29 Sep 2010 07:00
Embargoed for release: 0700 on 29 September 2010
Northern Petroleum Plc ("Northern", "the Group" or "the Company") Condensed Interim Results for the Six Months Ended 30 June 2010 Financial highlights: Six months Six months ended ended 30 June 2010 30 June 2009 EUR '000 EUR '000 (Unaudited) (Unaudited) Revenue 7,013 2,801 Profit / (loss) before tax 2,286 (531)
Profit / (loss) for the period 885
(73)
Basic earnings per share on profit / (loss) 1.11 cents (0.1) centsfor the period Diluted earnings per share on profit / (loss) 1.06 cents (0.1) cents/ profit for the period Cash and cash equivalents 25,815 27,942 Other working capital 434 12,275 Net assets 87,287 75,602 Total distributable reserves 55,846 32,950 Capital expenditure 6,793 9,083
* Production revenues increased to EUR 7.01million, up 150% on comparative
period, resulting in a pre-tax profit of EUR 2.29million * EUR 12.2million (£10million) raised during period via a placement of 11,764,706 new shares at 85 pence per share
* Reserve based debt finance discussions to continue now that the Brakel gas
field is on stream Other highlights
* Production volumes for H1 were 214,000 boe, up 250% from the comparative
period in 2009
* Brakel production now commenced, with Wijk en Aalburg to follow; once
latter on stream Northern forecast production rate in excess of 2,250 boepd Six months Six months ended ended 30 June 2010 30 June 2009 EUR '000 EUR '000 (Unaudited) (Unaudited) Average revenue, in currency of receipt, per EUR 29.57 EUR 42.63attributable boe: $73.97 $48.07Gas Oil Net Commercial Oil & Gas Reserve Quantities 102.78
102.99
- Proven and Probable reserves (million boe)
* Offshore West of Sicily permits in partnership with Shell Italia E&P S.p.A.
- fast track 3D volume completed and interpretation commenced to select a
drilling location
* UK - Havant well site built, preparing to drill Markwells' Wood; sale of
non-core UK assets to take place only if it meets corporate objectives and
fairly reflects RPS value
Outlook:
* La Tosca prospect (Longastrino permit) is being progressed for drilling in
2011; farmout agreement is likely to be reached shortly
* Drilling of three wells, Geesbrug-2, Papekop-2 and North Ottoland in The
Netherlands planned for H2 2011/Q1 2012; The Netherlands development
drilling planned for H2 2011 at Geesbrug gas field and from the existing
Papekop site, once a new road is built for rig access; testing of Ottoland
well planned for H1 2011 subject to planning consents, final design and procurement of equipment * Portion of June 2010 placing funds principally allocated to date on: seismic re-processing across The Netherlands portfolio; testing and
hydraulic fracturing of the Carboniferous at Tiendeveen, planned for late
2010 or early 2011, subject to permits; planning for drilling Ottoland North (47.2bcf) prospect in the Utrecht Licence for Q4 2011/Q1 2012 * Further wells on Oosterwolde and Utrecht (Everdingen South) planned for
2012, alongside EBN (Energie Beheer Nederlandse B.V.), who have elected for
the first time in The Netherlands to enter three of NOP's onshore
exploration licences
* Northern participating alongside Tullow, Shell and Total in the drilling of
an exploration well offshore Guyane with a spud date expected in Q1 2011
Richard Latham, Chairman said:
"The Board is committed to continue delivering greater production and increaseasset value within the strategy of operating in areas of low risk and obtainingand developing concentrated licence positions gaining high quality prospectswithout paying high entry costs. It is determined to accelerate growth anddelivery of improved value for shareholders. I feel that Northern's strongasset base has, and will continue to be, steadily transformed into productionand asset sales income."In accordance with the AIM Rules - Guidance for Mining and Oil & Gas Companies,the information contained in this announcement has been reviewed and signed offby 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 Finance, Legal & Corporate Affairs Graham Heard, Exploration & Technical Director Sophie Hull, Head of Corporate Communications Cenkos Securities (NOMAD and Joint Broker)
Jon Fitzpatrick Tel: +44 (0) 20 7397 8900 Ken Fleming Tel: +44 (0) 131 220 6939
Jefferies International (Joint Broker) Tel: +44(0) 20 7029 8000
Chris Snoxall 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:
Northern Petroleum Plc (NOP) is an oil and gas company with exploration,development and production assets in the Netherlands, Italy, UK and Guyane. TheCompany's strategy is to acquire low entry cost exploration, production anddevelopment assets. Through undertaking geological, geophysical and engineeringwork, Northern adds value to shareholders from production and asset sales.Northern has total P2 reserves of in excess of 102 million barrels of oilequivalent ("mboe"). In the Netherlands, where Northern has P2 reserves of 42.5mboe, Northern has four gas fields in production. In Italy, where Northern hasP2 reserves of 53.16 mboe, Northern is partnered with Shell and is pursuing afarm-out strategy. In the UK, Northern has 7.02 mboe. In Guyane, Northern ispartnered with Tullow, Shell and Total.
