Northern Reports Dutch Duster

Northern Petroleum Plc said that the Steenwijk-1 exploration well onshore Netherlands, drilled in partnership with the joint Shell and ExxonMobil subsidiary Nederlandse Aardolie Maatschappij B.V., ('NAM'), has not encountered significant hydrocarbons in the Rotliegendes sandstone, the primary objective.

The well was deepened into the Carboniferous but did not encounter hydrocarbon-bearing intervals from the objective depth to a total depth, which was determined by operational constraints. Therefore, the decision has been made to plug and abandon the well.

Northern reported that the well was drilled in 20 days, operationally considerably ahead of schedule and at an expected cost significantly under that budgeted.

Steenwijk-1 was the first of four exploration wells to be drilled in partnership with NAM, a partnership that also includes the development into production of five oil and gas discoveries. Under the terms of its agreements with NAM, Northern is entitled to recover the dry hole cost of the Steenwijk-1 well out of the pre-tax revenues from future discoveries before sharing the profits with NAM on an equal basis.

Derek Musgrove, Managing Director of Northern, stated:

"The drilling of the Steenwijk wildcat exploration well was always viewed as part of the 'consideration' for the wider deal with NAM to acquire five onshore Netherlands oil and gas fields. We will now move on from this result to drill the first of these five fields scheduled for development to production for which our plans are at an advanced state and a rig contract is due for signature shortly. There are no implications resulting from Steenwijk-1 which impact on the field developments save the potential benefits of cost saving experiences."