16 May 2007 07:00
Embargoed for release: 0700 on 16 May 2007
Northern Petroleum Plc ("Northern", "the Group" or "the Company") Final Results for the year ended 31 December 2006
Operational highlights - 2006:
* Netherlands oil and gas field development projects progressing on a fully
funded basis and with key personnel in place; * Italian activities accelerated through a two licence farmout in the Po Valley and offshore Sicily seismic survey during November. Interests in Italy now cover in excess of 12,000 square kilometres.
Operational highlights - 2007:
* Netherlands attributable production of 260.7 million cubic feet of gas and
216 metric tons of condensate for Q1 2007, up on forecast of 240 mcf; * Development operations have commenced at Ottoland and Brakel; * A cost free move into assessing 30 Bcf working volume underground gas storage project at Waalwijk alongside two operators of gas storage facilities in Essent B.V. and Star Energy Group Plc; the licence is
believed to also contain substantial upside with tested oil in two zones;
* Partial sale of Netherlands onshore assets to Dyas B.V.; * Strategic Alliance with Dyas B.V. targeting new assets and corporate acquisitions in selected EU countries and elsewhere.
Financial highlights:
* Increase in net assets at year end to ‚£24.1 million (2005: ‚£6.1 million)
following ‚£20 million placing;
* Cash in hand at year end of ‚£16 million (2005: ‚£1.9 million) plus Standard
Bank credit committee approval for project finance and working capital
facilities of up to ¢â€š¬40 million;
* Attributable revenues with effect from 1 January from Waalwijk and P12 gas
fields;
* Profitable sale of Waalwijk underground gas storage rights to Star Energy
Group Plc;
* Partial sale at a profit of Netherlands onshore assets to Dyas B.V.
realising ¢â€š¬18 million cash, already in hand, plus producing and development
assets;
* Strategic Alliance entered into with Dyas B.V., with Northern to receive ¢â€š¬
14m by 30 April 2010, with first payment in hand; * Cash in hand at 15 May 2007 of ‚£26 million;
* Proposals at Annual General Meeting to transfer balance standing to Share
Premium Account (‚£18.5 million) to distributable reserves and to make market purchases of up to a maximum of 3.5 million of the Company's own shares.
For further information please contact:
Northern Petroleum Plc Tel: +44 (0) 20 7743
6080
Derek Musgrove, Managing DirectorChris Foss, Finance DirectorGraham Heard, Exploration ManagerBishopsgate Communications Limited Tel: +44 (0) 20 7562 3350Fran Read / Maxine BarnesNotes to Editors:
Northern Petroleum Plc is an AIM listed oil and gas production, development and exploration company with core interests under its management in The Netherlands, Italy and the United Kingdom.
Northern is currently embarked upon a programme to place two oil fields and four gas fields into production with works on the first two, Ottoland and Brakel starting in March and April 2007.
The Company has recently acquired the management interests in the producingWaalwijk gas field where it intends to implement plans to increase late phasegas, production and move to develop a 30 Bcf underground gas storage facilityalongside Star Energy and Essent. The NPN deal with Dyas is the second gasproduction acquisition in 2007 to date.
Northern's Netherland partner list is impressive.
The Company has the second largest exploration position in Italy of licencesunder management where activities can be expected to pick-up as the result ofthe extra funds now available. In addition the Company has announced plans todrill a projected eastward extension of the producing Horndean oil field inWest Sussex and another exploration well in the county.
Further information on Northern is available at www.northpet.com.
CHAIRMAN'S STATEMENT
Summary
* Netherlands attributable production of 260.7 million cubic feet of gas and
216 metric tons of condensate for Q1 2007, up on forecast of 240 mcf;
* Transaction with Dyas B.V. places Netherlands administrative delays in
sensible perspective and a start has been made on the field developments at
Ottoland and Brakel; * A cost free move into assessing 30 Bcf working volume underground gas storage project at Waalwijk alongside two operators of gas storage facilities in Essent B.V. and Star Energy Group Plc. The licence is believed to also contain substantial upside with tested oil in 2 zones;
* A much strengthened cash position enables faster progress on the massive
potential in Italy; * A Strategic Alliance with Dyas B.V. targeting new assets and corporate acquisitions in selected EU countries and elsewhere; and
* Northern is in partnership with a number of substantial and highly regarded
exploration and production companies.
