15th Feb 2007 15:00
Embargoed for release: 1500 on 15 February 2007
Northern Petroleum Plc ("The Company" or "Northern") Netherlands - Development Update
Northern Petroleum Plc, the oil and gas production, development and exploration company with core interests under its management in The Netherlands, Italy and the United Kingdom, announces updated development plans for six oil and gas fields in The Netherlands. First production is delayed and now targeted to come on-stream in stages between 2007 year end and March 2008. Forecasted production levels have been increased through the concentration of efforts on three fields. On-site operations are starting in early March 2007.
Highlights:
* The initial gross production level target has been increased to 2300 barrels of oil per day ("bopd") and 10 Mw of electrical generating capacity by the end of March 2008; * The three fields are projected to yield a total oil and gas income at a rate ahead of previous projections at that stage; * Brakel well has been scheduled to be re-perforated during early March 2007 and testing should be completed before the end of the month; * The Ottoland oil field lateral well has been scheduled to commence in early April 2007; and * Much of the pre-engineering design work on the fields has been completed to make the final planning and construction period as short as possible.
Northern Petroleum Nederland B.V. ("NPN") has now significantly redesigned and improved the development plans for its six onshore oil and gas fields in The Netherlands. NPN has taken advantage of the benefits of flexibility offered by a six field development project. Efforts will now maximise the potential of the projects where regulatory approvals are in place or are expected imminently, namely Brakel, Ottoland and Papekop.
The gross production level target has been increased to 2300 bopd and 10 Mw of electrical generating capacity by end of March 2008 from the originally targeted 1000 bopd and 40Mw of electricity generation capacity at the end of 2007. Higher profit margins should result.
The licences have been affected by the delays at the central level of administration caused by the recent rapid increases in licensing and field activities. Such delays have been more evident than those from shortages of equipment and services.
Two of the Andel licence fields are being tackled first: Brakel and Ottoland. The Brakel well has been scheduled to be re-perforated in early March 2007 and testing should be completed before the end of the month. The objective is to increase gas deliverability and triple on-site electricity generating capacity from 2Mw to 6Mw.
The contracted rotary drilling rig is currently scheduled to be on the Ottoland site in early April to drill the long lateral intersection of the Bunter sandstone oil reservoir. It is designed to provide a much enhanced rate of oil production. The timing of the rig arrival may vary, earlier or later, according to when the rig is released from its current operations.
Upon release from Ottoland the rig will be utilised on third party operations, following which NPN plans to exercise its option for a second well, Papekop-1z, subject to successful prior fulfilment of final permitting requirements.
As much pre-engineering design work has been completed as is efficiently practicable to make the final planning and construction period as short as possible. Advanced tendering and contracting of the longest lead time items is in progress, one factor successfully accommodated in the project re-structuring.
Under the revised development plan it is projected that the three fields will yield a total oil, gas and electricity income at a rate ahead of the previous projections for March 2008.
The transfer of the part of the Drenthe production licence to NPN is taking longer than previously expected as the old licence has to be amended in line with the post-2003 changes to the Mining Legislation. This has affected the timing for the development of the substantial Geesbrug gas field and Grolloo, but in the meantime much of the engineering design work has continued to minimise the potential for delays. The financial terms will be more favourable than under the old Drenthe licence. The development of these fields and the Andel VI discovery will follow as soon as possible.
Derek Musgrove, Managing Director of Northern, stated:
"I am pleased that our team has demonstrated a flexible response to non-operational delays. In part, this demonstrates the strength of a six field position and original production level plans which were not too ambitious in the first phase. The response to reinforce projects gaining progress on the administration and planning fronts with additional effort and resources has been the correct action.
"The fundamental value of the assets has not been impaired and oil, gas and electricity prices are still significantly ahead of our original forecasts."
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.
---ENDS---
For further information please contact:
Northern Petroleum Plc Tel: +44 (0) 20 7743 6080
Derek Musgrove, Managing Director
Graham Heard, Exploration Manager
Investec Tel: +44 (0) 20 7597 5000
Michael Ansell
Panmure Gordon & Co Tel: +44 (0) 20 7459 3600
Katherine Roe
Bishopsgate Communications Limited Tel: +44 (0) 20 7562 3350
Nick Rome / Maxine Barnes
Notes to Editors:
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 60.5 million barrels of oil equivalent and is currently working towards putting its six Netherlands development assets into production with the support of Standard Bank. Further information on Northern is available at www.northpet.com.
NORTHERN PETROLEUM PLCRelated Shares:
Cabot Energy