Northern is well capitalised, has a track record of partnering with oil majors and is run by a senior and experienced management team.
Once Wijk en Aalburg is brought on production, Northern is forecasting aproduction rate in excess of 2,250 barrels of oil equivalent per day. This rateof production will increase as additional oil and gas fields in the Netherlandscome on stream.
Northern is listed on the AIM market of the London Stock Exchange. www.northpet.com
CHAIRMAN'S STATEMENT
This year has been one of steady progress in continuing the development of newproduction in The Netherlands. Gas production has started from the Brakelfield. Production from Wijk en Aalburg will be next and with that we lookforward to a forecasted production rate of 2,265 boepd. These are the third andfourth fields that the Group is developing of the six planned, following the2005 deal with Nederlandse Aardolie Maatschappij (NAM) which assigned fivediscoveries to Northern.
There is no doubt that in successfully working to meet the environmental considerations and requirements of our neighbours our corporate timelines have been impacted. However, the Board is proud of the completion of new field developments and remains focused on growing production further in due course.
Throughout this period progress has been made, and thereby value added, throughthe de-risking of a number of exploration prospects. With its greater potentialimpact, we have continued our work to develop oil and gas exploration plays andprospects on a regional scale. The definition of drilling prospects in both theSouthern Adriatic and, with the benefit of the new 3D seismic, in the Thrustand Fold belt offshore Sicily alongside our partner Shell Italia, are apriority for the next twelve months. New prospect defining work in the SouthernAdriatic (Italy), Longastrino (Italy), Utrecht (NL), Oosterwolde (NL) andGuyane Maritime licences has resulted from this regional explorationassessment. The Carboniferous formations in the north of The Netherlands in theDrenthe III Licence contain multiple targets across a series of prospects, andwe are proposing to test the suspended Tiendeveen-1 well drilled in the samelicence last year.Sales and farm out discussions continue to make progress. In the La Tosca caseagreement is likely to be reached, with drilling of the 44bcf prospect plannedfor 2011. Offers have been received from third parties to purchase otherItalian and UK assets. These offers have not been accepted as the Companycontinues to seek better value for our shareholders.Italian Environment Ministry legislation preventing near shore drilling isexpected to only have minor effect on our core Southern Adriatic prospects andoffshore Sicily areas. Suspension of permits C.R146.NP and C.R147.NP has nowbeen confirmed by the Italian authorities.The Markwells Wood-1 well is planned for drilling later this year with Havant-1likely to follow on. Other interesting developments in the UK have been theprogress towards drilling a well to appraise the Baxter Copse oil discovery andthe identification of a seemingly suitable site to drill a well to test andappraise the Hedge End-1 oil discovery.The Guyane project has seen the entry of both Shell and Total subsidiaries, andthe completion of a 2,500 km² 3D seismic survey. Tullow's expectation is for afirst well to be drilled in Q1 2011. The recent emphasis has been uponidentifying structures similar to the Jubilee Field in Ghana where theOperator, Tullow, has been successful.There has been a substantial increase in revenue to EUR 7.01million, up 150% oncomparative period, and the Company consequently reports pre-tax profits of EUR2.29million compared to losses of EUR 0.53million in the first half of 2009.This improvement was the result of new gas production from the Grolloo andGeesbrug fields in late 2009. Total production for the half year was 214,000barrels of oil equivalent. In the second quarter production was restricted byannual maintenance programmes at both Grolloo and Geesbrug to coincide withNAM's annual shut downs. We look forward to improving revenue and cash flowprofiles in the near term following new gas production from both Brakel andWijk en Aalburg and given current - August 2010 - gas prices being achieved inexcess of €5.60/mcf.In June 2010 Northern successfully placed 11,764,706 new Ordinary Shares of 5pence each at 85p per new Ordinary Share (the "Placing Price") and raised £10.0million (€12.2million) (the "Placing") gross. The net proceeds of the Placingare being used to accelerate the development of the most attractive existingpipeline of projects the Group has in the Netherlands and Italy. These projectsinclude the development of existing discoveries to increase production and thedrilling of exploration prospects to maintain and increase reserves. Funds willalso be used to acquire seismic data in Italy so as to improve the farmoutterms and the potential of the Italian assets in order to bring them closer todrilling. The management of Northern are very focussed on this acceleratedstrategy for the future development of the business.
