Northern Petroleum reported condensed interim results for the six months ended June 30, 2010.
Richard Latham, Chairman said, "The Board is committed to continue delivering greater production and increase asset value within the strategy of operating in areas of low risk and obtaining and developing concentrated license positions gaining high quality prospects without paying high entry costs. It is determined to accelerate growth and delivery of improved value for shareholders. I feel that Northern's strong asset base has, and will continue to be, steadily transformed into production and asset sales income."
This year has been one of steady progress in continuing the development of new production in The Netherlands. Gas production has started from the Brakel field. Production from Wijk en Aalburg will be next and with that we look forward to a forecasted production rate of 2,265 boepd. These are the third and fourth fields that the Group is developing of the six planned, following the 2005 deal with Nederlandse Aardolie Maatschappij (NAM) which assigned five discoveries to Northern.
There is no doubt that in successfully working to meet the environmental considerations and requirements of our neighbors our corporate timelines have been impacted. However, the Board is proud of the completion of new field developments and remains focused on growing production further in due course.
Throughout this period progress has been made, and thereby value added, through the de-risking of a number of exploration prospects. With its greater potential impact, we have continued our work to develop oil and gas exploration plays and prospects on a regional scale. The definition of drilling prospects in both the Southern Adriatic and, with the benefit of the new 3D seismic, in the Thrust and Fold belt offshore Sicily alongside our partner Shell Italia, are a priority for the next twelve months. New prospect defining work in the Southern Adriatic (Italy), Longastrino (Italy), Utrecht (NL), Oosterwolde (NL) and Guyane Maritime licenses has resulted from this regional exploration assessment. The Carboniferous formations in the north of The Netherlands in the Drenthe III License contain multiple targets across a series of prospects, and we are proposing to test the suspended Tiendeveen-1 well drilled in the same license last year. Sales and farm out discussions continue to make progress. In the La Tosca case agreement is likely to be reached, with drilling of the 44bcf prospect planned for 2011. Offers have been received from third parties to purchase other Italian and UK assets. These offers have not been accepted as the Company continues to seek better value for our shareholders.
Italian Environment Ministry legislation preventing near shore drilling is expected to only have minor effect on our core Southern Adriatic prospects and offshore Sicily areas. Suspension of permits C.R146.NP and C.R147.NP has now been confirmed by the Italian authorities.
The Markwells Wood-1 well is planned for drilling later this year with Havant-1 likely to follow on. Other interesting developments in the UK have been the progress towards drilling a well to appraise the Baxter Copse oil discovery and the identification of a seemingly suitable site to drill a well to test and appraise the Hedge End-1 oil discovery. The Guyane project has seen the entry of both Shell and Total subsidiaries, and the completion of a 2,500 km² 3D seismic survey. Tullow's expectation is for a first well to be drilled in Q1 2011. The recent emphasis has been upon identifying structures similar to the Jubilee Field in Ghana where the Operator, Tullow, has been successful.
There has been a substantial increase in revenue to EUR 7.01million, up 150% on comparative period, and the Company consequently reports pre-tax profits of EUR 2.29million compared to losses of EUR 0.53million in the first half of 2009. This improvement was the result of new gas production from the Grolloo and Geesbrug fields in late 2009. Total production for the half year was 214,000 barrels of oil equivalent. In the second quarter production was restricted by annual maintenance programs at both Grolloo and Geesbrug to coincide with NAM's annual shut downs. We look forward to improving revenue and cash flow profiles in the near term following new gas production from both Brakel and Wijk en Aalburg and given current - August 2010 - gas prices being achieved in excess of €5.60/mcf.
In June 2010 Northern successfully placed 11,764,706 new Ordinary Shares of 5 pence each at 85p per new Ordinary Share and raised £10.0 million (€12.2million) gross. The net proceeds of the Placing are being used to accelerate the development of the most attractive existing pipeline of projects the Group has in the Netherlands and Italy. These projects include the development of existing discoveries to increase production and the drilling of exploration prospects to maintain and increase reserves. Funds will also be used to acquire seismic data in Italy so as to improve the farmout terms and the potential of the Italian assets in order to bring them closer to drilling.
The management of Northern are very focused on this accelerated strategy for the future development of the business. Discussions in respect of reserve based debt finance secured against new production in the Netherlands are scheduled to continue now the Brakel gas field is on stream.
The Board is committed to continue delivering greater production and increase asset value within the strategy of operating in areas of low risk and obtaining and developing concentrated licence positions gaining high quality prospects without paying high entry costs. It is determined to accelerate growth and delivery of improved value for shareholders. I feel that Northern's strong asset base has, and will continue to be, steadily transformed into production and asset sales income.
After the half year end, Nigel Wright who joined as Finance Director on April 12, 2010 left the Company. Chris Foss has re-assumed these responsibilities providing us with continuity which is much appreciated. The Board considers that this change will have no material impact on the Company.
None of the achievements of the first half would have been possible without the dedicated endeavors of my executive colleagues and staff. I would like to take this opportunity to thank them for their hard work.
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