Cabot Energy Regulatory News (CAB)

12 Aug 2005 06:00

Embargoed: 0700hrs 12 August 2005 Northern Petroleum Plc ("Northern" or "the Company") Update: Agreements with Nederlandse Aardolie Maatschappij B.V. in the Netherlands Northern Petroleum Plc's wholly owned Netherlands subsidiary, NP NetherlandsB.V. ("NPN") has, following due diligence, exercised its option ("the Option")under the HOA signed on 13th June 2005 with Nederlandse Aardolie MaatschappijB.V. ("NAM"), a company jointly owned by Shell and ExxonMobil, on an initialpackage of undeveloped oil and gas discoveries.NPN has selected to develop those discoveries which it considers to becommercially the most attractive and therefore, under the Agreements (the"Agreements"), has initially committed to the development of two discoveriesand has the option, prior to 31st December 2005, to commit to a further three.NAM will assign its participating interest in the committed discoveries to NPNwho will immediately assume operating responsibilityafter receipt ofgovernmentapprovals. The discoveries are in two onshore part-areas in the Drenthe Licenseand the Andell II Licence, which is close to the Papekop discovery for whichNPN has filed an application. The NPN interests upon transfer will be: Licence Discovery Status NPN Interest Drenthe Geesbrug Committed 60% Drenthe Grolloo Optional 60% Andel II Ottoland Committed 100% Andel II Brakel Optional 100% Andel II Andel Optional 100% NPN estimates the gross expected in-place volumes of the committed discoveriesto be 102 billion cubic feet of gas and 20 million barrels of oil. The grossexpected in-place volumes of the optional discoveries is estimated at 33.5billion cubic feet of gas and 6.3 million barrels of oil. Accounting for otherpartners and the NAM commercial interests gives a net to NPN of 31-33 billioncubic feet of gas and 5.9-9.8 million barrels oil for the committeddiscoveries; 10-16 billion cubic feet of gas and 1.9 to 3.1 million barrels oilfor the optional discoveries, with the range depending upon whether theMinister of Economic Affairs designates Energie Beheer Nederland B.V. ("EBN"),a State owned company, as a 40% participant in the Andel II field developmentsin return for a pro-rata share of sunk exploration costs and a pro-rata shareof all future costs of the joint venture. NPN will, in respect of discoveriesto which it commits, receive 100% pay-back of its costs plus an uplift of 30%,thereafter splitting all future profits equally with NAM.Under the current Agreements and a previous farm-out agreement signed on 13thJune 2005, NPN will also farm-in to the Steenwijk prospect and an onshoreexploration part-area, in the Drenthe Licence. NPN will earn these interests bydrilling and covering the combined NAM and NPN expenses of three explorationwells and will subject to Government consent assume operatorship of the 2 wellsand activities in the Drenthe exploration part-area. The Agreements provide forNPN to recover all dry hole costs out of the pre-tax revenues from futurediscoveries and share the profits from the jointly held stakes with NAM on anequal basis. NPN estimates the unrisked g ross in-place volumes of theidentified gas prospects to be between 0.5 and 0.85 trillion cubic feet. Thisis 200 bcf to 330 bcf net to NPN, allowing for partners, other than NAM, whereapplicable.The Agreements further provide a farm-in option for NPN to acquire, prior to31st December 2005, 50% of NAM's interests in three additional onshoreexploration areas where NAM has identified gas prospects. NPN estimatesunrisked g ross in-place volumes between 0.36 and 0.53 trillion cubic feet. NPNwill have the right to earn these interests by drilling and covering thecombined NAM and NPN expenses of one well per exploration area. -Ends- For further information contact:Derek Musgrove, Managing DirectorNorthern Petroleum PlcTel. 020 7743 6080Chris Roberts/Ben SimonsHansard CommunicationsTel: 020 7245 1100Further information on Northern is available at www.northpet.comENDNORTHERN PETROLEUM PLC