30 Jun 2008 07:00
Embargoed for release: 0700 on 30 June 2008
Northern Petroleum Plc ("Northern" or "the Company") AGM Statement
At the Annual General Meeting ("AGM") to be held at 1030 today the Chairman, Richard Latham, will make the following statement:
"Our results have demonstrated the turnaround in our financial position we looked forward to at this time last year with the announcement of pre-tax profits of ‚£19.4 million for 2007. Our balance sheet has thus been significantly strengthened, and we are well funded for future growth and development.
As you will have noticed we have been able in addition to announce a substantial improvement in our reserve base, a fifth successive year of increase, as a result of the independent evaluation of our assets in the Southern Adriatic. This has been achieved despite the sale of a part of our Netherlands portfolio.
In many ways the past 12 months have been intensely frustrating for Northern and its shareholders.
The frustration is that much has been achieved without significant upward progress in our share price when oil prices have more than doubled in the period. Indeed Northern will benefit from current oil prices through its producing gas assets, with the gas price in The Netherlands being linked to the oil price. Our reserve base is clearly not declining in value, and I would also take this opportunity to remind shareholders that the bulk of our current asset base was in place by 2005, when oil and gas prices were significantly lower than they are now.
That all our progress has been achieved against the backdrop of deeply unsettled stock markets offers some explanation to our shareholders that so little of the potential seems to have been recognised.
The reality is that there has been a very marked improvement in our position which will become increasingly obvious over the coming year. An active programme is planned to unlock our reserves and the high impact exploration upside within our asset base, much of which is in proven hydrocarbon provinces. Our assets are in geopolitically safe areas which are also fiscally attractive for oil and gas companies - a barrel of oil in our region of focus ought to be worth more than in one in less secure parts of the world.
Northern has also suffered a continuation of the administrative delays in The Netherlands. Our response to has been to be flexible and reactive in our approach, skill sets that are key to operating onshore in Western Europe. Solid progress is being made to develop our position in The Netherlands into production and cash flow.
We are also transforming our position in Italy which will be assisted by the recent impressive board appointments at ATI Oil Plc ("ATI"), in which we have a 37% shareholding, which herald the starting point of a future life for ATI more independent from Northern. We will however remain a supportive shareholder, given our belief in the hydrocarbon potential of Italy. Competent persons reports are underway on a number of the other key Italian licences and prospects outside the Southern Adriatic to assist in negotiations with various third parties. Activity is being accelerated, with our first well, Savio 1x, scheduled for later this year, and the planning of new seismic and an extensive drilling campaign over the next two years is at an advanced stage.
Whilst of less potential I report that we are also making progress onshore the UK with the recent granting of planning permission for the Markwells Wood- 1 well and the reaching of an agreement with a landowner for another drilling location. First production from our small interest in Avington should also not now be far away.
There has been solid progress in each of our three core areas, in each of which we now have 2P reserves. In addition we have a rich portfolio of assets which has, and will continue to, allow us to demonstrate our ability to trade assets where we see advantage in doing so.
With this in mind I can announce that following a strategic review your Board has decided to sell its underground gas storage interests as it believes a significant price can be achieved. The projects are considered non-core to the Group and being at a fairly embryonic stage would not be generating positive cash flow for at the very least five years. Indeed they would have required at some point during that period the diversion and investment of very considerable funds, whereas the proceeds from a sale could immediately be deployed on other projects which your Board believe have the potential to generate more substantial gains for shareholders in the short and medium term. I look forward to commenting further on this in due course.
Northern has a strong and impressive list of partners in the Netherlands. We look forward to announcing partners of a similar calibre in Italy soon. We have a similarly impressive and very professional and dedicated staff who have already demonstrated outstanding technical and deal making talent, and will do so again in the coming year.
I have every reason to look forward with confidence to a year of increasing realisation of all this potential ahead."
For further information please contact:
Northern Petroleum Plc Tel: +44 (0) 20 7469 2900
Richard Latham, Chairman
Derek Musgrove, Managing Director
Chris Foss, Finance Director
Graham Heard, Exploration & Technical Director
Investec Tel: +44 (0) 20 7597 5000
Michael Ansell / Paul Brett
Panmure Gordon & Co Tel: +44 (0) 20 7459 3600
Ashton Clanfield / Katherine Roe
Bishopsgate Communications (Press) Tel: +44 (0) 20 7562 3350
Nick Rome / Maxine Barnes
Buchanan Communications (Analysts) Tel: +44 (0) 20 7466 5000
Tim Thompson / Nick Melson / Ben Romney
vendor