14 Dec 2010 07:00
Embargoed for release: 07.00 on 14th December 2010
Northern Petroleum Plc ("Northern" or "the Company") Update - Drilling, Testing and gas price increases
Northern Petroleum Plc (AIM:NOP), is pleased to provide an update on its activities.
Financial:
* Revenues from the Group's rising gas production levels are being further enhanced by a continuing improvement in Dutch gas prices, between €0.221 to €0.240 per normal cubic metre, or approximately $7.94-$8.62 per thousand cubic feet ("mscf") being achieved in November 2010. * The Board of Northern Petroleum Nederland B.V. ("NPN") has temporarily put on hold discussion of a reserve based loan with its preferred lead arranger, a major European bank. It is anticipated that discussions on a production based facility better suited to both NPN and the Group's needs will re-commence in the New Year following start up of production at Wijk en Aalburg. * The Group remains debt free and had a cash balance of approximately €22.5 million as of 1st December 2010. The bulk of expenditure since mid year, when the Group's cash balance was €25.8m, has been spent towards bringing Brakel and Wijk en Aalburg into production. Operations:The Netherlands * The development of the Wijk en Aalburg (NPN 45%) gas field is on schedule to commence production in Q1 2011. A gross initial production rate of 150,000nm³/day (5.58 million standard cubic feet "mmscfd") is projected (433 barrel of oil equivalence ("boepd") net to Northern). Wijk en Aalburg will be the fourth gas field developed by Northern as part of the 2005 deal with NAM, the joint Shell-ExxonMobil company. When production from Wijk en Aalburg is on-stream, and is added to the four operated and one non-operated gas fields already in production, The Netherlands' daily production rate net to Northern is forecast to be 2,200-2,300 boepd. This will be augmented by condensates produced at the Waalwijk, Brakel (NPN 45%) and Geesbrug (NPN 45%) fields. * The operations for the hydraulic fracturing and testing of the Tiendeveen-1 exploration well have commenced. * The Grolloo-1 (NPN 45%) well work-over has been completed and the field came back on stream on 17th November 2010. * Planning for the proposed multi-well development of the Geesbrug gas field has commenced for the first of the new higher angle wells that will have multiple hydraulic fractures, and is planned to be drilled from the existing drill site in 2011. The remainder would be completed as planning issues permit over the next 3-4 years. * Northern is proceeding with regulatory and planning applications required to drill in 2011 the North Ottoland prospect in the Utrecht (NPN 60%) licence, which will test and potentially develop a contingent gas resource of 1268 million Nm³ (47 billion normal cubic metre ("bcf"). * The production test of the Ottoland (NPN 45%) oil well awaits planning approvals but is scheduled for 2011. Development design will be initiated following the test results. * It is expected that the drilling and testing of a new development well in the Papekop (NPN 45%) oil field will also take place in 2011. Preparatory work continues as planning aspects related to traffic and road construction issues are being resolved. * Reprocessing and then re-interpreting of the 3D seismic data over the Andel III (45%), Drenthe III (45%), Oosterwolde (60%), Engelen (60%), Utrecht and Papekop licences is underway. This work is necessary to confirm future development well locations and exploration prospects for drilling in 2012 and beyond.
Italy
* As previously reported, the legislation banning most of the drilling within up to 12 nautical miles off the coast, and not deepwater drilling as has been incorrectly reported elsewhere, has had only a small effect on the Company's assets. Most of Northern's permits and applications are in deeper water and further offshore. Unlike several other companies Northern does not expect this new legislation to impact upon its reported reserves or materially affect its two key core areas of the Southern Adriatic and Thrust and Fold Belt offshore west of Sicily. * In the Thrust and Fold Belt core area offshore Sicily, alongside joint venture partner Shell Italia, the (1520km²) 3D seismic evaluation continues with a decision to drill required before the end of Q1 2011. * The farm-out of the La Tosca Prospect (Longastrino licence) in 2011 with Orca Exploration Group Inc. has been announced and the well is scheduled to drill in 2011. The La Tosca prospect is estimated by Northern to have 45 billion cubic feet ("bcf") of gross mean prospective resource and will target an upside of 85 billion cubic feet gross prospective resource of gas.
UK
* The Markwells Wood -1 (Northern 50%) well was spudded on the 21st November 2010. As at on 13th December the directional drilling of the 12 1/4" hole and the electric logging programme had been successfully completed. The rig is currently preparing to run the 9 5/8" casing.
