Following the award of the Papekop Production License on 7th June 2006 the company's attributable proven plus probable reserves have now increased to 60.5 million barrels of oil equivalence ("boe").
Equal attention should be given to the exploration license position obtained through our agreements with Nederlandse Aardolie Maatschappij B.V. ("NAM") which we anticipate will be supplemented with the success of our three license applications. This would create a position of 2,080 square kilometers in what is the most southerly part of the North Sea Gas Basin, or approximately 10 UKCS full sized blocks, in which we have now mapped six prospects.
NAM will be drilling Steenwijk-1, a gas prospect with a gross target of 150-240 Bcf of gas in place in the eastern part of The Netherlands later this year. It will be a farm-in well under the terms of an agreement with NAM through which we will earn a 50% net profit interest.
We can now foresee the fulfillment of our ambitious strategy in Italy. When all the licenses are finally gazetted we will have established ourselves as the second largest exploration company in Italy in terms of licensed area under management. I ask you to note that most of the licenses were selected and applied for before the recent substantial increases in oil and gas prices. This is the result of an aggressive strategy to acquire offshore and Po Valley licenses in prospective areas. I expect to provide more news on Italy as field activity levels increase over the coming year.
Since the end of 2005 we have placed 15,384,616 shares to provide £19 million net and the Credit Committee of Standard Bank Plc ("Standard Bank") have agreed the terms of a project finance facility of up to €40 million, which will together finance the cash generating base in the Netherlands and allow us to move forward in Italy. In the competitive environment driven by higher oil and gas prices, I am delighted to have succeeded in attracting the highly experienced staff necessary to manage and execute our ambitions.
It is always a hard decision to sell producing assets but the sale of our assets in Spain was undertaken to enable our re-deployment into the Netherlands. This decision was, I believe, correctly taken on the grounds of the materiality of the added value potential in return for the financial and human resources deployed. We wish much success to the buyers, particularly as Northern has retained a 1.25% gross overriding royalty over the three exploration licenses. We also have gained valuable experience during our period of tenure in Spain and realized a profit on sale of £419,000.
In the South of England activity now moves forward to the Weald Basin where attributed proven reserves have increased and an appraisal well and one prospect have been selected for drilling in the next year. One site is the mapped extension of a producing oil field on a license in which we hold a 50% interest. The drilling on the Isle of Wight last year was disappointing for our hopes in the Wessex Basin. We have absorbed the good points arising from sand prediction in Bouldnor Copse-1 and issues arising from now presumed bio-degraded oil at Sandhills. We have also taken note and are proud of the rapid improvement of drilling cost performance at Bouldnor Copse-1. In the shorter term the currently suspended Avington-3 well, in which we have a 5% interest, is to be tested.
While we should all take pleasure in the reporting of the significant proven plus probable reserve position of 60.5 million boe and look forward to placing the six fields onshore Netherlands in production, the real significance will be demonstrated as we build yet further on this income base to develop the projects that we already have in-hand in what would otherwise be a highly competitive market.
On the wider front we have been reported as having been recognized by Hemscott as the best performing Exploration and Production Company on AIM in terms of total shareholder returns over the three years to May 9, 2006, just before the subsequent change in market conditions. This progress has been made possible by the huge efforts over that period of the executive directors, staff and consultants. I also wish to acknowledge the support of Standard Bank and our new stockbrokers Investec Securities ("Investec") and Panmure Gordon & Co., who are achieving an ever wider recognition of Northern throughout the British and Netherlands financial communities. Of necessity John East & Partners have passed the role of Nominated Financial Advisor to Investec. They deserve the thanks of both the Board of Directors and shareholders.
Sadly, I must also say farewell to a friend, and director, David Roberts. In the low period for our Company in 1998 / 1999, he was one of a team that joined in refinancing and redirecting Northern towards the future we now see and aspire to. David earned the deep respect of the whole board for his knowledge of the oil business. His wisdom and friendship will be much missed. I am sure that we will achieve much on the path which we set out on together. He died on 8th April, 2006 and shall not be with us to see that which we are now doubly resolved to achieve.
There has been an increase to 60.5 million barrels of oil equivalent of independently reported Proven plus Probable reserves. This is as a result of re-evaluation work on the interest in five fields in The Netherlands acquired from NAM, the award of the Papekop Production License and work by ECL to re-examine the Weald Basin assets to reflect a $40/bbl oil price.
The main objective has been to create a viable presence in The Netherlands that in the near future will provide production income more than sufficient to fund a significant onshore exploration program in this lower risk proven oil and gas province. The first new activity will be the drilling of Steenwijk-1 currently scheduled for October 2006.
Also almost complete is the building of a major presence in Italy of 11,432 km², having under our management the second largest exploration area after ENI/Agip, based upon a strategy of revisiting past offshore discoveries and plays in the light of new technical capabilities and new economics. This is the implementation of a decision made some years ago to build on the greater potential of Italy rather than in the declining UK Sector of the North Sea and also to avoid the risks of the UK Government's multiple fiscal and licensing changes.
In the UK we have continued in the onshore South of England, concentrating on the appraisal of discoveries and exploration in the more mature Weald Basin following last year's unsuccessful campaign in the Wessex Basin. Avington-3 (5%) is soon to be tested and, as Operator, we are planning the drilling of two wells with a 50% interest.
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