Northern Petroleum Plc is an oil and gas exploration - DOC by oae20205


									Immediate release: 29 September 2005

                               Northern Petroleum Plc
                            (“Northern” or the “Company”)

                Interim Results for the Six Months to 30 June 2005


      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
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
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
Interest received                                         78             59            161
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)
Issue of ordinary shares for cash (net of                 18          2,993          3,082
(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)
(Decrease)/increase in operating creditors and          (109)           (55)           168
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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