Cabot Energy Regulatory News (CAB)

Northern Petroleum Plc

("Northern Petroleum" or "the Company")

Incentive schemes

Northern Petroleum has adopted an incentive policy for executive directors and senior management which is directly linked to share price performance over the long term. Under the new policy, the remuneration committee ("the Committee") has granted performance units under the Value Creation Plan ("VCP") and awards under the Northern Petroleum Incentive Plan ("NPIP") to the executive directors and staff of the Company.

Background

Following the change in management and Company strategy during 2013 and 2014, the Committee has decided that there is a need for the implementation of a long term incentive policy for the future. The Committee has liaised with external advisers to create a management incentive scheme designed to reward the creation of value for shareholders through the successful implementation of the Company's strategy. The key principle of the new policy is to link any reward only to the performance of the Company's share price over the medium to long term.

Awards under the VCP

The VCP has been designed so that participants will only benefit if significant value is delivered to shareholders through share price accretion. Participants have been awarded performance units which have no value at grant ("Units"). The VCP has a total of one million units which have been allocated according to the table below. Units will normally convert into a number of ordinary shares in the form of nil-cost options at three dates during a five year period, the number of which are determined as set out below.

Value becomes attributable to the VCP if the Measurement Price exceeds the Threshold Price at the respective Measurement Dates, where:

§ the Threshold Price is the higher of a 20 per cent per annum compound growth rate from:

- the grant price, which is £0.15 per share and represents the starting base price for the VCP, and

- the Measurement Price used at a previous Measurement Date

§ the Measurement Dates are three, four and five years after the establishment of the scheme, respectively 8th May 2018, 8th May 2019 and 8th May 2020;

§ the Measurement Price is the volume weighted share price of the Company for the 30 calendar days prior to and ending on a Measurement Date; and

§ the Value Attributable to the scheme is 15 per cent of the difference between the Measurement Price and the Threshold Price multiplied by the number of shares in issue at the start of the plan (the "Value Attributable").

Value Attributable earned under the VCP is converted into a number of nil-cost options at each Measurement Date. Any nil-cost options earned at each Measurement Date will not be exercisable until the end of the five year Measurement Period, in order to increase the alignment of interests between VCP participants and shareholders over the longer term.

If new shares are issued by the Company from the start of the scheme until before the final Measurement Date ("the Measurement Period"), the same calculation as described above is performed to calculate if any Value Attributable has accrued in respect of the new shares, using the share price on the date of issue.

Furthermore, as part of the plan, all participants are required to build up a shareholding equal to 100 per cent of their base salary by the final Measurement Date. Any nil-cost options earned by the end of the Measurement Period cannot be exercised until this shareholding requirement is satisfied.

On the 8th May 2015, the following Units were granted under the VCP to the Company's Directors and persons discharging managerial responsibility:

The Committee can grant any unallocated Units at any point in the future to new or existing participants, provided awards are made before the final Measurement Date and that the maximum number of Units does not exceed 1,000,000.

Awards under the NPIP

The NPIP has been established by the Committee to create a rolling, three year share incentive and loyalty scheme for all staff and also govern share based awards made as part of any annual bonus to executive directors and senior management.

On the 8th May 2015, the executive directors were granted awards in the form of nil-cost options under the NPIP, which are the deferred annual bonus shares in respect of 2013, as referenced in the Directors' Remuneration Report in the 2013 and 2014 annual report and accounts. These awards have not been granted until now due to the Company being in successive closed periods since the 2013 bonus award was determined by the Committee. These awards will vest on the 31st January 2017 and will remain exercisable until the tenth anniversary of grant.

Note 1: Calculated using an average share price of £0.3339 per share being the volume weighted average share price for the month of December 2013, being the final month of the year for which the deferred bonus share awards relate.

The Company will fund any pay out to the NPIP and VCP via new-issue shares and the maximum number of ordinary shares that can be issued under the NPIP, VCP and any other share plan is capped at 10 per cent of Northern Petroleum's issued share capital within a 10 year period. The Company can also fund any pay out under the VCP or NPIP using market purchased shares or cash, in addition to the issue of new shares. However, any pay out to the VCP across all consideration is capped at 10 per cent of the market value of the Company on the final Measurement Date.

Related party Transaction

The implementation of the long term incentive schemes is a related party transaction for the purposes of Rule 13 of the AIM Rules for Companies. The directors, other than Keith Bush and Nick Morgan, having consulted with the Company's nominated adviser, Westhouse Securities Limited, consider that the terms of the transaction are fair and reasonable insofar as the Company's shareholders are concerned.

-Ends-

For further information please contact:

Northern Petroleum Plc Tel: +44 (0)20 7469 2900

Keith Bush, Chief Executive Officer

Nick Morgan, Finance Director

Westhouse Securities Limited (Nomad and Joint Broker) Tel: +44 (0)20 7601 6100

Alastair Stratton

Robert Finlay

FirstEnergy Capital LLP (Joint Broker) Tel: +44 (0)20 7448 0200

Jonathan Wright

David van Erp

Camarco Tel: +44 (0)20 3757 4980

Billy Clegg

Georgia Mann

Note to Editors:

Northern Petroleum is an oil and gas company focused on production led growth. The Company is undertaking a redevelopment and production project in north west Alberta and has a broader portfolio of exploration and appraisal opportunities in countries of relatively low political risk, primarily Italy. Comprehensive information on Northern Petroleum and its oil and gas operations, including press releases, annual reports and interim reports are available from Northern Petroleum's website: www.northernpetroleum.com