Northern Reports 2P Reserves Increase for Fifth Year Running

Northern Petroleum's booked reserves have increased for the fifth successive year. Northern now has 27.14 mboe proven and 49.41 mboe probable, 26.47% increase during the year notwithstanding the sale of 13.91 mboe of Netherlands reserves to Dyas B.V.

The significant increase follows the issue of independent engineering reports by Blackwatch Petroleum Services over the Giove and Rovesti discoveries in the Southern Adriatic, which now allows Northern to report 2P reserves in each of its three core areas of operation - The Netherlands, Italy and United Kingdom.

The 26.61 million of Italian reserves added during the year have been assessed by Blackwatch as having an NPV10 value of $305 million, assuming a $70 per barrel price for Brent crude oil, and prior to examining financing options or leasing of FPSOs, the main capital expenditure item.

During 2007, Northern acquired its first production in the Netherlands, with revenues from the Waalwijk and P12 fields of $8.2 million, approximately 10% above expectation. Northern formally took over the Waalwijk field on August 1, 2007, and following its implementation of improvements in operational efficiency during the third quarter, total gas production for 2007 was 6.61% higher than the previous operator’s revised forecasts of June 2007.

Oil production continued in the UK at Horndean and was 3.5% higher than in 2006, which aided by an increase in the average realized U.S. dollar sales price, generated revenues of approximately $0.45 million. Crude sales receipts of $0.22 million from the extended production test at Avington more than offset the cost of the test program.

At the year end, the group will report significant income and profits as a result of its two transactions with Dyas B.V. Northern sold 25% of its interests in six Netherlands oil and gas fields for $26.4 million plus receipt of properties, and additionally entered into a Strategic Alliance which generated an entry fee of $20.5 million payable in four installments.

Northern had approximately $43 million net cash by December 31, 2007. The majority of that cash is held in euros, following significant euro purchases in late 2006 and early 2007. This will result in the group also reporting a significant foreign exchange gain for the year. In addition there remains $19.1 million of deferred consideration receivable from Dyas B.V.

The group reported a pre-tax profit of $16.7 million for the six month period ended June 30, 2007. "2007 has been a very successful year for Northern, in both financial and operational terms," Chris Foss, finance director of Northern, said. "Consequently we stand well positioned to achieve further success in 2008 and beyond. Being able to report an increase in 2P reserves for a fifth successive year over and above the sale of 13.91 million barrels of oil equivalent during the period attests to the capabilities of the Northern team and reflects well in comparison to most of our AIM peers."