Dyas to Acquire Stake in Dutch Licenses from Northern

Northern Petroleum Nederland B.V., a subsidiary of Northern Petroleum Plc, has signed a binding Heads of Agreement (HOA) with Dyas B.V. under which Dyas will acquire a quarter of the Northern Petroleum Nederland B.V. interests in six oil and gas discoveries and three exploration wells.

In exchange, Dyas B.V. will transfer a 23.6% interest in the producing gas field in block P12, a 30.4% interest in two gas discoveries in the Zuid Friesland permit and pay Euro18million in cash. Northern Petroleum Nederland B.V. will retain a 5% overriding oil production royalty over part of the transferred oil reserves in the Ottoland and Papekop oil fields.

Under a separate Strategic Alliance Agreement both companies will work together to identify and pursue new business opportunities in mutually agreed regions of the world excluding all existing licenses and applications. Northern Petroleum Plc will be the management company, Operator, for the Strategic Alliance. Under the terms of this agreement in addition to the Dyas pro-rata share of costs, Northern will receive payments of Euro14 million commencing on signature and over a period of three years, for Northern's proprietary knowledge.

Dyas B.V. - Northern Petroleum Nederland B.V. Agreement Highlights:

  • Dyas B.V. ('Dyas') will transfer to Northern Petroleum Nederland B.V. ('NPN') its participating interest in the offshore P12 production license (23.6%) Dyas will retain full economic rights to the prospect MB3 in P12.
  • Dyas will transfer the onshore Zuid Friesland II Exploration License (30.4%). retaining a net profits interest of 50% after 130% pre-tax payback of all capital costs in two gas discoveries in Zuid Friesland II.
  • Dyas will pay a cash consideration of Euro18 million to NPN.
  • NPN will transfer to Dyas 25% of its post-State participation license interests at effective date. NPN will additionally retain an over-riding royalty of five percent (5%) commencing when the gross oil production exceeds 90% of the NPN Proven oil reserves; namely over 6 million barrels on Papekop and over 4.6 million barrels on Ottoland.
  • The P12 interest, for which Wintershall Nordzee is the operator, initially adds 1.6 mmscfd (280 boed) production and 1.2 bcf of proven developed reserves to NPN. The forecasted 2007 revenues and pre-tax cashflow are Euro2.6 million and Euro1.6 million, respectively, at present gas prices. Additionally, a drill-ready prospect exists 8km from the P12 platform with an un-risked gross gas in place calculated at 38 bcf.

The two onshore discoveries in Zuid-Friesland II have a combined gas in place of 108 bcf (32.8bcf or 5.5 million boe net to the interest) and are well suited to a gas-to-electricity development similar to those planned for NPN's other gas fields in The Netherlands.

  • The NPN properties in which a 25% interest is being transferred to Dyas are Andel III Exploration License (Andel VI, Brakel and Ottoland discoveries) Papekop Production License (Papekop discovery) Drenthe Production License Part Area (Geesbrug and Groloo discoveries)
  • The effective date of the Agreement is January 1, 2007 Dyas - Northern Strategic Alliance Highlights:

  • Dyas and Northern have agreed to combine efforts to target new business opportunities by license applications, farm-ins and acquisitions in an agreed geographical area excluding existing licenses and license applications and the Netherlands.
  • Northern has for some years been deploying its skills and resources on new business development and will take the operator and management company role.
  • The Strategic Alliance will have an initial period of 4 years and in consideration for the provision of know-how, database value and opportunities Dyas will make a total payment of Euro14 million over the alliance period to Northern and cover the Dyas pro-rata share of all costs.

Derek Musgrove, Managing Director of Northern, stated:

"The Netherlands HOA gives NPN a further 280boed to add to the 330boed acquired from Wintershall and two further onshore gas discoveries holding an estimated 32.8 bcf in place net to the 30.4% interest.

"I am sure that our ongoing development of the six oil and gas fields will benefit from having in Dyas another strong Dutch partner. It is pleasing that an experienced local company has recognized the value and potential of the N orthern projects at this stage of development and made a clear demonstration of their confidence in the NPN team's capabilities to put the fields into production.

"The Strategic Alliance combines two companies with complimentary skills and strengths that will enable Northern to seize opportunities to grow in other areas. The additional financial resources, added to approximately £ 13.5 million of cash currently in hand, ensures that we can readily continue to undertake the field development works in The Netherlands as soon as approvals are obtained and start to bring forward our activities in Italy."

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