Embargoed for release: 07.00 on 25 June 2010
Northern Petroleum Plc
("Northern", "the Group" or "the Company")
Strategy to Accelerate Asset Development Activities and Placing
Northern Petroleum (AIM: NOP) announces that it has initiated a revised growth
strategy to accelerate its activity level in the development of its large asset
position which is predominantly in Italy and The Netherlands. This acceleration
of activities requires access to additional funds.
At 23 June 2010 the Company had approximately EUR13.3 million of cash in the
bank and is generating revenues from its existing production. In order to
accelerate development and capitalise on its asset position, the Company has
decided to raise new funds from three sources:
* Realisation of value from the sale of the non-core UK assets;
* Reserve based debt finance secured against production in the Netherlands;
and
* Placing of a modest amount of new equity, £10 million.
The Company has instructed Envoi Limited to handle the process of selling its
non-core UK assets. Envoi Limited is a UK company which provides specialist
marketing, acquisition and advisory services to the international upstream oil
and gas industry.
Northern's focus over a number of years has been on the low cost acquisition of
a large number of licence positions in selected low risk countries,
successfully acquiring discoveries, other reserves and high impact exploration
prospects. Northern entered the Netherlands in 2004 to acquire licences with
undeveloped discoveries. Northern has had significant success with the Company
now having net Proven and Probable reserves in The Netherlands of 42.7 million
barrels of oil equivalent (boe), with four gas fields in production and two gas
and two oil fields in development. In Italy a strategy of identifying and
acquiring key licences in prospective core areas was successfully pursued,
ahead of the majority of other oil companies. Currently, Northern has 53.2
million boe of net Probable oil reserves from 32 Italian licences and
applications beyond contest. In the UK, since 2003, Northern has accumulated
total net Proven and Probable reserves of 7.0 million boe. The UK and
Netherlands reserves have been independently assessed by RPS Energy and the
Italian reserves independently assessed by Blackwatch Petroleum Services.
As stated in the Company's Annual Report and Accounts for the year ended 31
December 2009, "the Board remains keen to have in its armoury some debt
facilities to both provide flexibility for growing the business and for tax
efficiency, but the finance must be at an appropriate cost. With additional
fields now brought into production, further de-risking the Group's asset base,
good progress is being made on a debt facility that fits the Group's
requirements. We look forward to reporting to shareholders on this soon".
The Company will also continue to seek farm-in partners for selected Italian
assets where it deems such transactions to be in the best interest of
shareholders.
THE PLACING
In order to finance the accelerated growth strategy, Northern is pleased to
announce the Placing of 11,764,706 new Ordinary Shares of 5 pence each at 85p
per new Ordinary Share (the "Placing Price") to raise £10.0 million (the
"Placing") gross. The Placing, with both existing and new institutional
investors, has been made pursuant to the authority granted by shareholders on
22 July 2009. The Placing Price of 85p represents a discount of 8.6% to the
closing mid-market price of 93p on 24 June 2010. Application will be made for
the admission of the new Ordinary Shares to AIM and it is expected that such
admission will take place on 29 June 2010.
The Company has existing authorities in place to permit the issue of these
shares for cash on a non pre-emptive basis. The issue of the Ordinary Shares
pursuant to the Placing therefore does not require additional shareholder
approvals. The Placing is conditional, inter alia, on admission. On admission,
the new Ordinary Shares will rank pari passu in all respects with the existing
ordinary shares in Northern. The Placing was not underwritten.
The Placing has only been made to persons falling within article 19 and article
49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order
2005 who are also qualified investors for the purposes of section 86 of FSMA
and no other person may now participate in the Placing or rely on any
communication relating to it.
The net proceeds of the Placing will be predominantly used to accelerate the
development of the existing pipeline of projects the Company has in the
Netherlands and Italy. The projects include enhancing production rates from
existing producing assets, 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 to improve
the farm out terms and potential of the Italian assets in order to bring them
closer to drilling. The Company will also participate in the exploration of a
licence in Guyane operated by Tullow Oil Plc.
Cenkos Securities acted for the Company in this successful placing and its
efforts are appreciated by the Company.
Chris Foss, Director of Legal and Corporate Affairs, commented:
"We have outlined our accelerated growth strategy and the Board's plans to
finance it. We are pleased to have had a positive reception to our development
plans from existing and new institutional shareholders. The strategy to deliver
greater growth is clear, as is the case for acceleration across a wider
portfolio of projects. Northern will now move forward to take advantage of the
very significant opportunities we have created in the last few years. We look
forward to implementation of the strategy."
In accordance with the AIM Rules - Guidance for Mining and Oil & Gas Companies,
the information contained in this announcement has been reviewed and signed off
by the Exploration and Technical Director of Northern, Mr. Graham Heard CGeol.
FGS, who has over 35 years experience as a petroleum geologist.
- Ends -
For further information please contact:
Northern Petroleum Plc Tel: +44 (0) 20 7469 2900
Chris Foss, Director of Legal & Corporate Affairs
Cenkos Securities (NOMAD and Joint Broker)
Jon Fitzpatrick Tel: +44 (0) 20 7397 8900
Ken Fleming Tel: +44 (0) 131 220 6939
Financial Dynamics Tel: +44 (0) 20 7831 3113
Billy Clegg / Edward Westropp
Bishopsgate Communications Tel: +44 (0) 20 7562 3350
Nick Rome / Michael Kinirons
Notes to Editors
Further information on Northern is available at www.northpet.com