of demand for repayment.

Having been informed of Arawak's views in relation to these matters, shareholders should consider the implications of the decisions to be taken at the General Meeting to be held on 3 February, 2015.

In light of these developments, the company will necessarily have to examine its options to ensure the availability of funding to repay moneys owing under the Arawak Loan Facility and to continue to finance the group's corporate activities, should Arawak move to demand repayment of advances under the Loan Facility.

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