Northern has been transformed. The recent transactions with WintershallNoordzee B.V. and Dyas B.V. ("Dyas") have provided us with attributable averagenet production of 2.9 mmscfd of gas and 2.4 metric tons (about 19bbls) per dayof condensate in The Netherlands during the first three months of 2007 to addto our 18 bopd of oil from the Horndean field in the UK.The financial resources of the Company were strengthened in May 2006 by a ‚£20million placing of shares and since year end have been supplemented by ¢â€š¬19million received from Dyas, with another ¢â€š¬13 million receivable over the nextthree years. The combination of the Waalwijk and Dyas deals will mean that theGroup is likely to report a pre-tax profit, and be cash flow positive, for theyear ended 31 December 2007.I believe that the most important message that shareholders and investorsshould take from the transactions with Dyas, a 100 % subsidiary of theprivately owned SHV Holdings NV, is that a large and prominent Dutch company inthe oil and gas sector, with an understanding of its home market, has bought aportion of our assets without reservation. I see this as showing confidencethat such administrative, planning and environmental problems as there are willbe resolved, albeit with an occasional time delay, and the operations shouldyield a significant profit on their purchase price. The project for thedevelopment of the six oil and gas fields in The Netherlands is underway, withBrakel and Ottoland in the first phase. At Ottoland it has been decided todrill a 600 metre in reservoir lateral well to greatly increase the plannedinitial oil production. This was a flexible response to potential delayselsewhere and should enable initial revenue targets to be met.The transformation of Northern will continue apace. The drilling of the PoValley licences, Longastrino and Savio, is being planned with our partners ATIOil Plc and Stratic Energy Corporation. Our substantial position of 24 licencesand applications beyond contestation in Italy has become very active followingthe offshore seismic survey in November 2006 and the extremely encouragingresults. Notwithstanding our new financial strength and billion barrelprospects, the offshore Sicily thrust belt, Pantelleria and the Ragusa Chanelarea are arenas of higher risk and expenditure than fitting to our strategy. Wehave decided to seek new partners from among the major oil companies and ourapproaches have received a very pleasing response with an almost fully bookeddata room opened in May 2007, with offers to be tendered later this year.On the final decree of the first two licences in the Durres basin in thesouthern Adriatic, which I anticipate imminently, we will move immediately toevaluate the production and the oil and gas reserve potential of the Giove,Medusa and Rovesti oil discoveries. An available report on one of thesediscoveries suggests that the previous operator had found an interesting levelof probable reserves. We will examine the modern potential of these discoveriesin the light of new engineering technologies and higher oil prices than in the1990s. Together with the three adjacent uncontested licence applications thisis the type of core area, equivalent in size to approximately 17 UKCS blocks,that fits well within the Northern strategy and can be progressed quickly withthe abundance of available data.Our current financial resources allow additional management flexibility tore-organise plans to keep as close as possible to schedules. We are no longerdependent upon profit generation before increasing our Dutch activities andmoving faster on our tremendous position in Italy. I consider these Italianassets to be those with the greatest growth potential for the Company, thatnotwithstanding the upsides in The Netherlands now that we have established asouthwest Netherlands core area following completion of the Waalwijktransactions and the recent award of the Utrecht exploration licence. We willalso be working in partnership with Dyas to establish new core areas withsignificant growth potential.The excitement may currently be on The Netherlands and Italy, but the south ofEngland remains an area of interest to Northern. Two wells are planned in WestSussex: Markwells Wood, for which a planning application has been submitted inMay 2007, and one yet to be named. Markwells Wood is of particular interest asit will appraise the projected eastward extension of the Horndean oil field.Our 10% interest in Horndean continues to yield a very welcome tax efficientgross profit, ‚£163,000 in the year. In Northern's opinion Horndean could bedrilled again to recover more oil which, at a time of sustained higher oilprices, should be interesting. I hope that success at Markwells Wood will helpto spur on such an effort.There has also been progress in Guyane. During the year Gaz de France agreed tofarm in to the licence and