Discussions in respect of reserve based debt finance secured against new production in the Netherlands are scheduled to continue now the Brakel gas field is on stream.
The Board is committed to continue delivering greater production and increaseasset value within the strategy of operating in areas of low risk and obtainingand developing concentrated licence positions gaining high quality prospectswithout paying high entry costs. It is determined to accelerate growth anddelivery of improved value for shareholders. I feel that Northern's strongasset base has, and will continue to be, steadily transformed into productionand asset sales income.After the half year end, Nigel Wright who joined as Finance Director on 12thApril 2010 left the Company. Chris Foss has re-assumed these responsibilitiesproviding us with continuity which is much appreciated. The Board considersthat this change will have no material impact on the Company.None of the achievements of the first half would have been possible without thededicated endeavours of my executive colleagues and staff. I would like to takethis opportunity to thank them for their hard work.R H R LathamChairman29 September 2010Consolidated Income StatementFor the six months ended 30 June 2010 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2010 2009 2009 (Unaudited) (Unaudited) (Audited) Notes EUR '000 EUR '000 EUR '000 Revenue 7,013 2,801 5,084 Production costs (1,924) (858) (2,077) Depletion and amortisation - property, (354) (759) (1,525)plant & equipment Cost of sales (2,278) (1,617) (3,602) Gross profit 4,735 1,184 1,482 Pre-licence costs (165) (47) (847) Administrative expenses - other (1,565) (1,516)
(2,565)
Administrative expenses - share (151) (784) (1,927)incentives Administrative expenses - total (1,716) (2,300) (4,492) Other operating expenses - (1) - Loss on disposal of assets - (14) - Profit / (loss) from operations 2,854 (1,178) (3,857) Finance charges (599) (191) (552) Finance income 2 49 910 1,365
Share of operating loss of joint (18) (72)
(80)ventures & associates Profit / (loss) before tax 2,286 (531) (3,124) Tax (expense) / credit (1,401) 458 973 Profit / (loss) for the period 885 (73)
(2,151)
Basic profit / (loss) / earnings per 3 1.11 cents (0.1) cents (2.9)share cents
Diluted profit / (loss) / earnings per 3 1.06 cents (0.1) cents (2.9) share
cents
All results are from continuing activities and are attributable to equity shareholders of the parent.
Notes 1 to 7 form an integral part of the report.
Consolidated Statement of Comprehensive IncomeFor the six months ended 30 June 2010 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2010 2009 2009 (Unaudited) (Unaudited) (Audited) EUR '000 EUR '000 EUR '000 Profit / (loss) / profit for the 885 (73) (2,151)period
Exchange differences on translation 539 411
(41)of foreign operations
Other comprehensive income for the 539 411
(41)period, net of tax Total comprehensive income / 1,424 338
(2,192)
(deficit) for the period
Consolidated Statement of At 30 June At 30 June At 31Financial Positionat 30 DecemberJune 2010 2010 2009 2009 (Unaudited) (Unaudited) (Audited) Notes EUR '000 EUR '000 EUR '000 Assets Non-current assets Intangible assets 29,989 20,475 27,880 Property, plant and 4 50,623 31,390 45,895equipment Investments in joint 263 99 259ventures
Investments in associates 15 15
15 Loans and other 388 103 118receivables 81,278 52,082 74,167 Current assets Inventories 90 60 98 Trade and other 8,319 20,183 14,376receivables Cash and cash equivalents 25,815 27,942 15,002 34,224 48,185 29,476 Total assets 115,502 100,267 103,643 Liabilities Current liabilities Trade and other payables 7,975 5,272
8,103
Corporation tax liability - 2,696 2,895 7,975 7,968 10,998
Non-current liabilities Trade and other payables 32 36
169 Provisions 9,662 6,813 9,564 Deferred tax liabilities 10,546 9,848 9,148 20,240 16,697 18,881 Total liabilities 28,215 24,665 29,879 Net assets 87,287 75,602 73,764 Capital and reserves Share capital 5 5,763 4,974 4,983 Share premium 11,421 23,964 194 Merger reserve 10,289 10,289 10,289 Special reserves - 28,415 4,544 28,410distributable Special reserves - 168 154 173undistributable Share incentive plan 3,770 3,328 3,865reserve Foreign currency 30 (57) (509)translation reserve Retained earnings 27,431 28,406 26,359 Total equity 87,287 75,602 73,764
All amounts are attributable to equity shareholders of the parent. Notes 1 to 7 form an integral part of the report.
