Cabot Energy Regulatory News (CAB)

Embargoed for release: 1 October 2013 at 07.00 Northern Petroleum Plc ("Northern", "the Group" or "the Company") Sale of Netherlands Subsidiary Northern Petroleum Plc (AIM: NOP) announces that it has entered into a bindingsale and purchase agreement with Vermilion Oil & Gas Netherlands BV("Vermilion"), a wholly owned subsidiary of Vermilion Energy Inc., for the saleof Northern Petroleum Nederland BV ("NPN"), the Company's wholly ownedNetherlands operating subsidiary. The consideration for the sale will besatisfied as follows: * Canadian $27.5 million, payable in cash on completion; * a net profit interest in the Papekop Production Licence ("Papekop NPI"); and * a net profit interest over any future production from unconventional reservoirs ("Posidonia NPI"). The economic effective date for the transaction is the 1st January 2013.Completion is expected to occur before mid October and is conditional upon theofficial execution of the deed of transfer before a notary in The Netherlands. Rationale for sale The Company acquired the majority of its Netherlands portfolio in 2005 fromNederlandse Aardolie Maatschappij BV ("NAM"), the Netherlands based jointventure between Exxon and Shell. The agreements allowed Northern to bring intoproduction undeveloped discoveries and pursue exploration opportunities. Sincethat time, the assets in The Netherlands have provided valuable cash inflow forthe Company from production and partial asset sales. The portfolio currentlyconsists of five producing gas fields onshore, one gas field offshore, forwhich Northern is receiving deemed production compensation, and two furtherpotentially commercial discoveries awaiting appraisal and development. Averageproduction for the six months to 30th June 2013, including the deemedproduction from P12, was 851 barrels of oil equivalent per day. The NPN portfolio as a whole requires significant levels of capital to developand increase production to more material levels. Operations would furtherbenefit from being part of a larger group of assets with the associatedoperating and drilling synergies. Without these levels of required investment,which are currently beyond the capacity of the Company, the net economicbenefits to Northern are reducing and therefore the time is right to conclude asale. Net Profit Interests The Papekop NPI grants Northern a 20 per cent interest in any net operatingprofit generated from the Papekop oil and gas discovery, if it is developed andbrought into production. This is calculated after the deduction of operatingexpenditure and the recovery of development expenditure. If the interest in thelicence is sold within one year, Northern will receive 80 per cent of theproceeds, after Vermilion has recovered its expenditure to that point. If theinterest is sold by Vermilion after one year, but before a field developmentplan is approved, Northern will receive 20 per cent of the proceeds after costrecovery by Vermilion and keep a 20 per cent net profit interest. The Posidonia NPI grants Northern a 10 per cent interest in any net operatingprofit generated from the production of oil or gas from unconventionalreservoirs, which is primarily the Posidonia shale sequence. This payment willbe calculated net of operating and development capital expenditure. Financial impact NPN produced approximately 95 per cent of the Company's total revenue of €12.4million for the 12 months ended 31 December 2012 and contributed approximately€2.5 million of profit after tax to the Company's net loss of €1.6 million forthe same period. As at 31 December 2012, the net assets subject of the sale hada reported book value of approximately €21.9 million. Following completion, itis expected that the sale will give rise to a book loss in the Group'sconsolidated accounts for the year to 31 December 2013. The pro forma cash balance of the Group calculated as if completion had takenplace on the 27th September 2013 would have been approximately €33 million. Itis anticipated that the majority of these cash reserves will be spent on theexisting firm and contingent financial commitments of the Company's remainingoperations and to meet the ongoing working capital requirements of thebusiness. An updated copy of the Group's corporate presentation reflecting the sale ofNPN will shortly be available on the Company's website. Keith Bush, Chief Executive Officer of Northern, commented: "The assets in the Netherlands have served the Group well in providing cashinflow over the last six years, but the time is now right to conclude a sale.The completion of the sale will represent the achievement of the first of threekey objectives we set ourselves in August this year. Our attention will nowturn to realising some of the significant latent value held within theCompany's Southern Adriatic licences and the testing of our redevelopment playin Canada." - Ends - For further information please contact: Northern Petroleum Plc Tel: +44 (0)20 7469 2900 Keith Bush, Chief Executive Officer Nick Morgan, Finance Director Graham Heard, Exploration and Technical Director Westhouse Securities (Nomad and Broker) Tel: +44 (0)20 7601 6100 Richard Baty - Corporate Finance Ian Napier - Corporate Broking FTI Consulting Tel: +44 (0)20 7831 3113 Billy Clegg, Edward Westropp Bishopsgate Communications Tel: +44 (0)20 7562 3350 Nick Rome, Anna Michniewicz Note to Editors: Northern is a full cycle oil and gas company currently holding numerouslicences in a number of low risk areas and is continuing with its strategy ofadding and securing value for shareholders as it engages with projects at allstages of the E&P value chain. Comprehensive information on Northern and its oil and gas operations, includingpress releases, annual reports and interim reports are available fromNorthern's website www.northpet.com