Cabot Energy Regulatory News (CAB)

Northern Petroleum Plc

("Northern Petroleum", "the Group" or "the Company")

Operational update

Interim Results for six months ended 30 June 2016

Northern Petroleum, the AIM quoted oil company focusing on production led growth, provides the following update on operations and announces its unaudited interim results for the six months ended 30 June 2016.

Operational update

§ Current production of approximately 390 barrels of oil per day ("bopd")

§ Planned summer work programme completed with five wells brought into production

- three workover wells on production from mid September

- two waterflood wells recently started with oil rate expected to build in October

§ One well currently suspended through August and September due to pipeline repair and forecast to be back on production in October at approximately 50 bopd

§ Evaluating opportunity with a local power generation company concerning a joint venture to produce shut-in gas within the Company's leases to generate power both for operations and to sell into the local grid

- material operating cost savings possible

§ $1.2 million of abandonment deposit returned from Alberta Energy Regulator as a result of increased production

- remaining $0.2 million forecast to be returned in October

§ Cash balance as at 28 September 2016 is approximately $1 million

§ Winter work programme planned to double production to more than 800 bopd

§ Shell, as operator in Cascina Alberto onshore northern Italy, is progressing through the planned exploration programme with a 2D seismic acquisition programme now being considered

§ Legal appeals process against the approved environmental impact assessments for both the 3D seismic acquisition and five exploration permit applications in the southern Adriatic now completed with all appeals rejected

- planning for the 3D seismic acquisition programme will now continue

Keith Bush, Chief Executive Officer, commented:

"Through assiduous planning and execution over the last nine months, we have stabilised the Company with a solid production base, while continuing to work in a challenging industry environment. Importantly, we now have an asset base in Canada with which to produce meaningful growth in production and cashflow. This asset base, in conjunction with the ability to progress our Italian exploration and appraisal portfolio, provides an attractive upside for the Company."

Interim Highlights

Operations

§ Completion of production asset acquisition in the Rainbow area, Alberta

§ Successful planning and execution of a multi well workover programme

§ Significant increase in production from approximately 150 bopd to over 400 bopd

§ Restart of second production facility in the Rainbow area

§ Restart of production in the Virgo area, Alberta

§ Average production for the first six months of the year was approximately 300 bopd

Finance

§ Revenue of $1.5 million for the first six months of the year

§ Gross profit of $0.4 million before depletion and amortisation

§ Successful cashflow management while $1.4 million on deposit with the regulator in Alberta

Corporate

§ Administrative costs reduced by 55 per cent. when compared to the first six months of 2015

§ Annual Group general and administrative costs below $3.0 million

For further information please contact:

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

Keith Bush, Chief Executive Officer

Nick Morgan, Finance Director

Stockdale Securities Limited (Nominated Adviser and Joint Broker) Tel: +44 (0)20 7601 6100

Antonio Bossi

Robert Finlay

David Coaten

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

Jonathan Wright

Interim Report Management Statement

The first half of 2016 has been positive for the Group despite the continuing poor macro environment. The Group completed an asset acquisition in the Rainbow area of Alberta near the existing Virgo operations and executed a well workover programme. Growth in production was achieved through a programme of repairs and maintenance to wells and facilities. These operations more than doubled the production from the asset and despite a turbulent market, where the West Texas Intermediate benchmark crude price ("WTI") dropped to less than $30 per barrel during February, the Group exited the period with a gross profit. Subsequently, work has started to position the Group to again double production and provide free cashflow for further investment in Canada and support for other areas of the business, particularly the Italian assets.

Operations

During January, the Group acquired assets which at the time were producing approximately 150 barrels of oil per day and contained 1.1 million barrels ("mmbbls") of proven plus probable oil reserves, close to the Group's Virgo assets in the Rainbow area. The acquisition included a number of wells, pipeline infrastructure and two production facilities with a direct tie-in to the national pipeline network. A small, low cost work programme of well and facility repairs was conducted through the remainder of winter and into spring, initially increasing the production to over 400 bopd.