Consolidated Cash Flow Statementfor 6 months ended 6 months ended Year ended the six months ended 30 June 2010
30 June 30 June 31 December 2010 2009 2009 (Unaudited) (Unaudited) (Audited) EUR '000 EUR '000 EUR '000
Cash flows from operating activities
Profit / (loss) before tax 2,286 (531) (3,124) Depletion and amortisation 354 759 1,525
Depreciation - non oil and gas 104 93
181
property, plant & equipment
Foreign exchange gain (42) (151) (567) Finance income (7) (759) (798) Finance charges 599 191 552 Share based payments 386 642 1,210
Expenses settled by issue of shares - -
63
Share of operating loss in joint 18 72
80venture & associate Net cash inflow / (outflow) before movements 3,698 316 (878)in working capital
Decrease / (increase) in inventories 11 (2)
(43)
Decrease in trade and other receivables 6,079 3,990 9,831
(Decrease) / increase in trade and (710) (1,026) 2,127other payables Net cash inflow from changes in working 5,380 2,962 11,915capital Taxes paid (2,895) (964) (964) Net cash inflow from operating 6,183 2,314 10,073activities
Cash flows from investing activities
Interest received 7 139 178 Interest paid (147) (72) (69) Purchase of property, plant and (5,132) (3,643) (16,939)equipment Expenditure on exploration and (1,661) (5,440) (12,768)evaluation assets Investment in joint venture company - (33) (183) Loan to joint venture company (212) - - Acquisition costs of ATI net of cash - (727) (727)and cash equivalents acquired Net cash (outflow) / inflow from (7,145) (9,776) (30,508)investing activities
Cash flows from financing activities
Issue of ordinary shares 11,552 - -
Proceeds from the exercise of warrants 161 -
60
Net cash inflow from financing 11,713 -
60activities Net increase / (decrease) in cash and 10,751 (7,462) (20,375)cash equivalents Cash and cash equivalents at start of 15,002 34,927 34,927period
Effect of exchange rate movements 62 477
450
Cash and cash equivalents at end of 25,815 27,942
15,002
period Consolidated Statement of Changes in Equityfor the six months ended 30 June 2010 Share Share Merger Special Share Foreign Retained Total capital premium reserve reserves incentive currency earnings Account plan translation reserve reserve EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
EUR'000 EUR'000
At 1 January 4,488 23,964 - 4,698 2,384 (468) 28,479 63,5452009 (audited) Total - - - - - 411 (73) 338comprehensive income for the period Share based - - - - 642 - - 642payments ATI 486 - 10,289 - 302 - - 11,077acquisition At 30 June 4,974 23,964 10,289 4,698 3,328 (57) 28,406 75,6022009 (unaudited) Total - - - - - (452) (2,078) (2,530)comprehensive income for the period Cancellation - (23,885) - 23,885 - - - -of share premium account Issue of 9 115 - - - - - 124shares during the period Equity share - - - - (31) - 31 -warrants exercised Share based - - - - 568 - - 568payments At 31 4,983 194 10,289 28,583 3,865 (509) 26,359 73,764December 2009 (audited) Total - - - - - 539 885 1,424comprehensive income for the period Issue of 42 119 - - - - - 161shares during the period - warrants Issue of 23 271 - - (294) - - -shares during the period - staff bonus Issue of 715 11,510 - - - - - 12,225shares during the period - placing Costs and - (673) - - - - - (673)fees associated with placing Equity share - - - - (187) - 187 -warrants exercised Share based - - - - 386 - - 386payments At 30 June 5,763 11,421 10,289 28,583 3,770 30 27,431 87,2872010 (unaudited)
All amounts are attributable to equity shareholders of the parent.
Notes to the Interim Resultsfor the six months ended 30 June 2010
1. BASIS OF PREPARATION
This unaudited condensed consolidated interim financial information has beenprepared using the recognition and measurement principles of InternationalAccounting Standards, International Financial Reporting Standards andInterpretations adopted for use in the European Union (collectively EU IFRSs).The principal accounting policies used in preparing the interim results areunchanged from those disclosed in the Group's Annual Report for the year ended31 December 2009. These statutory accounts are available on the Company'swebsite (www.northpet.com) or by application to the Company's registeredoffice.The financial information for the six months ended 30 June 2010 and 30 June2009 is unaudited and does not constitute statutory financial statements ofNorthern Petroleum Plc and its subsidiaries. The comparative financialinformation for the full year ended 31 December 2009 has, however, been derivedfrom the statutory financial statements for that period. A copy of thosestatutory financial statements has been delivered to the Registrar ofCompanies. The auditors' report on those accounts was unqualified, did notinclude references to any matters to which the auditors drew attention by wayof emphasis without qualifying their report and did not contain a statementunder section 498(2)-(3) of the Companies Act 2006.
