Northern Petroleum has said that as part of a corporate review it may potentially sell its Netherlands asset portfolio.

The news comes as the company announced plans to enter Canada and upgraded the resource estimate at a prospect in Italy.

Potential sale of operations in the Netherlands

The group has received a number of expressions of interest in its Netherlands assets and has held extensive negotiations with two parties in exploring ways to achieve the greatest value for shareholders, resulting in two non-binding indicative offers for the UK holding company of the Netherlands subsidiary and one such offer includes the UK assets.

The party with the more attractive offer has requested that at this stage prices in the package not be disclosed until a binding agreement is reached, the group said.

Plans to enter Canada

Northern Petroleum has initiated a new light oil production redevelopment project in northern Alberta, Canada, and to date has acquired over 5,300 acres, which have the estimated potential to yield in excess of a further one million barrels of extra production from an estimated original 36m barrels of oil in place.

Derek Musgrove, Managing Director of Northern, said: "These new moves are part of the continued implementation of the basic strategy
of the company. They conform to the requirements of a low acquisition cost, the potential addition of material value and consideration of full or partial disposals to finance growth and continuance of activities over the longer term.

"It is a simple understanding that the faster the cycle of investment and return, the greater the corporate growth rate. I know that the board and all shareholders have been disappointed by the pace of progress caused by bureaucracy and restrictions of process. However, I am sure that these new moves will increase activity and aid growth in a timely manner to the benefit of shareholder value."

Resource upgrade in Italy

The group also announced that the Cygnus prospect offshore Italy has now been mapped as an estimated unrisked prospective resource of up to 790m barrels of recoverable oil within the group's wholly-owned permit.

The prospect is next to a producing oil field, known as Aquila, and has a prospective resource estimate based on Cygnus shares a common oil water contact with this field. Mapping of the available data did not find a barrier between the two areas.

If Cygnus is proven to have the same oil water contact as the Aquila oil field, it is the knowledge of the deeper oil water contact that increases its estimated prospective resource.

The analysis of the data recognised that it is possible for the Aquila field to be in charge communication with the Cygnus prospect and therefore have a common oil water contact with the Aquila field. This results in a high (P10) case of 978m barrels, with 790m barrels in Northern's permit.

A mean prospective resource of 446m barrels has been estimated, of which 401m barrels is within the permit and the remainder beyond the permit boundary.

Derek Musgrove, the Managing Director of Northern, said: "This project is materially valuable to shareholders and our efforts in Italy have now been concentrated upon this. Discussions are currently progressing with major industry partners to join with Northern to drill the prospect.

"The availability of the new Aquila well data has greatly increased our confidence levels in the Cygnus prospect."

The share price fell 6.42% to 09:25.

NR

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