Production continued throughout the second quarter, with some downtime due to torrential rains during May and June which affected the wells not tied in to the pipeline infrastructure due to trucking restrictions. With the increase in production during the second quarter and despite the poor weather conditions, the Group still averaged approximately 300 bopd for the first half of 2016. The Group has also secured contracts from local operators to process and ship their crude, generating additional income from the facilities.

In Italy, progress continued with the development of an environmental impact assessment for the drilling of the Giove appraisal well, which is planned to be submitted before the end of the year. Onshore in the Po Valley, Shell continued to evaluate the Cascina Alberto exploration permit in order to develop the additional seismic programme required to more thoroughly review the previously identified 300 mmbbls prospect. The Group is carried by Shell for a 20 per cent. share of the Cascina Alberto permit including seismic acquisition up to $4 million and an exploration well up to $50 million.

Corporate

The focus of the Group has continued to be on cost reduction and ensuring that the organisation is fit for purpose. Staff and infrastructure reductions were made, including the implementation of a cost effective accounting system designed for the Canadian market. This further reduced the overall corporate general and administration cost to below $3 million on an annualised basis.

Financial

Following the completion of the asset acquisition in the Rainbow area and the subsequent successful workover programme, total revenue for the first six months of the year was $1.5 million, reflecting an average production rate of approximately 300 bopd. Even with the oil price for WTI averaging approximately $39 per barrel for the period, a gross profit before depletion and amortisation of $405,000 was generated.

The Group maintained a strict focus on costs, which resulted in a 55 per cent. reduction in the administrative expenses for the first six months of the year.

The biggest cash movement in the period was an abandonment deposit of approximately $1.2 million with the Alberta Energy Regulator required to complete the asset acquisition in Rainbow. Approximately $0.2 million was already on deposit with the regulator from the prior year. Following the increase in production $1.2 million was returned after the period end in September.

OutlookWith production at the current level of approximately 400 bopd, the Group can sustain its financial position with a WTI oil price of approximately $50 per barrel. As production grows, the Rainbow asset's fixed cost base does not increase significantly, therefore the operating cost increase per additional production barrel is less than $10. This makes incremental production from this point forward economically attractive, and something that is achievable and relatively low cost.

The Group is now developing a winter work programme to double production again to 800 bopd which will then provide free cashflow for investment. This will enable the Group to fund activities in Alberta and other areas such as the 3D seismic programme in the southern Adriatic. Funding for this programme will be achieved through a combination of working capital, debt, a farmout and equity as is considered most appropriate at the time.

The work conducted in the first half of 2016 has enabled the Group to survive in these extreme market conditions and helped establish the platform for further growth. This work is continuing in order to generate strong positive cash flow and core value for shareholders.

Condensed Consolidated Statement of Profit or Lossfor the six months ended 30 June 2016

All results are from continuing activities. As the Group is loss making, there is no dilution of earnings from potential ordinary shares and diluted earnings per share has not been presented.

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Incomefor the six months ended June 2016

Condensed Consolidated Statement of Financial Position

at June 30 2016

Condensed Consolidated Cash Flow Statement

for the six months ended 30 June 2016

Condensed Consolidated Statement of Changes in Equity

for the six months ended 30 June 2016

Notes to the Condensed Consolidated Interim Financial Statementsfor the six months ended 30 June 2016

1. Basis of preparation

This unaudited condensed consolidated interim financial information has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively EU IFRSs). The principal accounting policies used in preparing the interim results are unchanged from those disclosed in the Group's Annual Report for the year ended 31 December 2015. These statutory accounts are available on the Company's website (www.northernpetroleum.com) or by application to the Company's registered office.

The financial information for the six months ended 30 June 2016 and 30 June 2015 is unaudited and does not constitute statutory financial statements of Northern Petroleum Plc and its subsidiaries. The comparative financial information for the full year ended 31 December 2015 has been derived from the statutory financial statements for that period. A copy of those statutory financial statements has been delivered to the Registrar of Companies. The auditor reported on those accounts; the report was unqualified and did not contain any statement under section 498(2) or 498(3) of the Companies Act 2006. However, an emphasis of matter with regards to a material uncertainty in the application of the going concern basis of accounting was included in the audit report.