Changes to Accounting policies
Adoption of IFRS 3 (Business Combinations) (revised 2008) (`IFRS 3') and IAS 27 (Consolidated and Separate Financial Statements) (revised 2008) (`IAS 27')
Following their adoption by the EU, the Group has adopted IFRS 3 and IAS 27 inthe current year. The revised standards apply prospectively to businesscombinations made after 1 January 2010. Business combinations which took placebefore 1 January 2010 do not need to be restated as a result of the adoption ofthese standards. The most significant changes to the Group's previousaccounting policies for business combinations are as follows:
* all transaction costs which previously could be capitalised are now
expensed as they are incurred;
* any pre-existing equity interest in the entity acquired is re-measured to
fair value at the date of obtaining control, with any resulting gain or loss recognised in the income statement; * any changes in the Group's ownership interest subsequent to the date of obtaining control are recognised directly in equity; and * any changes to the cost of an acquisition, including contingent consideration, resulting from events after the date of acquisition are recognised in the income statement.
On the adoption of the revised standard there has been no effect on the amounts reported in these financial statements.
2. FINANCE INCOME 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2010 2009 2009 (Unaudited) (Unaudited) (Audited) EUR '000 EUR '000 EUR '000 Interest receivable 7 139 178 Foreign exchange gains 42 151 567
Unwinding of fair value discount on - 620
620
receivables due in more than one year
49 910 1,3653. EARNINGS PER SHARE
Basic earnings per share amounts are calculated by dividing profit or loss for the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing profit for theperiod attributable to ordinary equity holders of the parent by the weightedaverage number of ordinary shares outstanding during the year, plus theweighted average number of shares that would be issued on the conversion ofdilutive potential ordinary shares into ordinary shares. The calculation of thedilutive potential ordinary shares related to employee and director shareoption plans includes only those warrants with exercise prices below theaverage share trading price for each period. 6 months ended 6 months Year ended ended 30 June 30 June 31 December 2010 2009 2009 EUR '000 EUR '000 EUR '000 (Unaudited) (Unaudited) (Audited) Net profit / (loss) attributable to 885 (73) (2,151)equity holders used in basic calculation Net profit / (loss) attributable to 885 (73)
(2,151)
equity holders used in dilutive
calculation Basic weighted average number of 80,059 71,395 75,184shares
Dilutive potential of ordinary
shares: Warrants exercisable under 3,415 - -Company schemes Diluted weighted average number 83,474 71,395
75,184
of shares
The calculation of the diluted EPS assumes all criteria giving rise to the dilution of the EPS are achieved and all outstanding share options that are in money at period end are exercised.
4. PROPERTY, PLANT AND EQUIPMENT
30 June 30 June 31 December 2010 2009 2009 (Unaudited) (Unaudited) (Audited) EUR '000 EUR '000 EUR '000 Oil and gas assets 49,801 30,961 45,527
Computer and office equipment and leasehold 822 429
368improvements 50,623 31,390 45,8955. SHARE CAPITAL 30 June 30 June 31 December 2010 2009 2009 (Unaudited) (Unaudited) (Audited) EUR'000 EUR '000 EUR '000 Authorised:
311,316,404 ordinary shares of 5p each 19,648 19,648 19,648
Allotted, issued, called up and fully
paid:
91,812,701 (30 June 2009: 78,840,326, 31 5,791 4,974 4,983 December 2009: 78,987,248)ordinary shares
of 5p each
The ordinary shares above all hold the same voting rights and there are no restrictions on the distribution of dividends.
The following issues of new ordinary shares were made during the period:
Share Share capital Premium Total €'000 €'000 €'000
For cash as a result of exercise of
warrants: 642,500 ordinary 5p shares 42 119 161
Issued to staff insettlement of bonus:
418,247 ordinary 5p shares 23 271 294
Issued as a result of placing: 11,764,706 ordinary 5p shares 715 10,837 11,552 808 11,199 12,0076. APPROVAL BY DIRECTORS
The interim report for the six months to 30 June 2010 was approved by the Directors on 28 September 2010.
7. AVAILABILITY OF INTERIM REPORT
The interim report will be made available in electronic format on the Company'swebsite, www.northpet.com, and will be posted to registered shareholders.Further copies will be available on request by application to the CompanySecretary at the Company's registered office being Martin House, 5 Martin Lane,London, EC4R 0DP.
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