Shares in Oslo-listed African Petroleum plunged some 40% on July 5, their second daily fall in a row, as Gambian Oil Minister Fafa Sanyang confirmed that his country had ended talks to extend exploration rights for two offshore areas.

African Petroleum said in a statement it was “surprised and disappointed” by comments from Gambian officials, reiterating its position that it still holds the rights to the licenses and vowing to defend them.

The Gambian oil ministry’s permanent secretary for petroleum Mod K. Ceesay initially revealed the government’s decision in an interview with Reuters published on July 4.

“That’s the truth. You already got the message about the licenses,” Sanyang told Reuters in a telephone interview on July 5, referring to Ceesay’s comments.

The oil ministry’s commissioner for petroleum, Jarreh Barrow, was in charge of determining the legal status of the contracts, Sanyang added.

“We are not responsible for what African Petroleum says or does not say and for your information the Ministry is NOT in talks with African Petroleum,” Barrow wrote in a response to a request for comment on the status of the companies' permits.

A recent evaluation of the A1 and A4 license blocks cited by African Petroleum suggested they could contain over 3 billion barrels of oil.

African Petroleum shares fell as much as 57% during trade on July 4 before partially recovering. They were down 39% by 1631 GMT on July 5 with nearly 38 million shares trade which was a record daily volume, according to Thomson Reuters Eikon data.

The firm said it would host an investor conference call at 0900 GMT on July 5 to discuss the licenses.

“The license agreements have dispute mechanism provisions which we fully intend to utilize if the Gambian authorities maintain this stance,” Chief Executive Jens Pace said on July 5.

“However, our preferred route is to engage in more constructive dialogue in order to establish a way forward that is in the best interest of all stakeholders,” he added.

Pace did not provide further clarity on the dispute mechanism. An African Petroleum spokesman added that the firm had invested over $64 million in the country and met with senior officials recently to put forward drilling proposals.

Neighboring Senegal said it has cancelled one of two contracts African Petroleum held there because it had not fulfilled its commitments. That block has since been attributed to Total but African Petroleum says it still holds the license.

In a sign of growing interest in tiny Gambia’s oil prospects, the government this week approved a deal for Australia’s FAR to acquire an 80% stake in the A2 and A5 blocks held by New York-listed Erin Energy Corp.

The A1 and A4 license blocks are adjacent to blocks in Senegal’s waters where Britain’s Cairn Energy made the world’s largest discovery of 2014.

African Petroleum, founded by Australian-Romanian billionaire Frank Timis, said in April it was in exclusive talks with an unnamed third party to sell a 70% stake in the blocks along with another one in neighboring Senegal.

Timis is the largest single shareholder with a 16.72% stake, according to Thomson Reuters data, although the company said he is not involved in the day-to-day running of the firm.

Offshore