Big picture - Why invest in Northern Petroleum Plc
Northern Petroleum Plc Snapshot
Northern Petroleum Plc is an oil and gas exploration and production company quoted on the AIM Market of the London Stock Exchange.
The Group is focused on production and development activities which are expected to deliver cash flow and demonstrable value for shareholders in a reasonable timeframe.
In conjunction with this production activity, Northern Petroleum continues to mature exploration and appraisal projects which can be farmed out and drilled in order to generate the possibility of very high returns on investment.
Northern Petroleum’s key assets are in Canada, an onshore oil production play with significant growth potential, and in Italy, with both onshore and offshore permits and applications containing exploration prospects and discovered oil fields.
The Group places great importance upon maintaining a good environmental and safety record in all areas of its operations while seeking to foster strong relations with host governments and industry partners alike.
The Company is incorporated in the United Kingdom and is subject to the City Code on Takeovers and Mergers.
Northern Petroleum undertook an internal review process to assess the best strategic direction for the Group. Key areas for consideration included the Group’s existing assets, collective skills and experience and comparing these to opportunities that currently exist within the industry. Thought was also given to the balance of risk and reward required by shareholders and new investors.
Given the experience and skill set of the Board and senior management, as well as the investment community moving away from volatile, exploration led strategies, Northern Petroleum’s new strategy will focus on production led growth which will be primarily onshore.
This strategy will continue to provide our investors with exposure to exploration and appraisal opportunities with a controlled outlay of the Group’s capital, and provide the opportunity for significant upside in addition to the foundation of a more predictable, but very valuable, increase in core value from production.
Northern Petroleum, through implementing this strategy, aims to provide its shareholders with exciting short term activity and value growth, while building a well balanced exploration and production business of material size over the medium to long term.
Northern's core values are:
Having the highest regard for health and safety
Respect for our neighbours
Respect for the environment
Commitment to all our stakeholders
Integrity and accountability in all our operations
To date Northern has built an acreage portfolio in the Southern Adriatic comprising two permits, on which the undeveloped Rovesti and Giove fields are located, and a further five applications. Since award of the permits Northern has acquired proprietary seismic data from which a number of exploration prospects have been mapped. The most significant of these is Cygnus, which lies updip of the Aquila field in the neighbouring licence area. The applications are located adjacent to the two permits and collectively provide Northern with contiguous acreage covering some 4,700km2.
In 2013 Northern acquired 9,320 acres of mineral leases in the Virgo area of north west Alberta to pursue a light oil redevelopment opportunity. The Group’s land position has grown to approximately 30,000 acres over 94 mineral leases to enable a sustainable and growing production base.
The Group’s land position comprises acreage with an estimated 108 mmbbls STOOIP as determined by the Alberta Energy Regulator, with an existing average recovery factor of only 18 per cent to date. The appraisal and development work performed during 2014 confirmed the concept that recovery factors of approximately 25 per cent should be achievable from the Keg River play with primary recovery and an upside of over 40 per cent may be possible using enhanced oil recovery techniques.
During 2014 two drilling campaigns, each of three wells, were undertaken. All six wells provided valuable lessons and prompted a focused subsurface review aimed at delivering similar high performance results. Other activities in the fourth quarter of 2014 concentrated on the installation of the surface facilities and the tie-in for the 102/15-23 well, along with well planning for the next drilling phase. Once the facilities work was completed, production was progressively increased enabling the Group to achieve a total field production rate from four producing wells of more than 500 bopd.
Following the initial seven well proof of concept programme a period of subsurface analysis is underway to integrate the results into the Company’s understanding of the Keg River play before planning the next stage of development.
Since the Zaedyus oil discovery in 2011, the partners in this new oil province have focused on a rapid follow up exploration programme. The Stena ICEMax drillship was contracted for a four well programme and in addition two 3D seismic surveys have been acquired.
Through this drilling programme Northern has been exposed to the potential rewards that a multi-well, frontier exploration programme can bring, with each well having the opportunity to add significant value to the Company's share price.