Tullow Oil Plc has taken over as operator followingits acquisition of Hardman Resources. Northern views these changes as verypositive steps and we look forward to CSEM operations planned for the secondhalf of 2007 in advance of the drilling of a first well in 2008. In SpainAscent Resources have drilled a dry hole, Hontomin-4. Whilst this isdisappointing it bears out the wisdom of Northern's prior assessment anddecision to trade for a no cost over-riding royalty interest. The Company looksforward to the re-entry of Tozo-1 with greater enthusiasm on the same no costbasis.I would also like to formally welcome the two directors that have joined theBoard since the last Annual General Meeting. Tony Brewer joined the Board as anon-executive director in August of last year. I also welcome Graham Heard whohas stepped up into the new position of Exploration and Technical Directorfollowing a period of commendable service as Exploration Manager during whichtime he has played a leading role in creating the significant opportunitiesthat currently exist within the Group's asset base.
Both Tony and Graham are, in accordance with the Company's Articles of Association, required to retire following their appointment by the Board and, being eligible, offer themselves for re-election at the 2007 Annual General Meeting.
The professionalism and quality of employees and management of Northern issomething that I commend highly to you. The inexpensive identification ofquality assets has been a key feature of Northern's past and will remain so infuture. To this has been demonstratively added, as if the profitable trades outof Seven Heads and Spain had not, the commercial dealing competence of theNorthern team. They have judgement, perseverance and deliver. I would selectfor your attention the Waalwijk underground gas storage project where, afternegotiation, this step into a new area of business will have no front end risk,not divert management and technical resources, place us in a joint venture withEssent B.V. and Star Energy Group Plc, who both run underground gas storageprojects, and we will as a result receive an initial positive cash flow of ¢â€š¬470,000 on the combined Waalwijk transactions.I would like to briefly address two of the special resolutions to be proposedby the Board for the next Annual General Meeting which is to be held on 27 June2007. Your approval is sought to apply to the High Court to cancel the amountstanding to the credit of the share premium account of the Company, being ‚£18.53 million. This is a reaction to the likely impending reportedprofitability of the Group and enables the option to distribute a dividend atan earlier stage. The cancellation of the share premium would also enable thepossibility of share buy backs, the powers for which are also sought in aspecial resolution. These resolutions give your Board fuller powers reflectingthe increased stature of the Company.Finally, I would make a statement as to our partners in our endeavours. I amaware that they should speak for themselves. Indeed they do. We thank them fortheir confidence in us and trust that we will succeed to their expectations.R H R LathamChairman15 May 2007OPERATIONS OVERVIEWDuring 2006 and early 2007 the position in The Netherlands was built upon andfirst production of gas acquired. A start has been made at Brakel and Ottolandon the six field development programme, and it is hoped that Papekopdevelopment activities will follow next. First production from the developmentsremains on target for year end 2007 to March 2008.With the award of the Utrecht Exploration Licence and the acquisition ofinterests in the Waalwijk Production Licence from Wintershall Noordzee B.V. acore area of existing gas production, development, appraisal and explorationhas been established in the southwest Netherlands. The award of the OosterwoldeExploration Licence and the acquisition of the Dyas interests in gas productionfrom P12 and the two gas discoveries in the Zuid Friesland Licence have addedto our presence elsewhere. The sale of one quarter of our interests in sixdiscoveries currently planned for development at a significant profit has notdiminished our ambition, but has provided a new and valued partner, furtherimmediate production revenues and provided funds to increase Northern's rate ofprogress. With an effective date of 1 January 2007 there will be a netreduction in proven plus probable reserves of 10.41 million barrels of oilequivalence, which are subject to a 50% net profit interest.In Italy we have continued to expand the portfolio and have under ourmanagement the second largest exploration area after Eni. Italy is only nowbeing fully appreciated as having excellent untapped hydrocarbon potential andattractive fiscal terms; the country has a high energy demand and relies onsubstantial import requirements. This is evidenced by the increased number