The exercise of these three options brings the number of discoveries that NPN has committed to under the Agreements to five following the earlier exercise of the options over the Geesbrug and Ottoland discoveries as announced on August 12, 2005.
NAM will now arrange the license split and assignment of its participating interest in the three committed discoveries to NPN who will immediately assume operating responsibility after receipt of government approvals. The discoveries are in two onshore part-areas within the Drenthe License and the Andell II License, which is close to the Papekop discovery for which the Netherlands Mining Council ("Mijnraad") has recommended the award of a production license to NPN.
Under the Agreements, NPN will also farm-in to an onshore exploration part-area, in the Andel II License, and has agreed a two month extension to its option with NAM on the Schagen prospect during which time NPN will complete its due diligence. NPN will earn 50% of NAM's interests by drilling and covering the combined NAM and NPN expenses of one exploration well in each part-area and will subject to Government consent assume operatorship of the Andel II exploration part-area. The Agreements provide for NPN to recover all dry hole costs out of the pre-tax revenues from future discoveries and share the profits from the jointly held stakes with NAM on an equal basis.
NPN estimates the unrisked gross in-place volumes of the identified oil and gas prospects within the Andel II part area to be between 55 and 130 billion cubic feet of gas and 62 and 148 million barrels of oil. NPN estimates unrisked gross in-place volumes of gas in the remaining option to be between 200 and 270 billion cubic feet.
Derek Musgrove, Managing Director of Northern, commented:
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