Immediate release: 29 September 2005 Northern Petroleum Plc (“Northern” or the “Company”) Interim Results for the Six Months to 30 June 2005 Highlights A significant new sphere of operations being established in the Netherlands with planned short term oil and gas field developments for 3200-5000 barrels of oil per day and 50Mw of electricity, 30% net to Northern. On going exploration and appraisal drilling programme in South of England Achieving of a substantial exploration licence position in Italy A strong cash position and tight expenditure control maintained Chairman’s Statement I am delighted with the establishment of the new sphere of operations in the Netherlands even if this anticipates the successful outcome of our Production Licence application in order to develop the Papekop gas and oil discovery. This will add to our position under the joint venture agreements with the Shell/ExxonMobil subsidiary – Nederlandse Aardolie Maatschappij (“NAM”). We will now pursue this opportunity to bring a total of six oil and gas discoveries into production during the period of late 2006 and into 2007. We anticipate achieving production levels of 3200-5000 barrels of oil per day and on site generation of up to 50Mw. of electricity from the gas, 30% of which is net to Northern, which assumes that the Minister of Economic Affairs elects to designate Energie Beheer Nederland B.V. (“EBN”), a State owned company, as a 40% participant in the licences to which it is not currently party to in return for a pro-rata share of past exploration costs and a pro-rata share of all future costs of the joint ventures. Our share of this will greatly expand the company’s cash flow and is anticipated to provide sufficient surplus funds to sustain our ongoing exploration programme in the future. The venture in the Netherlands will become our key project in the immediate future and will make a major call upon the Company’s management and technical staff. We have therefore decided to reduce our commitments in Spain by the exchange with Ascent Resources Plc of our 50% holding in three exploration licences for a 2.5% overriding royalty on those interests. This will avoid the commitment of substantial management and skilled technical resources and allow us to deploy them on less risky projects with greater perceived potential. Our project to re-perforate the wells in the Ayoluengo field progresses on the back of a 64% increase in the current local price paid for our product as against that received at the end of 2004, a major factor that enables me to report an increase of £72,000 in gross profits and a decrease of £41,000 in operating losses for the six month period despite increased activity levels and the consequential increase in personnel. The overall loss for the period is £233,000 as against £275,000 for the comparable period last year. These results once again demonstrate the Group’s tight control of its cost base and the efficiency of its staff. In Italy our position has been expanded to twenty one licences and applications covering an area in excess of 11,000 km². The applications now include two oil discoveries in the southern Adriatic and one gas discovery off the Calabrian Coast. We have also entered into discussions with substantial potential new partners regarding our licences in the western Po Valley, Nibbia and Gattinara, and licences offshore south west of Sicily with a view to early drilling of those licenses at little or no expense to the company. In the South of England our two well Wessex Basin drilling campaign on the Isle of Wight is in progress. The first well, Sandhills-2, drilled to appraise the 1982 logged oil discovery has disappointed with the realisation that the oil is predominantly bio- degraded. Some small comfort can be taken in that, at one time, a substantial accumulation of mobile oil was there and this has some positive implications for both the area to the east and the area to the west where we are currently drilling Bouldnor Copse-1, both as a further Jurassic test of the same Great Oolite Reservoir tested at Sandhills and the large Triassic prospect estimated by independent consultants to be of the potential of 300 million barrels of oil in place. Our programme for the Weald Basin is planned for 2006 and our forecast is clearly not diminished by this year’s drilling campaign. We shall approach the work of obtaining planning consent with the benefit of our experiences on the Isle of Wight and trust that we will satisfactorily present ourselves as a suitable new neighbour in the communities concerned. I anticipate that drilling those prospects will be successful and soon add to our promising cash flow position for 2007 onwards. I can also look forward with you to our first well in the Guyane offshore concession of which Hardman Resources is the operator. Our 1.25 % net beneficial interest may seem small, but with the potential to drill significant number of very substantial sized prospects of which several are in excess of one billion barrel potential, I see reason for cautious excitement. Hardman Resources has announced their intent to drill the first prospect in the middle of 2006 following the 3-D seismic survey to be conducted in October 2005. I wish to thank Jerry White for his services to the company as Finance Director during our sustained period of growth since 1999. He continues as a non-Executive Director and Chairman of the Audit Committee. I also welcome Chris Foss stepping into the position of Finance Director following a period of commendable service as Group Financial Controller. This has been and continues to be a period of expansion both in the Company’s business and the Company’s skill base. R Latham Chairman 28 September 2005 For further information please contact, Derek Musgrove, Managing Director Chris Foss, Finance Director Northern Petroleum Plc Tel. 020 7743 6080 Chris Roberts/Ben Simons Hansard Communications Tel. 020 7245 1100 Notes to Editors Northern Petroleum Plc is an oil and gas exploration, development and production company focused on the European Union and nearby areas. It is quoted on the AIM Market of the London Stock Exchange. The Company seeks to obtain significant