ATI Oil, Northern Sign Exploration License Agreement

Northern has signed a binding Heads of Agreement with ATI Oil Plc, the principle terms of which are as follows:

  • A subsidiary of ATI will assign to Northern Petroleum (UK) Limited ("NPUK") its entire economic interest in exploration licenses G.R17.NP, G.R18.NP, G.R19.NP, G.R20.NP, G.R21.NP and G.R22.NP in exchange for a 1.5% gross overriding royalty over 30% of NPUK's post farm-out percentage in the six licenses;
  • A subsidiary of ATI will assign to Northern Petroleum (UK) Limited (“NPUK”) 40% of its economic interest in exploration license C.R147.NP, reducing its economic interest to 10%; and
  • Northern will extend the existing £2 million loan facility to ATI until December 31, 2011 at a fixed interest rate of 8.125%.

Relationship between Northern and ATI

Northern currently has a 37.05% shareholding in ATI and Derek Musgrove and Chris Foss, directors of Northern, are also directors of ATI. The Directors of Northern who are independent of ATI, having consulted with Northern’s nominated adviser, Investec, consider the provision and terms of the agreement are fair and reasonable insofar as Northern's shareholders are concerned.
 

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