oflicence applications and Northern's portfolio has already attracted attentionfrom others.The multiple billion barrel potential of the licences offshore Sicily has beenenhanced by the 2D seismic survey acquired last November and the licenceposition is attracting the attention of some significant farminees to a DataRoom that opened in May 2007.Whilst we are excited and attracted by the prospectivity of the area whichincludes a billion barrel potential structure among some twenty others ofsignificance, the risk to expenditure profile taken together with the timing tofruition is not easily compatible with our size of company. A modest amount ofmoney has been expended and a considerable value established. We are now movingto a realisation of that value to deploy resources in areas which may sooner bebrought to production and with a cost and time frame more comfortable to theCompany. Northern is fortunate to be in a project rich position.The Savio and Longastrino Licences onshore in the Eastern Po Basin have beenfarmed out to Stratic Energy Corporation, each on a one well seismic option,and a formal drilling decision is expected in the near future.The process of final award of licences previously applied for has continued.The establishment of a new core area in the Durres Basin in the SouthernAdriatic has now been achieved, and made public, having a proven petroleumsystem and three oil discoveries to which probable reserves might soon becomeattributable.The assets in Italy are seen as holding the potential to again transform thevalue of the Company. It is likely that this will be achieved in part throughnormal industry farmout deals to progress the drilling of licences inconjunction with drilling selected prospects ourselves.In the Weald Basin in the south of England progress on permitting two drillinglocations continued. Following signing contracts with landowners a planningapplication has been submitted for Markwell's Wood-1 (50% Northern), projectedas an eastern extension of the Horndean oil field. The oil discovery atAvington (5% Northern) awaits the arrival of a new rig and it is expected thatthe drilling of a production well will be undertaken in the next few months.
By no means least, an international strategic alliance with Dyas has been concluded providing for the companies to work together to identify and pursue new business opportunities in mutually agreed regions of the world with Northern the Operator. This alliance creates further potential for growth.
In summary Northern continues to grow as an energy company focused in the EUwith a mix of development projects in The Netherlands that will provide longterm production revenues and a core value. Additional value will be realisedthrough the appraisal and development of existing discoveries within theportfolio in Italy and the UK. We intend to expand on these developmentprojects, continuing to add value. There is a realistic large upside in theportfolio of diverse and exciting exploration projects where progress has beenmade on enhancing the prospects for drilling in The Netherlands, Italy and
theUK.Derek MusgroveManaging Director15 May 2007
Consolidated Profit and Loss AccountFor the year ended 31 December 2006
Year ended Year ended Year ended Year ended 31 31 31 31 December December December December 2006 2005 2005 2005 (restated) (restated) Notes ‚£'000 ‚£'000 ‚£,000 ‚£'000 Total Continuing Discontinued Total Operations Operations Turnover 2 227 174 321 495 Production costs (44) (35) (234) (269) Depreciation, depletion and (75) (31) (22) (53)amortisation Cost of sales (119) (66) (256) (322) Gross profit / (loss) 108 108 65 173
Administrative expenses - other (1,944) (1,186) (55) (1,241)
Administrative expenses - share (311) (87)
(87)incentives Total administrative expenses (2,255) (1,273) (55) (1,328) Other operating income 143 191 22 213
Group operating (loss) / profit (2,004) (974) 32
(942) Share of operating (loss) / (110) (80)profit in associates
Total operating loss: Group and (2,114)
(1,022)share of associates Profit on disposal of 3 45 441subsidiary and associate
Interest receivable and similar 415
164income Loss on ordinary activities (1,654) (417)before taxation Tax on loss on ordinary - (13)activities Loss for the year (1,654) (430) Basic loss per share 4 (2.59)p (0.80)p Diluted loss per share 4 (2.59)p (0.80)p
Consolidated Statement of Total Recognised Gains and Losses For the year ended 31 December 2006
Year ended Year ended 31 December 31 December 2006 2005 (Restated) Notes ‚£'000 ‚£'000 Loss for the financial year (1,654) (430) Exchange differences on 36 (6)
retranslation of net assets of
subsidiary undertakings Total recognised gains and losses (1,618)
(436)
for the financial year
The effect of the prior year adjustment in relation to the FRS20 share-based payments is to increase the loss for the year ended 31 December 2005 by ‚£ 87,000.
