Northern Petroleum Calms Shareholders on Disappointing Exploration Well Result

PUBLISHED: Sep 07 2012 @ 07:45 | Comments (0) | More info about Kenneth G. Mondero

Northern Petroleum plc (LSE:NOP) plugged and abandoned its exploration well in Italy after gas shows proved to be insufficient as to merit commercial production and also hinted shareholders need not panic.

In a statement issued today, the AIM-quoted oil and gas explorer said the La Tosca-1 well, drilled at a depth of 2,335 metres in the Eastern Po Valley Basin north of Italy, encountered a limited reservoir sand than was expected, compared to results of nearby wells.

“The data did not provide a sufficiently strong economic case to warrant well completion and testing,” Northern Petroleum admitted, after having earlier estimated 43 billion cubic feet of gas trapped within the concession located right next to a gas field.

To soothe shareholders’ reactions to the not-so-good development, Northern Petroleum stated the cost the company incurred related to the well’s drilling, which commenced on 6^th August 2012, was minimal as most of the expenses were incurred by its joint venture partner, Orca Exploration Group, which holds 70% working interest.

“Northern’s share of the well cost is minimal and the drilling was completed ahead of schedule and conducted in a proficient manner,” Norther Petroleum Managing Director, Derek Musgrove, clarified.

Orca paid 100% of all the costs prior to the drilling and 70% of the costs in the drilling phase as part of the farm-in agreement signed in 2010. The Toront0-quoted oil and gas producer was supposed to earn additional 5% interest should the well proved successful.

Notwithstanding, Northern Petroleum said the gas find still merits consideration of future exploration.

“Whilst there will not be a well test, the gas shows are encouragement for further work to be undertaken to determine the future potential in the area,” Mr. Musgrove continued saying.

Shares were unfortunately down 3% to 65 pence at 1:45 PM GMT, almost seven hours after the announcement was released, after gaining 1 pence from yesterday’s close to 68 pence at 10:36 AM earler.

Company Spotlight

Northern Petroleum holds exploration and production assets in the Netherlands, United Kingdom, Italy, Guyane, and Spain.

The company has been on the Alternative Investment Market since 1995.

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