25 Jun 2010 07:00
Embargoed for release: 07.00 on 25 June 2010
Northern Petroleum Plc ("Northern", "the Group" or "the Company") Strategy to Accelerate Asset Development Activities and Placing
Northern Petroleum (AIM: NOP) announces that it has initiated a revised growth strategy to accelerate its activity level in the development of its large asset position which is predominantly in Italy and The Netherlands. This acceleration of activities requires access to additional funds.
At 23 June 2010 the Company had approximately EUR13.3 million of cash in the bank and is generating revenues from its existing production. In order to accelerate development and capitalise on its asset position, the Company has decided to raise new funds from three sources:
* Realisation of value from the sale of the non-core UK assets; * Reserve based debt finance secured against production in the Netherlands; and * Placing of a modest amount of new equity, £10 million.
The Company has instructed Envoi Limited to handle the process of selling its non-core UK assets. Envoi Limited is a UK company which provides specialist marketing, acquisition and advisory services to the international upstream oil and gas industry.
Northern's focus over a number of years has been on the low cost acquisition of a large number of licence positions in selected low risk countries, successfully acquiring discoveries, other reserves and high impact exploration prospects. Northern entered the Netherlands in 2004 to acquire licences with undeveloped discoveries. Northern has had significant success with the Company now having net Proven and Probable reserves in The Netherlands of 42.7 million barrels of oil equivalent (boe), with four gas fields in production and two gas and two oil fields in development. In Italy a strategy of identifying and acquiring key licences in prospective core areas was successfully pursued, ahead of the majority of other oil companies. Currently, Northern has 53.2 million boe of net Probable oil reserves from 32 Italian licences and applications beyond contest. In the UK, since 2003, Northern has accumulated total net Proven and Probable reserves of 7.0 million boe. The UK and Netherlands reserves have been independently assessed by RPS Energy and the Italian reserves independently assessed by Blackwatch Petroleum Services.
As stated in the Company's Annual Report and Accounts for the year ended 31 December 2009, "the Board remains keen to have in its armoury some debt facilities to both provide flexibility for growing the business and for tax efficiency, but the finance must be at an appropriate cost. With additional fields now brought into production, further de-risking the Group's asset base, good progress is being made on a debt facility that fits the Group's requirements. We look forward to reporting to shareholders on this soon".
The Company will also continue to seek farm-in partners for selected Italian assets where it deems such transactions to be in the best interest of shareholders.
THE PLACING
In order to finance the accelerated growth strategy, Northern is pleased to announce the Placing of 11,764,706 new Ordinary Shares of 5 pence each at 85p per new Ordinary Share (the "Placing Price") to raise £10.0 million (the "Placing") gross. The Placing, with both existing and new institutional investors, has been made pursuant to the authority granted by shareholders on 22 July 2009. The Placing Price of 85p represents a discount of 8.6% to the closing mid-market price of 93p on 24 June 2010. Application will be made for the admission of the new Ordinary Shares to AIM and it is expected that such admission will take place on 29 June 2010.
The Company has existing authorities in place to permit the issue of these shares for cash on a non pre-emptive basis. The issue of the Ordinary Shares pursuant to the Placing therefore does not require additional shareholder approvals. The Placing is conditional, inter alia, on admission. On admission, the new Ordinary Shares will rank pari passu in all respects with the existing ordinary shares in Northern. The Placing was not underwritten.
The Placing has only been made to persons falling within article 19 and article 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 who are also qualified investors for the purposes of section 86 of FSMA and no other person may now participate in the Placing or rely on any communication relating to it.
The net proceeds of the Placing will be predominantly used to accelerate the development of the existing pipeline of projects the Company has in the Netherlands and Italy. The projects include enhancing production rates from existing producing assets, the development of existing discoveries to increase production and the drilling of exploration prospects to maintain and increase reserves. Funds will also be used to acquire seismic data in Italy to improve the farm out terms and potential of the Italian assets in order to bring them closer to drilling. The Company will also participate in the exploration of a licence in Guyane operated by Tullow Oil Plc.
Cenkos Securities acted for the Company in this successful placing and its efforts are appreciated by the Company.
Chris Foss, Director of Legal and Corporate Affairs, commented:
"We have outlined our accelerated growth strategy and the Board's plans to finance it. We are pleased to have had a positive reception to our development plans from existing and new institutional shareholders. The strategy to deliver greater growth is clear, as is the case for acceleration across a wider portfolio of projects. Northern will now move forward to take advantage of the very significant opportunities we have created in the last few years. We look forward to implementation of the strategy."
In accordance with the AIM Rules - Guidance for Mining and Oil & Gas Companies, the information contained in this announcement has been reviewed and signed off by the Exploration and Technical Director of Northern, Mr. Graham Heard CGeol. FGS, who has over 35 years experience as a petroleum geologist.
- Ends -
For further information please contact:
Northern Petroleum Plc Tel: +44 (0) 20 7469 2900 Chris Foss, Director of Legal & Corporate Affairs Cenkos Securities (NOMAD and Joint Broker)
Jon Fitzpatrick Tel: +44 (0) 20 7397 8900 Ken Fleming Tel: +44 (0) 131 220 6939 Financial Dynamics Tel: +44 (0) 20 7831 3113 Billy Clegg / Edward Westropp Bishopsgate Communications Tel: +44 (0) 20 7562 3350 Nick Rome / Michael Kinirons Notes to Editors
Further information on Northern is available at www.northpet.com
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