Loss for the financial year includes the Group's share of joint venture'slosses after tax of ‚£Nil (2005 ‚£Nil) and associates' losses after tax of ‚£110,000 (2005 ‚£80,000). Neither the joint venture nor the associates have
anyother gains or losses.Group Balance Sheetat 31 December 2006 2006 2005 (Restated) Notes ‚£'000 ‚£'000 Fixed assets Intangible assets 5 6,897 3,208 Tangible assets 6 2,146 663 Investments - - Investments in joint ventures: Share of gross assets of 14 10joint ventures Share of gross liabilities (14) (10)of joint ventures - - Share of net assets of 130 195associates Total fixed assets 9,173 4,066 Current assets Stocks 27 27 Debtors 2,568 1,076 Cash at bank and in hand 15,954 1,904 18,549 3,007 Creditors: amounts falling 3,381 930due within one year Net current assets 15,168 2,077 Provisions for liabilities 230 27and charges Total assets less 24,111 6,116liabilities Capital and reserves Called up share capital 7 3,511 2,697 Share premium account 18,529 41 Special reserve 3,599 3,574(Distributable) Special reserve 122 147(Undistributable) Share incentive plan 295 87reserve Profit and loss account (1,945) (430) Shareholders' funds 24,111 6,116
These financial statements were approved and authorised for issue by the Board of Directors on 15 May 2007 and were signed on its behalf by:
C J Foss D R Musgrove
Consolidated Statement of Cash Flows for the year ended 31 December 2006 Year ended Year ended 31 December 31 December 2006 2005 Notes ‚£'000 ‚£'000 Net cash outflow from operating 8(a) (361) (540)activities
Returns on investments and servicing of
financing Interest received 415 164 Taxation Overseas taxation paid - (13) Capital expenditure and financial 8(b) (5,299) (2,806)investments Acquisitions and disposals
Disposal of subsidiary undertaking -
(88) Cash outflow before financing (5,245) (3,283) Financing
Issue of ordinary shares for cash (net of 19,302
53expenses) Increase/(decrease) in cash in the year 14,057
(3,230)
Reconciliation of net cash flow to 8(c) & 8(d)
movement in net funds Increase/(decrease) in cash in the year 14,057 (3,230) Exchange adjustments (7) (6) Net funds 1 January 1,904 5,140 Net funds 31 December 8(c) & 8(d) 15,954 1,904Notes to the Accountsfor the year ended 31 December 2006
1. BASIS OF PREPARATION
The financial information presented in this announcement does not constitutestatutory accounts within the meaning of s240 of the Companies Act 1985. Theinformation has however been extracted from the Company's statutory accountsfor the year ended 31 December 2006 which were approved by the Board on 15 May2007 and on which the Company's auditors have given an unqualified opinion.
2. SEGMENTAL INFORMATION
All turnover in 2006 relates to income from the Group's oil and gas assets, andis analysed as follows: Year ended Year ended 31 December 31 December 2006 2005 ‚£'000 ‚£'000 Other EU - discontinued - 321
United Kingdom - continuing 227
174 227 495
Group operating profit/(loss) is analysed as follows:
Year ended Year ended 31 December 31 December 2006 2005 (Restated) ‚£'000 ‚£'000 Discontinued - 32 Continuing (2,004) (974) (2,004) (942)
The loss for the year is analysed by geographical area as follows:
Year ended Year ended 31 December 31 December 2006 2005 (Restated) ‚£'000 ‚£'000 United Kingdom 38 106 Italy - Group (21) (6) Netherlands (201) (34) Other EU - 19 Common costs (1,820) (1,027) Group operating loss (2,004) (942) Italy - Associate (110) (80)
Net interest and similar income 415
164
Profit on sale of fixed asset investments -
419
Profit on deemed sale of fixed asset 45
22investments
Tax on loss on ordinary activities -
(13) Loss for the year (1,654) (430)
Miscellaneous common costs, which predominantly relate to head office salaries and administration costs, have not been apportioned to geographical areas.
