Northern Petroleum announced that its wholly owned subsidiary, Northern Petroleum (UK) Limited, has farmed-out three of its Po Valley licenses in Italy, namely Savio, Cerasa and Longastrino, to Avobone Italy S.r.l., an Italian subsidiary of the Indofin Group, a private global investment company.
Under the terms of the farm-out agreements, Avobone will earn 20% in each license through payment of back costs to Northern and a promote on the first well in each license. In Savio and Longastrino, Avobone will pay 40% (i.e. a 20% promote) of the well costs and 30% in Cerasa. The benefits of the Agreements will be shared equally between Northern and a subsidiary of ATI Oil Plc.
The mean, combined and unrisked Prospective Resources of all mapped prospects in the three licenses is 750 bcf (100%) recoverable. The first well is Savio 1x which is currently planned to be drilled in the first quarter of 2009 and will test prospective horizons down to 3720m with mean Prospective Resources of 232 bcf, considerably higher than announced before as shallower secondary targets have not previously been included within our estimates. All necessary approvals for the well have been granted save the final environmental approval which is expected to follow in due course.
The Cerasa and Longastrino wells are shallower and the first well targets have mean Prospective Resources each of some 40 bcf recoverable. Drilling programs are in early stages of preparation.
Derek Musgrove, Managing Director, stated, "We are pleased to welcome Indofin as a new partner in three of our Italian licenses. This marks the completion of the first of several deals under discussion which I believe will demonstrate the prospectivity of the Group's Italian licenses. We perceived the potential of the Po Valley ahead of the new climate of gas oil prices and have been progressing these prospects for several years.
"The introduction of new partners is part of our risk management strategy ahead of production cash flow from the six oil and gas field developments in The Netherlands."
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