The report, carried out by RPS Energy, a leading independent reservoir engineering consultancy group, has been completed for the Andel, Brakel, Geesbrug, Grolloo and Ottoland fields, but does not include the Papekop discovery for which Northern has applied for a Production License. The reserve estimates shown in the RPS report are based on the joint reserve and resource definitions of the Society of Petroleum Engineers, the World Petroleum Congress and the American Association of Petroleum Geologists.
These fields are all subject to agreements previously disclosed between Nederlandse Aardolie Maatschappij BV ('NAM') and NP Netherlands B.V. ('NPN'), a wholly owned subsidiary of Northern, which grant NPN commercial interests in the fields.
The reserves are stated gross. The license interests are subject to the Minister of Economic Affairs designating Energie Beheer Nederland B.V. ('EBN'), a State owned company, as a 40% participant in the field developments in return for a pro-rata share of sunk costs and a pro-rata share of all future costs of the joint ventures. The Northern interests are subject to a NAM 50% Net Profits Interest ('NPI') after NPN has recovered 130% of its capital costs.
The following results were obtained:-
Gross Reserves Proved Proved + Proved + Probable Probable + Possible Oil 6.3MMstb 11.6MMstb 19MMstb Gas 210.1 bscf 364.9 bscf 544.6 bscf
Derek Musgrove, Managing Director of Northern commented:
'RPS has confirmed our recognition and analysis of the reserve potential of the five fields and their report provides us with a solid foundation upon which to move forward.
Considerable technical effort has been expended by Northern to better integrate the results of the analysis of the detailed regional data by all the technical disciplines, in order to be able to provide this updated assessment of the reserve potential of the fields. The results represent a very sizeable upgrade, since our preliminary gross proved plus probable reserves assessment of 85 Bscf gas and 8 MMstb oil (as disclosed in the Operations section of the 2004 Annual Report and Accounts and shown net of possible EBN back-in and further discounted by 50% to illustrate the NAM NPI).
The upgrade has been largely possible thanks to our regional approach and the support of the latest software programs, enabling a better understanding of the results from the original discoveries. Further improvements in reserves have also come from the increase in commodity prices, which improve the economics and enable more reserves to be extracted profitably, and our proposed utilization of the latest efficient small gas generators being utilized within our development plan.
With both the ongoing market deregulation in the EU and higher energy prices, Northern believes that the electricity generation model will become increasingly prevalent in the development of smaller onshore gas fields.
The procedure for the transfer of the license interests is progressing as normal through the relevant authorities.
We are excited about the outcome of this report and look forward to progressing as quickly as possible towards first production and to becoming a fully integrated Netherlands exploration and production company.'
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 Manager of Northern, Mr Graham Heard BSc (Hons), who has over 30 years experience as a petroleum geologist.
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