The net operating assets are analysed by geographical area as follows:
Year ended Year ended 31 December 31 December 2006 2005 ‚£'000 ‚£'000 Operating assets: United Kingdom 3,215 3,628 Italy 889 216 Netherlands 3,783 95 Other EU 140 78 8,027 4,017 Non-operating assets:
Fixed asset investments - associates 130
195 Cash 15,954 1,904 16,084 2,099 24,111 6,1163. NON-OPERATING ITEMS
Profit on sale of fixed asset investments
Year ended Year ended 31 December 31 December 2006 2005 ‚£'000 ‚£'000
Profit on disposal of subsidiary undertakings -
419
Profit on deemed disposal of associate 45
22undertakings 45 441
The Company sold its entire shareholding in its wholly owned subsidiary, Northern Petroleum Exploration Limited, to Gold Oil Plc, with an effective date of 30 September 2005.
The profit on deemed disposal of the associate undertaking represents the deemed profit arising following fundraisings, which have been at prices in excess of the Group's average cost of its investment, by ATI Oil Plc. No tax has been accrued or paid in respect of this deemed profit.
4. LOSS PER SHARE
The basic and diluted loss per share is calculated by reference to the loss forthe year of ‚£1,654,000 (2005: loss of ‚£430,000) and the weighted average numberof ordinary shares in issue during the year of 63,948,884 (2005: 53,787,152).The effect of all potential ordinary shares is anti-dilutive.
5. INTANGIBLE ASSETS
Intangible assets represent the cost of investment in oil and gas projectswhere it is too early to make a decision regarding the existence or otherwiseof commercial reserves. United Italy Netherlands Other EU Total Kingdom ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Group Cost: At 1 January 2006 2,953 221 8 117 3,299 Additions 151 802 2,737 61 3,751 Disposals - - - - -
Transfer from / (to) tangible - - - -
-assets Exchange adjustment - - - - - At 31 December 2006 3,104 1,023 2,745 178 7,050
Depletion, depreciation and
amortisation: At 1 January 2006 46 - 7 38 91 Charge for the year 41 - 21 - 62 Disposals - - - - - At 31 December 2006 87 - 28 38 153 Net book value: At 31 December 2006 3,017 1,023 2,717 140 6,897 At 31 December 2005 2,907 221 1 79 3,208
Included within the costs of the United Kingdom & Ireland pool is ‚£36,000 relating to land on the Isle of Wight purchased by the Group, and held on behalf of, the co-licencees of Petroleum Exploration and Development Licences ("PEDL") 098 and 113.
Licence cost analysis of intangible assets by cost pool at 31 December 2006: United Italy Netherlands Other EU Total Kingdom ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Licence acquisition costs 94 99 22 161 376
Exploration and appraisal costs 3,010 924 2,723 17 6,674
Total cost at 31 December 2006 3,104 1,023 2,745 178 7,050
The Group's share of the intangible oil and gas assets of associate companiesis analysed as follows: ‚£'000 United Kingdom 8 Italy 271 Other EU 7 2866. TANGIBLE ASSETS Oil and Gas Oil and Oil and Gas Computer Assets Gas Assets Assets (UK)- and (Netherlands (UK) Undeveloped Office -Undeveloped Developed - equipment Total ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Group Cost: At 1 January 2006 154 226 282 79 741 Additions 1,223 10 163 152 1,548 Transfer from - - - - -intangible assets Disposal - - - - - Exchange movement (4) - - - (4) At 31 December 2006 1,373 236 445 231 2,285 Depletion, depreciation and amortisation: At 1 January 2006 - 47 - 31 78 Charge for the year - 20 - 41 61 Disposal - - - - - Exchange movement - - - - - At 31 December 2006 - 67 - 72 139 Net book value: At 31 December 2006 1,373 169 445 159 2,146 At 31 December 2005 154 179 282 48 663The carrying value of proven undeveloped oil and gas assets in The Netherlandsincludes the expenditures to date in respect of certain assets in which theGroup has interests in The Netherlands that have been independently reviewed byRPS Energy Limited in March 2006. Further information is given in the Report onNet Commercial Oil & Gas Reserve Quantities.
