Northern Petroleum Reports '09 Results
Northern Petroleum announced its audited results for the year ended December 31, 2009.
- On December 31, 2009 the Company had 102.9 million barrels of oil equivalence of net proven and probable reserves, representing an increase of 34.6% from the 76.4 barrels of oil equivalence reported at the end of 2008;
- At the end of 2009, production had increased to 1320 barrels of oil equivalence per day (boepd) with the commissioning of two new gas fields in The Netherlands. The production rate at the start of the year was 367 boepd; and
- The Company conducted two seismic surveys during 2009, recording 3067km of 2D data and set up a 1520km2 3D survey which was recorded in early 2010.
- The Company made a record capital investment of Euro29.7 million, to develop its reserves and resources;
- The Company made a post tax loss of Euro2.15 million for the year;
- At the end of 2009 the Company had Euro15 million of cash, plus Euro3.5 million of working capital; and
- The Company successfully completed the acquisition of the outstanding shares in ATI Oil Plc which it did not already own.
- Development of two further gas fields in the Netherlands is going to plan with first production on schedule for 2010;
- The Company is developing plans to participate in the drilling of up to six wells over the next 12 months; and
- The Company expects to have achieved a production rate in excess of 1,750 barrels of oil equivalence a day by the end of 2010.
Richard Latham, Chairman, commented,"The world's economies may give us all some uncertainties, but as shareholders
of Northern there are positive factors we should enjoy. Our strategies on technology, partnerships and low-cost acquisition of assets are now proving extremely effective in producing value.
- We have completed a highly successful hydraulic reservoir fracturing program and placed in production, at enhanced flow rates the first two of six fields in our Netherlands' core area, Grolloo and the very much larger Geesbrug.
- We captured five more Netherlands discoveries. It is expected that these will add to our reserves and forecast levels ofproduction.
- We have, together with Shell Italia, progressed our joint venture offshore of Sicily, completing a 3D seismic survey within budget. The data is being mapped with results due later this year.
- We made a successful offer for the acquisition of outstanding shares in ATI Oil.
- We have established, together with our co-venturer Providence Resources, a project in the UK to drill a long reach well with the potential to immediately put into production the Baxters Copse oil discovery of 5.36 million barrels gross of 2P reserves.
- We have together with Tullow Oil had our confidence in the venture offshore Guyane reinforced. Both Shell and Total have joined the project. A 2,500km² 3D seismic survey has been completed to set up the first well.
- The oil price is back in the range of US $60-90 per barrel which is refueling interest in our high impact assets offshore Italy.
"It is a time to perceive our glass to be better than half full. Northern finished the year with an increase of 35 per cent in our Proven and Probable Reserves to 103 million barrels of oil equivalence. We now have 56 licenses and applications. By the end of 2010 we expect to have achieved a production rate in excess of 1,750 barrels of oil equivalence a day.
"In the year we report a small loss of Euro2.2 million. We invested Euro29.7 million of capital expenditure and started the current year with cash and working capital of Euro18.5 million.
"Our target is to increase production and revenues by bringing on-stream the Wijk en Aalburg and Brakel gas fields and drilling further production wells in the Netherlands. This will build a position of greater financial strength from which to progress development of our very strong asset position and the multitude of projects that we have created. In the near term we must differentiate between the many high impact offshore projects, requiring new partners with the finance that they will bring, and those low risk and medium impact projects that we can progress ourselves.
"Our history shows that we have every reason to be confident that our strategy of building strong long-term relationships and alliances will enable us to exploit our resource potential and create shareholder value. We remain focused on building within our core areas - areas with the potential to establish and expand our presence to a size where we are a material player, and which can make a very considerable impact on the Company's profits.
"In that context we have reviewed our position onshore south of England. It has good profit potential. We are pleased to look forward to the drilling of two wells in 2010 with at least one more in 2011. Two of the wells will target proven and probable reserves and an independent audit has confirmed their potential. However, future expansion potential is considered to be less than elsewhere in the Group portfolio. It may now be the time to realize the asset value we have created and redeploy those funds elsewhere in the business. We have successfully used this strategy of taking an early exit in Ireland and Spain and investing the funds elsewhere.
"In The Netherlands, where considerable achievements were made in 2009, we are completing the first stage of the development of our initial six fields before increasing production through the drilling of one or more further wells in most of these fields. We correctly assessed that we could add further fields and discoveries within this core area. In the next phase we intend to develop two gas fields on the newly awarded Zuid Friesland production license together with our partners EBN, Dyas, NAM, PetroCanada and Total.
"We are also enthused by the potential of three undeveloped discoveries in our Utrecht license where we have now been joined by the state owned company, EBN. It is the first time that EBN has elected to enter into the exploration phase of any onshore licenses. We value their strong support.
"The Northern technical team is generating new exploration concepts in The Netherlands. We continue our relationship with NAM through discussion on the mutual benefits of our development of some of their past discoveries.
"Gratifyingly in Italy, which holds the greatest potential of all, we have continued to build and develop our evaluation of a number of core areas. 2009 saw both the acquisition of the outstanding shares in ATI Oil and new preliminary license awards making encouraging prospective additions to core areas.
"We have been an industry leader in several regions of Italy in identifying and then acquiring key licenses in prospective areas and have been a catalyst in revitalizing oil industry interest in Italy. Our foresight, good relations with the Italian authorities and track record of commercial partnerships are now paying off. We have developed a position of strength at costs within our means through examination of well logs, reprocessing existing seismic data and undertaking new seismic surveys. Our valuable offshore licenses have the potential to attract major industry players who recognize their high future potential profitability that more than justifies the cost of farming in at the exploration or development stage.
"As Northern's operations and prospects grow, the Board recognizes that its capacity must also grow. Changes have been made to ensure that we have the strengths to capitalize on our opportunities. Nigel Wright has recently been appointed Finance Director. He has brought with him a wealth of experience in the petroleum industry. He takes over the role from Chris Foss who, in his new role as Director of Legal & Corporate Affairs, will use his seven years of experience with us, to assist the Managing Director in the implementation and delivery of the corporate strategic plan. All of our employees deserve to have our thanks for the commitment they have shown in the past challenging but successful twelve months.
"With the quality and scale of our prospects, we will respond to the challenges and opportunities and we will realize value from our considerable asset base."
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