The current and final well completed in November 2013, after which the operator undertook a period of data consolidation and analysis before progressing the next work programme to explore and appraise this vast licence. At that point Northern will decide the best way to maximise the value of this asset for its shareholders.
Northern Petroleum has sold all UK assets.
Northern holds 100% of Petroleum Exploration Licence PEL629 covering an area of 5,800km2 with shale oil prospectivity. The licence is in the Otway Basin, South Australia's second most prospective onshore oil and gas province. This basin is lightly explored and Northern's licence is situated in the producing portion of the onshore basin, where significant amounts of gas and condensate have been discovered.
Five exploration wells have been drilled within the licence and some 4,468 line km of 2D seismic data is available.
The initial work programme focuses on the unconventional potential of the Late Jurassic to Early Cretaceous Casterton and Sawpit formations. This will be achieved through seismic reprocessing geochemical analysis and detailed log analyses to characterise the unconventional shale resource objectives.
The Otway Basin has existing infrastructure with possibilities for rapid development of potential discoveries. Recent drilling activity in the adjacent acreage, operated by Beach Energy Limited, has further enhanced the potential of the licence.
Jon Murphy - Non-Executive Chairman
Jon Murphy was appointed as Chairman in September 2013, and has over thirty years of experience in the mid-cap exploration and production industry. Jon holds a BSc. Geology from the University of London. His career includes several years with Lasmo where he held various positions in geology, planning and new business, and in 1999 he joined Venture Production plc as Chief Operating Officer, a position he held until the company was sold in 2009. He is currently a Non-executive Director of Trinity Exploration and Production plc.
Keith Bush - Chief Executive Officer
Keith Bush joined Northern in May 2012 as Chief Operating Officer, he was appointed to the Board in November the same year, and was made Managing Director in July 2013. Keith gained a degree in Physics and has over 20 years industry experience. Commencing his career with Western Atlas logging Services, Keith progressed to hold managerial positions in Amerada Hess, Burlington Resources and was most recently employed as General Manager Operations for E.On Ruhrgas in Norway. Keith has extensive experience in the North Sea, North Africa and Norway.
Nick Morgan - Finance Director
Nick Morgan was appointed Finance Director in November 2012. Before joining Northern Petroleum, Nick spent over 13 years in investment banking where he focused on advising the international E&P industry. He specalised in advising upon mergers and acquisitions and providing equity capital markets advice and services to a broad range of global oil and gas companies, both public and private. For the last six years he was employed by Tristone Capital, the global energy investment bank, and latterly GMP Securities. Nick qualified as a chartered accountant at Price Waterhouse and is a member of The Institute of Chartered Accountants in England and Wales.
Stewart Gibson, 66 Non-executive Director
Stewart Gibson was appointed as a Non-Executive Director in December 2013. Most recently he was with Sterling Resources from the early days of its growth until retiring from the position of CEO in May 2010. He has over 40 years’ experience in the oil industry encompassing all aspects of the upstream oil and gas business, both onshore and offshore with extensive international involvement. Stewart has a BSc. in Geology from the University of Aberdeen and an MSc. in Petroleum Reservoir Engineering from Imperial College.
Iain Lanaghan, 60 Non-executive Director
Iain Lanaghan was appointed as a Non-executive Director in February 2014. Iain is the non-executive Chairman of MET and a non-executive director of National Nuclear Laboratory. He was previously Group Finance Director of Faroe Petroleum plc, spent four years as Group Finance Director of transport operator FirstGroup plc and was a founder of the German bus and rail group Abellio GmbH. He planned the flotation of 3i-backed Atlantic Power Group and then led its merger with the Norwegian group Petroleum Geo-Services. He was also Finance Director of PowerGen International and has advised a variety of financial investors in the transport and energy sectors. Iain is a chartered accountant, having qualified with KPMG in London.
Northern Petroleum Plc
5 Martin Lane
London EC4R 0DP
Tel: +44 (0)20 7469 2900
Fax: +44 (0)20 7469 2901
Northern Petroleum (UK) Limited
Viale Trastevere, 249
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