Northern Petroleum Plc announced an agreement to farm-out to Orca Exploration Group Inc. (Orca) an interest in the Longastrino Permit in the eastern part of the Po Valley Basin, onshore Italy.
Under the terms of the farm-out agreement, Orca will pay 100% of the costs of the first well up to Euro 4.3 million and 70% thereafter to complete the drilling phase. If the well is tested and completed, then Orca will earn an additional 5% by paying 100% of the testing costs up to Euro 1.3 million and 75% thereafter. Orca will also pay back costs of Euro 0.6 million. Northern’s equity will reduce to 30% during drilling and then by a further 5% if the well is flow tested in which case Northern will retain 25%.
The principal target within the Longastrino Permit is the La Tosca prospect. The prospect is just 2 kilometres to the northeast of the Alfonsine gas field and the 3-D seismic that covers the prospect shows a well defined seismic amplitude anomaly within the mapped closure. The La Tosca-1 well will be drilled to an estimated total depth of approximately 2,500 metres. The well is scheduled to be drilled in 2011.
In Italy Northern has pursued a focussed approach to licencing and now holds 14 permits and 22 applications and established a position of strength. Using modern 3D seismic, Northern has interpreted the La Tosca prospect, with 45 billion cubic feet of gross mean prospective resource. Work is being progressed to secure a well site from which to drill the well for this farm-out. The drilling of the La Tosca prospect will target an upside of 85 billion cubic feet gross prospective resource of gas.
Northern will be the Operator during the drilling and testing phase and Orca will assume Operatorship of the permit thereafter.
Graham Heard, Exploration & Technical Director, Northern, stated:
“We are delighted to welcome Orca as a new partner and to this permit. This third farm-out in Italy is part of Northern’s ongoing farm-out campaign which to date has involved eight permits. We look forward to further farm-outs.”
David Lyons, Orca Exploration Chairman and CEO added:
“Orca is delighted to be partnering with Northern Petroleum drilling the La Tosca well. We see this as a low risk exploration opportunity in a proven hydrocarbon basin with significant upside potential. This acquisition is Orca’s second entry into Italy which we believe has substantial reserves and has been overlooked by the major players.”
Orca Exploration is an international public company engaged in hydrocarbon exploration, development and supply of natural gas in Tanzania and the development of high potential oil and gas exploration, appraisal and production opportunities in Europe, the Middle East and Africa. Orca Exploration trades on the TSXV (Toronto Stock Venture Exchange) under the trading symbols ORC.B and ORC.A.
The transfer of licence interests and Operatorship will be subject to approval by the government and regulatory ministries of Italy.
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.
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