14th Jul 2008 07:00
14 July 2008 Northern Petroleum Plc ("Northern", "the Group", or "the Company")
‚£10 million deal for sale of interest in Underground Gas Storage Application
Northern Petroleum Plc (AIM:NOP), an oil and gas production, development, exploration and asset trading company, announces the sale of its entire interests in the Waalwijk underground gas storage ("UGS") projects to Star Energy Group Plc ("Star"), a subsidiary of Petronas International Corporation Limited, for a consideration of up to ‚£10 million. The Group's oil and gas interests within the Waalwijk licence area remain unaffected by this transaction.
Northern will receive an initial consideration of ‚£7 million upon completion. Further payments of ‚£2 million and ‚£1 million will be made upon the Final Investment Decisions ("FID") being taken on UGS projects in the northern and southern parts of the Waalwijk licence respectively.
This transaction has also released Northern from the ¢â€š¬4.5 million contingent consideration due to Wintershall Noordzee B.V. ("WINZ") under the terms of the agreement with WINZ in the event of FID being made before August 2012 on a UGS project within the Waalwijk licence area.
The sale involves Northern selling its entire shareholding in Gas Storage Limited and Overseas Gas Storage Limited ("OGS") to Star, and replaces the Heads of Agreement entered in to by Northern and Star on 2 April 2007 for the sale of OGS. Completion will be achieved when Northern's guarantees to the Ministry of Economic Affairs are replaced by those of Star.
Derek Musgrove, Managing Director, commented:
"Northern acquired the UGS projects from Wintershall at the time of the purchase of their interest in the producing gas and condensate field which is still retained and continues to be managed by Northern. The total purchase price paid in 2007 by Northern was ¢â€š¬0.5 million. Last year the free cash flow from gas and condensate production was ¢â€š¬1.9 million.With our remaining interest in the Waalwijk field we look forward to continuing gas production at currently higher gas prices and progressing with the enhanced condensate recovery project.
"The UGS projects are non-core assets which would not have generated positive cash flow for five years at the very least and would have required at some point the diversion and investment of very considerable funds. The profits from the sale can rapidly be deployed on other projects which we believe have the potential to generate more substantial gains for shareholders in the short and medium term.We wish Star and Essent Energy Gas Storage B.V. every success in developing UGS stores at Waalwijk."
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 5000
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