Junior oil and gas firm Northern Petroleum reported Tuesday that it has agreed to sell its Netherlands subsidiary to Vermilion Energy for $26.7 million.
The deal will also see Northern receive a 20-percent interest in any net profit generated from the Papekop oil and gas discovery, onshore Netherlands, if it is developed and brought into production. The firm will also receive a 10-percent net profit interest over any future production from unconventional reservoirs that lie primarily in the Posidonia shale sequence.
Northern said its rationale for the sale was based on the cost of developing and increasing production of its Netherlands portfolio to more material levels. This portfolio currently consists of five producing gas fields onshore and one offshore gas field. Average production from these fields during the six months to June 30 was 851 barrels of oil equivalent per day.
Northern said that the required investment to develop the fields further is currently beyond its capacity.
Northern CEO Keith Bush commented in a company statement:
"The assets in the Netherlands have served the group well in providing cash inflow over the last six years, but the time is now right to conclude a sale. The completion of the sale will represent the achievement of the first of three key objectives we set ourselves in August this year. Our attention will now turn to realizing some of the significant latent value held within the company's Southern Adriatic licenses and the testing of our redevelopment play in Canada."
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