The carrying value of proven developed oil and gas assets includes a 10% interest in the producing Horndean field owned by the Company's wholly owned subsidiary, Northern Petroleum (GB) Limited.
The carrying value of proven undeveloped oil and gas assets in the UK includesthe expenditures to date in respect of certain assets under licence to theGroup in the Weald Basin that have been independently determined by ExplorationConsultants Limited in April 2005, and subsequently confirmed by the samecompany in June 2006, to be two proven undeveloped oil fields. Furtherinformation is given in the Report on Net Commercial Oil & Gas ReserveQuantities.Licence cost analysis of tangible assets by cost pool at 31 December 2006:
Netherlands UK - UK - Total -Undeveloped Developed Undeveloped ‚£'000 ‚£'000 ‚£'000 ‚£'000 Licence acquisition costs 398 232 18 648 Exploration and appraisal 39 - 427 466costs Development costs 936 4 - 940
Total cost at 31 December 2006 1,373 236 445
2,054 7. SHARE CAPITAL 2006 2005 ‚£'000 ‚£'000 Authorised: 311,316,404 ordinary shares of 5p each 15,566 15,566 15,566 15,566
Allotted, issued and called up: 70,219,851 (2005: 53,931,117) ordinary shares of 5p 3,511 2,697each 3,511 2,697
8. NOTES TO THE STATEMENT OF CONSOLIDATED CASH FLOWS
(a) Reconciliation of operating loss to net cash outflow from operatingactivities: Year ended Year ended 31 December 31 December 2006 2005 ‚£'000 ‚£'000 Operating loss (1,693) (855)
Depreciation, depletion and amortisation 82
53
Depreciation - non oil and gas tangible assets 41
15 Decrease in stocks - 39 Increase in operating debtors and prepayments (742)
(676)
Increase in operating creditors and accruals 2,654
890
Increase in short term loans receivable (750)
- Exchange adjustments 47 (6) 1,332 315 Net cash outflow from operating activities (361)
(540)
(b) Capital expenditure and financial investment:
Year ended Year ended 31 December 31 December 2006 2005 ‚£'000 ‚£'000
Purchase of tangible fixed assets (152)
(36)
Expenditure on oil and gas assets (5,147) (2,766) (5,299) (2,802)
Purchase of fixed asset investments -
(4)
Net cash outflow from capital expenditure and (5,299) (2,806)financial investment (c) Analysis of net funds: At At 1 January Cash Exchange 31 December 2006 flow Movement 2006 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Cash at bank 1,904 14,057 (7) 15,954
(d) Reconciliation of movement in cash to movement in net funds
Year ended Year ended 31 December 31 December 2006 2005 ‚£'000 ‚£'000 (Decrease)/increase in cash 14,057 (3,230) Exchange movement (7) (6) Movement in net funds resulting from cash flows 14,050 (3,236) Opening net funds 1,904 5,140 Closing net funds 15,954 1,904
9. ANNUAL REPORT AND ACCOUNTS
The Annual Report and Accounts are expected to be posted to shareholdersshortly and will be available free of charge for a period of not less than onemonth by application to the Company Secretary at No.1 Cornhill, London, EC3V3ND. They will also be available in electronic format from the company'swebsite, www.northpet.com.
NORTHERN PETROLEUM PLC