Adoption of new and revised standards

A number of new standards, amendments to existing standards and interpretations were applicable from 1 January 2016. The adoption of these new standards and amendments did not have a material impact on the Group's condensed financial statements for the half-year ended 30 June 2016.

2. Finance costs and income

3. 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 the period attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year, plus the weighted average number of shares that would be issued on the conversion of dilutive potential ordinary shares into ordinary shares. The calculation of the dilutive potential ordinary shares related to employee and director share option plans includes only those warrants with exercise prices below the average share trading price for each period.

At 30 June 2016 there were 666,706 options and no warrants with exercise prices below the average share trading price for those years, (2015: nil), hence the number of potential dilutive ordinary shares is 666,706 (2015: nil).

4. Property, Plant and Equipment

The increase in oil and gas assets in the period includes the assets acquired in Alberta, Canada, see note 5 below.

5. Canadian acquisition

On 12 November 2015 the Group announced it had agreed an acquisition of production and reserves in Alberta, Canada, conditional on financing. The Group successfully raised new equity finance and on 15 December signed a sale and purchase agreement and paid an initial consideration. On 21 January 2016 the Alberta Energy Regulator ("AER") transferred a number of Rainbow area leases in Alberta, Canada to the Group's Canadian subsidiary, Ouro Preto Resources Inc. ("OP") following the deposit by OP with the AER of US$1,165,000. The payment of the abandonment deposit to the AER was the final step in the regulatory approval of the acquisition of the leases. The acquisition of the Rainbow leases has enabled the Group to substantially increase its asset base in Alberta. The Rainbow Assets include a total of 117 operated and 41 non-operated wells, of which approximately one third are either currently in production or are believed by the Directors to have the potential of being brought back into production. The remaining wells are either suspended or already abandoned and will be reviewed for future production potential.

The acquisition consideration below is considered equal to the aggregate of the provisional fair values of the assets and liabilities acquired, with no goodwill arising, and these have been recorded as shown further below. The liabilities include the provisions for future abandonment of the wells and facilities. OP has commissioned a new reserves report for the assets acquired from a leading independent Calgary reserves auditor. The new reserves report will be used to reassess the fair valuations of the assets acquired which will form the basis of the final acquisition accounting to be reported in the 31 December 2016 Group consolidated accounts.

Consideration:

The Canadian Dollar consideration was settled for $513,000 which equates to US $360,000 at the prevailing exchange rate of $1.4244 Canadian Dollars to $1 US Dollar on 21 January 2016.

Identifiable assets acquired and liabilities assumed:

No goodwill has been recognised as a result of the acquisition and no significant acquisition related costs have been incurred at 30 June 2016.

The revenue generated and expenses incurred by this operation since the date of acquisition (21 January 2016 to 30 June 2016) were $1,269,000 and $1,260,000 respectively. Of the $1,260,000 expenses, $809,000 relates to production costs, $102,000 relates to administration and management time recharged by Northern Petroleum Plc, $269,000 relates to depletion and amortisation of plant property and equipment and $80,000 relates to finance costs for the unwinding of discount on decommissioning provisions. Cash outflow in the period comprised net revenue and investments in oil and gas assets. If the acquisition had occurred on 1 January 2016, management estimates that consolidated revenue for the first half year would have been $64,000 higher and the consolidated costs for the period would have been $111,000 higher.

6. Approval by directors

The interim results for the six months ended 30 June 2016 were approved by the Directors on 28 September 2016.

7. Availability of interim report

The Interim Report will be made available in electronic format on the Company's website, www.northernpetroleum.com. Further copies will be available on request by application to the Company Secretary at the Company's registered office, being Chester House, Unit 3.01, Kennington Park, London SW9 6DE.

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 CEO of Northern Petroleum, Mr Keith Bush, who has 25 years' experience as a petroleum engineer. He has read and approved the technical disclosures in this regulatory announcement. The technical disclosure in this announcement complies with the SPE/WPC standard.

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 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