27 Mar 2007 07:00
Northern Petroleum Plc
Acquisition of gas production through purchase of Waalwijk Licence interest
Northern Petroleum Plc ("Northern" or "the Company"), the oil and gas production, development and exploration company with core interests under its management in The Netherlands, Italy and the United Kingdom, is pleased to announce that subsidiaries of Northern have agreed to purchase from Wintershall Noordzee B.V. ("WINZ") its gas producing and storage project interests in the Waalwijk Production Licence ("The Licence") onshore The Netherlands, with an effective date of 1 January 2007. The acquisition is subject to the usual government consents.
Operational Highlights:
* Northern Petroleum Nederland B.V. ("NPN") will be the Operator of The Licence and any underground gas storage projects on it; * The gas production is at an average rate, year 2007 to the end of February, of 1.8 mmscfd (330boepd) net the interest from the Bunter sandstone formation; * The Licence contains tested oil discoveries of 200 bopd in the Bunter and 100 bopd in the Delftland formation which NPN intends to evaluate in the context of today's higher oil prices; and * The agreement places NPN immediately in production as of 1 January 2007, with a core operating crew near to four of NPN's six proposed developments.
Financial Highlights:
* The production will bring NPN 2007 estimated revenue of ¢â€š¬2.5 million and pre-tax cashflow of ¢â€š¬1.7 million at current gas prices, on the basis of the proven no further investment forecast; * NPN to pay a consideration on completion of ¢â€š¬500,000 to WINZ for the acquisition of its oil and gas interests within The Licence; and * Northern will pay a further ¢â€š¬4.5 million ("the Contingent Consideration") to WINZ contingent upon a final investment decision ("FID") being made on an underground gas storage project on The Licence within five years of completion of this Agreement.
Waalwijk Production Licence
The Waalwijk gas fields are situated some 16 km from the projected extension of the Zeebrugge gas pipeline, which provides a connection from Belgium through to the United Kingdom and Irish markets. The Waalwijk Licence is also near to NPN's Papekop, Andel 3 licence and the Utrecht Licence Application.
NPN will hold a 16.67% interest in all the wells on The Licence save at the Loon op Zand South well in which it will hold a 50% interest.
The Waalwijk fields commenced production in 1991 and have a discovered gas initially in place of an estimated 215Bcf of which 55% has been recovered. Gross production is currently an average of 7.5mmscfd (WINZ share of 1.8mmscfd). The gross proven reserve on the basis of no further investment is 2Bcf (WINZ share 0.5bcf). Modest further investment (WINZ share ca. ¢â€š¬2mln) is required to increase the gross proven reserves to up to 22Bcf (WINZ share 3.8Bcf). A further 15Bcf of possible reserves (WINZ share 7Bcf) are estimated in undrained areas of the fields.
Oil has been tested in two formations, the Delftland (Lower Cretaceous) and the Lower Bunter Sandstone (Triassic) at rates varying from 100 bopd in the Delftland to 200 bopd in the Lower Bunter.
In 1999 a study of the commercial potential for development of the Delftland was undertaken. In that year an average oil price of $17 per barrel, even though up from a previous year average of $13, was still considered not to warrant proceeding to development. This will now be re-examined.
NPN intends to evaluate the commercial potential for oil production from the Delftland through new completions, probably through lateral drilling from existing wells in the main field. The potential for isolating the Bunter Sandstone gas production zone to achieve oil production from the Bunter Sandstone will also be examined.
A gas storage licence application for Waalwijk North field has been made by WINZ and Essent Energy Gas Storage BV ("Essent").
The interests in the potential underground gas storage projects within the Waalwijk North reservoir will be held 33.33% by Northern and 66.67% Essent. The interests in all other potential underground gas storage projects within the rest of The Licence will be held 50% by Northern and 50% by Essent, on the assumption that Energie Beheer Nederland B.V. will not hold any underground gas storage project interests.
Derek Musgrove, Managing Director of Northern, stated:
"In a core area where we have six gas and oil fields, this is a low cost acquisition of conventional gas production with real upside potential through reconfiguring the production plant and wells to effect a lower final pressure and a realistic potential underground gas storage project in the vicinity of the Zeebrugge inter-connector trunk gas pipeline.
It places NPN immediately into production, with a core operations crew in the neighbourhood of the proposed developments on the Papekop, Ottoland, Brakel and Andel VI fields as well as the applied for Utrecht exploration licence.
I am also pleased that we have gained as a partner, Essent, one of the larger utility companies in The Netherlands. Essent has valuable experience in gas marketing and salt cavern gas storage.
Finally, there is a potential oil project on an operational production site on an existing production licence."
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 Exploration Manager of Northern, Mr Graham Heard BSc (Hons), who has over 30 years experience as a petroleum geologist.
For further information please contact:
Northern Petroleum Plc Tel: +44 (0) 20 7743 6080
Derek Musgrove, Managing Director
Chris Foss, Finance Director
Graham Heard, Exploration Manager
Investec Tel: +44 (0) 20 7597 5000
Michael Ansell / Paul Brett
Panmure Gordon & Co Tel: +44 (0) 20 7459 3600
Katherine Roe
Bishopsgate Communications Limited Tel: +44 (0) 20 7562 3350
Nick Rome / Maxine BarnesNotes to Editors:Northern Petroleum Plc
Northern Petroleum Plc is an oil and gas production, development and exploration company with core interests under its management in The Netherlands, Italy and the United Kingdom and other interests in Guyane and Spain. The Company has proven and probable reserves of 56 and 4.5 million barrels of oil equivalent in the Netherlands and UK respectively and is currently working towards putting its six Netherlands oil and gas fields into production with financial support from Standard Bank. The Shell/ExxonMobil subsidiary Nederlandse Aardolie Maatschapppij B.V. participates in five of the six Netherlands fields by way of a net profits interest. Further information on Northern is available at www.northpet.com.
NORTHERN PETROLEUM PLC