29 Jun 2012 10:30
Embargoed for release 29 June 2012 at 10.30
Northern Petroleum plc ("Northern", "the Group" or "the Company" (AIM: NOP)) 2012 AGM STATEMENT
Northern, the independent oil company, announces that at the Annual General Meeting held today the Chairman of the meeting, Richard Latham, will make the following statement:
"Your Company operates five producing gas fields and is partner in one further gas field, all in The Netherlands and operates two producing oil fields in the UK. These yielded in 2011 a gross revenue of €24.5 million, an operating profit of €11.0 million and an increase cash position over the twelve months of €8.4 million from a total net production to the Group of 580,000 barrels of oil equivalence.
"After recently announced adjustments Northern has proven and probable reserves of 75.6 million barrels of oil equivalence and forecasts an average daily production rate for 2012 of 950 to 1050 barrels of oil equivalence per day. In addition the Group holds a portfolio of exploration prospects and licences of considerable potential in Italy, The Netherlands and Guyane.
"During the last twelve months efforts were directed on the long term oil production tests at Ottoland (in The Netherlands), where an unexpectedly higher amount of gas was produced and Markwells Wood (in the South of England). Additionally a major re-evaluation of the gas fields and prospects in The Netherlands was initiated, involving the reprocessing and reinterpretation and mapping of the 3D seismic data and detailed analysis of the data gained during the first phase of development and production of the four new gas fields placed on-stream by the Group during 2009-2010. This project is ongoing.
"The first fast-tracked results already allow Northern to move forward again; to plan and drill two new production wells in the Geesbrug gas field from existing drill pads regaining momentum to achieve a higher gas production rate. Intervention to install down-hole fluid lifting assistance at Wijk en Aalburg has been successful, as has the change to the compression facilities at Waalwijk to enable production rates to be maintained and field life extended.
"The discovery of a 72 metres net oil column in two horizons in the Zaedyus well offshore Guyane (1.25% interest net to Northern) has been the highlight of our exploration activities. It has been perceived as opening up a potential new oil province having a valuable benefit to Northern and the local community. The new Operator, Shell, has moved swiftly to complete the 3D seismic coverage of the shelf margin and improve the density of seismic coverage near to the discovery. A modern drill ship has been chartered and the start of drilling of the follow up well is scheduled for July 2012 now that permits are in hand. Northern perceives this as a project with a major potential to add value for shareholders.
"By August 2012 it is also expected that drilling in Italy of the La Tosca well (25% net interest to Northern after farmout) will also commence. It is a 43 billion cubic foot reserve gas prospect similar to many others in the Po Valley basin gas. The prospect is less than two kilometres of the much larger Alfonsine gas field. As planning consents are gained the group also plans to drill the Vlist and Diever West prospects in The Netherlands. The latter's potential was highlighted by the discovery on-trend of the Vinkega gas field on the adjacent licence and which extends into Drenthe III.
"The small interest in the Vinkega gas field extension has now been sold for € 3.2 million which will assist in financing the Netherlands exploration programme. This sale also serves to highlight the Northern strategy that trading of properties and interests is a fundamental part of the oil and gas investment cycle and enables the acceleration of activities to add shareholder value without recourse to shareholders for additional funding. This will continue as a central part of our strategy.
"Along with Guyane, Italy remains a major core of the exploration activities of the Group. The project in the southern Adriatic Sea may offer the greatest upside potential. It is of significantly different order of magnitude to the UK and The Netherlands areas and even, with the higher licence and application interests, could even be better than Guyane.
"Northern has noted the new Italian government's recognition of the potential value that oil and gas investment can bring to their economy and there is hope that the pace of activities may now improve. During 2011 we recorded a 600 km 2D survey of much improved data quality and await the approval to record a 600 sq km 3D survey.
"The venture west of Sicily, which Shell joined and paid for all the costs of Northern's operations, has reached the stage where Shell have not committed to the drilling of a well. Under the terms of the agreements Shell must now withdraw from the licence. The area remains interesting and Northern is determining its future strategy. Elsewhere in Italy moves are being made for the formation of new strategic alliances to move activities forward to the degree that permits are granted.
"During the past year, without significant expenditure, the analysis of the potential for the development and production of shale oil in the southwest of The Netherlands has continued. Northern's consultants and advisors have reinforced the favourable evaluations reported in 2011 and efforts will be made to realise the value of this resource on the Group's licences once clarity is received on the government approach to the use of hydraulic fracturing of reservoirs to stimulate oil shale production from this known and significant national resource.
"In 2011 your Company has improved its position to withstand unforeseen events. The balance sheet remains strong, with the end of year net cash position increased to €29.8 million and no external indebtedness. Northern is now moving forward with plans to increase production in The Netherlands, drilling the follow up well to the Zaedyus (Guyane) discovery and an exploration well on trend with the Vinkega (Netherlands) discovery. The considerable potentials of the offshore Italy and also the southwest Netherlands oil shale are being actively pursued.
"As I said in my statement in the Report and Accounts; I look forward to reporting again in twelve months time that we have made yet more progress."
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. He has compiled, read and approved the technical disclosure in this regulatory announcement. The technical disclosure in this announcement complies with the SPE/WPC standard.
For further information please contact:
Northern Petroleum Plc Tel: +44 (0)20 7469 2900
Derek Musgrove, Managing Director
Chris Foss, Director of Finance, Legal & Corporate Affairs
Graham Heard, Exploration & Technical Director
Cenkos Securities (NOMAD and Joint Broker)
Jon Fitzpatrick Tel: +44 (0) 20 7397 8900
Ken Fleming / Beth McKiernan Tel: +44 (0) 131 220 6939
Westhouse Securities (Joint Broker) Tel: +44 (0) 20 7601 6100
Richard Baty / Petre Norton - Corporate Finance
Sanjiv Pandya - Corporate Broking
FTI Consulting Tel: +44 (0) 20 7831 3113
Billy Clegg / Edward Westropp
Bishopsgate Communications Tel: +44 (0) 20 7562 3350
Nick Rome / Anna Michniewicz/ Ivana Petkova
Notes to Editors:
Northern is a full cycle oil and gas company currently holding over 50 licences in a number of low risk areas and is continuing with its strategy of adding and securing value for shareholders as it engages with projects at all stages of the E&P value chain.
Comprehensive information on Northern and its oil and gas operations, including all press releases, annual reports and interim reports are available from Northern's website at www.northpet.com
XLON