Cabot Energy Regulatory News (CAB)

31 Oct 2006 08:00

Embargoed: 0800hrs, 31 October 2006 Northern Petroleum Plc ("Northern" or the "Company") Provision of Finance Facility Northern announces that it has signed a Heads of Agreement with ATI Oil Plc("ATI") such that Northern shall provide a finance facility of up to ‚£1,750,000to ATI, secured over certain of ATI's assets. All funds drawn down under theterms of the facility will be repayable to Northern in full on 30 November 2007in the event that they are not repaid before that date.In return for providing this facility, Northern, in addition to receiving feesand interest, has been granted options to farm into, and thereby earn anadditional interest in up to seven offshore blocks in which ATI has aninterest. These options expire three months after the cancellation of thefacility by either party.This facility has been put in place to provide ATI with additional workingcapital and sufficient funds to further exploit the significant potential ofits Italian oil and gas assets.The facility will enable an offshore seismic survey to commence in November2006. This survey is essential to advance ATI's exploration efforts in a timelymanner and enhance the value of Northern's joint interest in five licences:G.R17.NP, G.R18.NP and G.R19.NP (2156 km‚²)These licences cover an exploration play comprising the projected extension ofthe highly productive Southern Apennine thrust belt through to the west ofSicily and extending onwards into Tunisian waters where Shell has recentlyfarmed into a large licence position held by Anadarko and Petro-Canada andthereafter into Algeria.In the main the area was previously licensed in the period 1984-1989, a time ofdeclining oil prices, since when seismic, drilling and field developmenttechnologies have improved dramatically as has the price of oil. The previouslicensees, Agip/Shell and Gulf, mapped over twenty prospects or leads ofsignificant magnitude as to warrant follow-up using the technologies of today.Seismic reprocessing has improved the image quality of the older data coveringthe west of Sicily thrust belt on the G.R17.NP, G.R18.NP and G.R19.NP licences.We are therefore confident that the acquisition of a new seismic survey treatedwith modern processing methods will clarify the structural complexity of thisarea, and we are hoping to uncover oil prospects not dissimilar in size andnature to Agip and Shell's Val d'Agri complex on trend in southern Italy.The new 540km 2D survey is to be acquired across the three north-westernmostpermits to infill the existing seismic grid and upgrade the leads and prospectsalready identified. Once acquisition and processing of these data are complete,they will be interpreted and integrated into a regional geological model priorto selection of drilling locations being planned for 2008.LICENCE C.R146.NP (620 km‚²)Reprocessed seismic data on C.R146.NP has together with petrophysicalinterpretation of well data confirmed the previously recognized significantprospect potential of the licence. Of particular interest is the presence ofthe carbonate platform edge extending from the Vega field into the permit. Oneprospect and three leads have been identified. Three were previously assessedin the 1980s as having potential recoverable oil contents of 100 million, 70million and 30 million barrels.We are confident that new seismic acquisition and processing with moderntechniques will result in the clearer structural images that have in the pasteluded previous campaigns in this area. 500km 2D seismic data is to beacquired. This will be interpreted and integrated with all existing well andseismic data to mature one or more locations for drilling starting in late2007.LICENCE C.R147.NP (637 km‚²)Whilst the prospectivity has been enhanced by reprocessing of the existingseismic data, it is expected that the prospects previously recognised will bebetter defined by new seismic of a modern quality. A 200km 2D acquisitionprogramme is planned as part of the seismic survey, which we expect will enableus to clarify prospects within the Miocene sand/carbonate fairway, on trendwith producing fields in the Tunisian Gulf of Hammamet beyond the area whereGrove Energy have announced intentions to drill two wells on their licences inItalian waters.Once acquired and processed, these data will be interpreted and integrated withall existing well and seismic data to mature a location for possible drillingin 2008.Richard Latham, Chairman of Northern, commented,"This facility provides ATI with the ammunition to advance our joint projectsin Italy where we feel that there are great opportunities to enhance the valueof our assets. Italy is the third largest producer of oil and gas in Europeand, as the country's second largest licence holder by area, it represents animportant part Northern Petroleum's European prospects."Relationship between Northern and ATINorthern has a 38% shareholding in ATI and Derek Musgrove and Chris Foss,directors of Northern, are also directors of ATI. The Directors of Northern whoare independent of ATI, having consulted with Northern's nominated adviser,Investec, consider the provision and terms of the facility are fair andreasonable insofar as Northern's shareholders are concerned. -Ends- Contact Details:Derek Musgrove, Managing DirectorNorthern Petroleum PlcTel. 020 7743 6080Chris Roberts/ Ben SimonsHansard GroupTel. 020 7245 1100Notes to editors:Northern Petroleum is a junior oil and gas exploration and production company,focused on the EU, with major assets in the Netherlands, Italy and the UK. Forfurther information please visit www.northpet.comENDNORTHERN PETROLEUM PLC