licence positions to which it can add value at reasonable risk utilising new ideas together with new drilling, seismic, completion and computer technologies and where it is believed that economic oil and gas production can be established. Efforts are concentrated in a few areas. The Company is a recognised Operator of both onshore and offshore projects including a producing oilfield and boasts a management and technical team of the highest quality. Consolidated Profit and Loss Account For the six month period Ended 30 June 2005 6 month 6 month period ended period ended Year ended 30 June 30 June 31 December 2005 2004 2004 (unaudited) (unaudited) (audited) £’000 £’000 £’000 Group turnover 273 230 468 Group cost of sales Production costs (188) (170) (332) Exploration costs (1) (42) (36) Depreciation, depletion and amortisation (11) (17) (88) (200) (229) (456) Gross profit 73 1 12 Administrative expenses (464) (375) (786) Other operating income 101 43 108 Group operating loss (290) (331) (666) Share of operating (loss)/profit in associates (37) - 3 Operating loss for the group before interest (327) (331) (663) and other income Interest receivable 78 59 161 Profit on sale of fixed asset investments 22 - 16 Loss on ordinary activities before taxation (227) (272) (486) Tax on loss on ordinary activities (6) (3) (5) Retained loss for the period (233) (275) (491) Basic and diluted loss per share (0.43)p (0.58)p (0.98)p Consolidated Statement of Total Recognised Gains and Losses For the six month period ended 30 June 2005 6 month 6 month period ended period ended Year ended 30 June 30 June 31 December 2005 2004 2004 (unaudited) (unaudited) (audited) £’000 £’000 £’000 Loss for the period (233) (275) (491) Exchange differences on retranslation of (20) (17) (3) net assets of subsidiary undertakings Total recognised gains and losses (253) (292) (494) Consolidated Balance Sheet As at 30 June 2005 30 June 30 June 31 December 2005 2004 2004 (unaudited) (unaudited) (audited) £’000 £’000 £’000 Fixed assets Intangible assets 1,301 899 625 Negative goodwill - (5) - Tangible assets 533 303 566 Investments in joint ventures: Share of gross assets of joint ventures 5 - 3 Share of gross liabilities of joint ventures (5) - (3) - - - Share of net assets of associates 238 - 249 Total fixed assets 2,072 1,197 1,440 Current assets Stocks 131 130 137 Debtors 507 457 667 Cash at bank and in hand 4,330 5,546 5,140 4,968 6,133 5,944 Creditors: Amounts falling due within one year 705 589 810 Net current assets 4,263 5,544 5,134 Creditors: amounts falling due after more 51 51 53 than one year Provision for liabilities and charges 106 106 109 Total assets less liabilities 6,178 6,584 6,412 Minority shareholders’ interest - equity - 59 - 6,178 6,525 6,412 Capital and reserves Called up share capital 7,127 7,099 7,119 Share premium account 9,343 9,263 9,332 Profit and loss account (10,292) (9,837) (10,039) Shareholders’ funds - equity 6,178 6,525 6,412 Consolidated Statement of Cash Flows For the six month period 30 June 2005 6 month 6 month period ended period ended Year ended 30 June 30 June 31 December 2005 2004 2004 (unaudited) (unaudited) (audited) £’000 £’000 £’000 Net cash outflow from operating activities (225) (315) (573) Returns on investments and servicing of finance Interest received 78 59 161 Taxation Corporation tax paid (3) (3) (7) Capital expenditure and financial investments (668) (343) (462) Management of liquid resources Sale of current asset investments - 226 - Cash outflow before financing (818) (376) (881) Financing Issue of ordinary shares for cash (net of 18 2,993 3,082 expenses) (Decrease)/increase in cash for the period (800) 2,617 2,201 Reconciliation of operating loss to net cash flow from operating activities: Operating loss (290) (331) (666) Depreciation, depletion and amortisation 12 55 124 Amortisation of negative goodwill - (5) (10) Depreciation – non oil and gas tangible assets 5 5 10 Decrease in stocks 6 9 2 Decrease/(increase) in operating debtors and 160 8 (205) prepayments (Decrease)/increase in operating creditors and (109) (55) 168 accruals Exchange adjustments (9) (1) 4 65 16 93 Net cash outflow from operating activities 225 (315) (573) Reconciliation of net cash flow to movement in net funds: (Decrease)/increase in cash for the period (800) 2,617 2,201 Exchange adjustments (10) (16) (6) Net funds at start of period 5,140 2,945 2,945 Net funds at end of period 4,330 5,546 5,140 Notes to the Accounts For the six month period 30 June 2005 1. The results for the period are all derived from continuing activities. 2. For oil and gas projects, the full cost accounting policy has been adopted, whereby all costs are accumulated in cost pools and are then written off to the extent that they are not supported by underlying oil and gas reserves, unless the expenditure relates to an area where it is too early to make such a decision. Expenditure in the latter category has been included on the balance sheet under intangible assets. 3. During the second half of 2005 the Company will perform a final fair value review of its acquisition during October 2004 of the 30% interest in Northern Petroleum (UK) Limited that it did not already own, with any required adjustments being made in the 2005 annual accounts. 4. The calculation of the basic and diluted loss per share has been based on the loss after taxation for the period and the average number of ordinary shares in issue throughout the period after adjusting for the ordinary shares issued followed the exercise of warrants in June 2005 and for the one for five consolidation of the Company’s ordinary shares that took effect from 8 August 2005. 5. The unaudited results have been prepared on the basis of the accounting policies adopted in the annual accounts for the year ended 31 December 2004. 6. The interim report is unaudited and does not constitute Statutory Accounts as defined in Section 240 of the Companies Act 1985. A copy of the group’s 2004 Statutory Accounts has been filed with the Registrar of Companies. 7. The interim report for the six months to 30 June 2005 was approved by the Directors on 28 September 2005.
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