Guyane
* As advised by the Operator Tullow, the anticipated timing for drilling of the first well, Zaedyus, remains the first quarter of 2011. Ensco plc announced on 1st December that one of its subsidiaries had sublet the ENSCO 8503 to the Tullow led joint venture, a new ultra-deepwater semisubmersible drilling rig that recently mobilised to the U.S. Gulf of Mexico. ENSCO 8503 is scheduled to begin sea trials shortly. * Shell France has taken up an option to increase its interest in the licence to 45%, with Tullow consequently reducing its interest to 27.5%. Total remains at a 25% interest with Northern having a net beneficial 1.25% interest.
Derek Musgrove, Managing Director, commented:
"The Company is establishing higher gas production levels in The Netherlands at a time of higher gas prices being realised. This supports our strong balance sheet. It is clear that the Company has improved in strength during 2010. We must now build upon this base.
One important challenge is to drill and realise the very large potential of some of our projects offshore Italy. In the short term those are the Thrust and Fold Belt permits where we are operating with Shell Italia, CR146 with an internally estimated billion barrels plus sized prospect and CR147 which our exploration team consider has been made more attractive by the Lambouka discovery recently announced by ADX Energy in nearby Tunisian waters. The farmout processes for both CR146 and CR147 continue."
Glossary
3D - three dimensional (in relation to seismic surveys)
P2 - Proven plus Probable reserves
bbl - barrel(s) of oil
bscf - billion standard cubic feet
boe - barrel(s) of oil equivalence
boepd - barrel(s) of oil equivalence per day
cf - cubic feet
km, km² - kilometre, square kilometres
mmcfd - millions of cubic feet per day (of gas)
mscf - thousand cubic feet
Nm - normal metres
Probable - Probable reserves are those unproved reserves which analysis of geological and engineering data suggests are more likely than not to be recoverable in this context and when probabilistic methods are used, there should be at least a 50 per cent probability that the quantities actually recovered will equal or exceed the sum of estimated proved plus probable reserves.
Proved - Proved reserves are those quantities of petroleum which, by analysis of geological and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under current economic conditions.
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 35 years experience as a petroleum geologist. He has compiled, read and approved the technical disclosure in this regulatory announcement. The technical disclosure in this announcement complies with the SPE/WPC standard.
- Ends -
For further information please contact:
Northern Petroleum Plc Tel: +44 (0) 20 7469 2900 Derek Musgrove, Managing Director Chris Foss, Director of Finance, Legal & Corporate Affairs Graham Heard, Exploration & Technical Director
Sophie Hull, Head of Corporate Communications
Cenkos Securities (NOMAD and Joint Broker) Jon Fitzpatrick Tel: +44 (0) 20 7397 8900 Ken Fleming Tel: +44 (0) 131 220 6939 Jefferies International (Joint Broker) Tel: +44 (0) 20 7029 8000 Chris Snoxall Financial Dynamics Tel: +44 (0) 20 7831 3113
Billy Clegg / Edward Westropp
Bishopsgate Communications Tel: +44 (0) 20 7562 3350
Nick Rome / Michael Kinirons
Notes to Editors:
Northern Petroleum Plc (NOP) is an oil and gas company with exploration, development and production assets in the Netherlands, Italy, UK and Guyane. The Company's strategy is to acquire low entry cost exploration, production and development assets. Through undertaking geological, geophysical and engineering work, Northern adds value to shareholders from production and asset sales.
Northern has total P2 reserves of in excess of 102 million barrels of oil equivalent ("mboe"). In The Netherlands, where Northern has P2 reserves of 42.5 mboe, Northern has five gas fields in production. In Italy, where Northern has P2 reserves of 53.16 mboe, Northern is partnered with Shell and is pursuing a farm-out strategy. In the UK, Northern has 7.02 mboe of P2 reserves. In Guyane, Northern is partnered with Tullow, Shell and Total. Northern's reserve position is detailed within the Company's 2010 Interim Report dated 29th September 2010 which is available on Northern's website.
Northern is well capitalised, has a track record of partnering with oil majors and is run by a senior and experienced management team.
Once Wijk en Aalburg is brought on production, Northern is forecasting a production rate of between 2,200-2,300 barrels of oil equivalent per day. This rate of production will increase as additional oil and gas fields in the Netherlands come on stream.
Northern is listed on the AIM market of the London Stock Exchange.
www.northpet.com
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