Northern is pleased to provide shareholders with the following update on its operations in The Netherlands.
The wholly owned subsidiary, Northern Petroleum Nederland B.V. ("NPN"), has been advised by the Ministerie van Economische Zaken ("the Ministry") that there will be a 40% State participation by EBN in the Andel III Production License. The Andel III license will run for 30 years from November 19, 2008. Such participation by EBN will be on the basis of being a fully paying partner in all respects from notification, and payment of applicable back costs, including their pro rata share of the costs of Ottoland 1z well drilled during the second quarter of 2007.
As anticipated NPN will now hold a 45% interest in Andel III, with Dyas B.V. holding the remaining 15%. These revised interests are in full alignment with the existing joint ventures at Papekop, Drenthe III and Drenthe IV. The entry of EBN into these projects has no impact on Northern's declared reserves, as these have always been prepared on the working assumption that EBN would participate in Andel III.
The Andel III license contains the Brakel, Ottoland and Wijk en Aalburg fields that Northern secured under the terms of its 2005 agreements with NAM. It also contains the Nieuwendijk exploration prospect, targeting 56 million barrels of oil in place, which is planned to drill in the first quarter of 2009.
Operations towards Production
The well service program commenced ahead of schedule in late October and operations have been successfully completed at both Wijk en Aalburg and Brakel. The workover rig is currently at the Grolloo location.
Operations to fracture the reservoir at Wijk en Aalburg, commenced on Monday, December 1. The frac operation has been successfully completed and the well is being cleaned up prior to flow testing.
The five well frac program has been designed to determine the possibility of increasing the planned initial production rates and the results will be used to form the basis of gas and oil sales contracts.
It has become clear the credit facility between NPN and Standard Bank Plc announced in March 2006, which NPN has yet to draw upon nor planned to until well into 2009, is no longer practical or essential. Northern has a strong cash position and is debt free.
The change of several field development project structures from electricity sales to gas sales to increase profitability has altered the security profiles for the projects. Both companies are working together on a replacement facility to be in place prior to significant field development expenditures being incurred.
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