4 Dec 2008 07:10
Embargoed for release: 0710 on 04 December 2008
Northern Petroleum Plc ("The Group" or "the Company") Sicily Channel Farm-outs
Northern Petroleum Plc announces that its wholly owned subsidiary, Northern Petroleum (UK) Limited, ("Northern") has farmed out six of its offshore Sicily Channel licences in Italy, namely GR17-NP, GR18-NP, GR19-NP, GR20-NP, GR21-NP, GR22-NP ("Sicily Channel Licences"), to Shell Italia E&P S.p.A ("Shell").
Under the terms of the farm-out agreement ("Agreement"), Shell will earn 55% in GR17-NP, GR18-NP and GR19-NP; and 70% in GR20-NP, GR21-NP and GR22-NP. Shell will pay 100% of Northern's back-costs on these licences of ¢â€š¬1.9 million and pay for 100% of the Q4 2008 reprocessing, the 2008/2009 2D seismic programme and thereafter two 3D seismic surveys if proposed by Shell and the optional drilling and testing of the first well.
Northern will remain the Operator during the initial seismic phase and Shell will assume operatorship for the drilling phase.
The unaudited, mean, combined and unrisked Prospective Resources of all mapped prospects in the six licences from the present limited seismic data base is estimated by Northern at 1.9 billion barrels (100%) recoverable.
The tender process for the winter 2008/2009 2D seismic campaign is well advanced with negotiations underway with the preferred contractor.
The Agreement with Shell also envisages that Northern and Shell will hold further discussions on expanding the partnership in Italy.
The transaction is subject to approval by the government and regulatory ministries of Italy.
Derek Musgrove, Managing Director, Northern, stated:
"We are delighted to welcome Shell as a new partner in our offshore Sicily Channel licences. Shell will bring to the project Italian thrust belt and production experience, in addition to its international major project and deepwater expertise."
This marks the completion of a second Italian deal in recent months further demonstrating the prospectivity of the Group's Italian licences. The indicative gross estimate of the optional work programme that Northern will be carried on for its share up to the point of earn in by Shell on this acreage is in excess of ¢â€š¬100 million.
In 2003, we perceived the potential of the thrust belt play in the Sicily Channel ahead of the new climate of gas oil prices and have been progressing these licences for several years. The area under licence in the Sicily Channel is 4367 km2 (equivalent to about 20 North Sea blocks) and if drilling is successful it could open up a new Western European hydrocarbon province."
Jean-Pierre Tallon, Relationship Manager and Country Chair, Shell Italia E&P, commented:
"Shell is pleased to join Northern Petroleum in this venture which extends our relationship beyond the ongoing co-operation in the Netherlands. Shell is committed to its Italian business and we are delighted to be furthering this with a return to offshore exploration in the country.
We view the Sicily Channel acreage as having significant potential and see this as an excellent opportunity to leverage our geological and operational knowledge of the Italian thrust belt in a new theatre of activity."
About Shell Italia E&P S.p.A
Shell Italia E&P is a wholly owned indirect affiliate of Royal Dutch Shell plc. It is one of Italy's largest producers with a stake in the Val d'Agri field (Eni operated). Shell also holds a participating interest in the Tempa Rossa field (Total operated), which is under development in Basilicata, where the greatest onshore deposits in Western Europe have been discovered.
See http://www.shell.com/home/content/it-it/shell_for_businesses/ exploration_production/shell_enterprise_0319.html
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 and Technical Director of Northern, Mr Graham Heard CGeol FGS, who has over 30 years experience as a petroleum geologist.
For further information please contact:
Northern Petroleum Plc Tel: +44 (0) 20 7469 2900
Derek Musgrove, Managing Director
Chris Foss, Finance Director
Graham Heard, Exploration & Technical Director
Investec Tel: +44 (0) 20 7597 5000Michael Ansell / Patrick RobbBlue Oar Tel: +44 (0) 20 7448 4400Jerry KeenBishopsgate Communications (Press) Tel: +44 (0) 20 7562 3350
Nick Rome / Maxine Barnes
Buchanan Communications (Analysts) Tel: +44 (0) 20 7466 5000
Tim Thompson / Ben Romney
Notes to Editors:
Northern has recoverable Proven and Probable reserves of 76.5 million barrels of oil equivalence.
It is the Netherland's second largest onshore oil company in terms of oil and gas reserves, 45.5 million boe recoverable. It is currently producing gas at Waalwijk and the offshore P12 fields. The planned development of six onshore oil and gas fields is being progressed through the Netherlands authorisation and planning processes. Partners in these projects include Dyas B.V., EBN and NAM (the joint Shell ExxonMobil company). Northern recently sold its interest in the Waalwijk UGS application for an overall consideration of ‚£10 million.
Northern manages the largest licensed exploration area in Italy, over 13,000 km ‚², predominantly offshore but includes seven licences in the Po Valley oil and gas province in the north of the country where the drilling of the Savio 220 bcf gas prospect is being progressed. Through its holdings in licences in the southern Adriatic covering the Rovesti and Giove oil discoveries it has net Probable oil reserves independently assessed at 26.6 million barrels recoverable.
Northern is also a significant holder of licences in the south of England where it has a 10% interest in the production from the Horndean oil field and a 5% interest in the Avington development.
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