Northern Petroleum announces sale of UK assets for £1.5 million

Oil company Northern Petroleum has announced that it has signed sale and purchase agreements to sell the company's interests in all of its UK licences and assets for £1.5 million to UK Oil & Gas Investments PLC (UKOG).

Completion of the sale is subject to the approval of UKOG becoming an operator for certain licences by the Department of Energy and Climate Change and the completion of an intra group transfer of certain asset interests within Northern Petroleum on or before 31 October 2014.

The consideration of £1.5 million is payable with a minimum of £1 million in cash and the remainder in either cash or UKOG ordinary shares at a price of 1.0938 pence per ordinary share at UKOG's election. In the event that Northern Petroleum receives ordinary shares in UKOG, the company will consider the best way to monetise the holding in an orderly manner.

UK oilfield assets and licences

The UK assets and licences comprise the 10% and 5% minority interests in the Horndean and Avington producing fields respectively, 50% interests in the Markwells Wood and Baxters Copse discoveries, and a 65% interest in a licence offshore the Isle of Wight. Net production to the company during 2013 averaged approximately 20 bpd of oil and contributed ?591 000 of revenue and ?345 000 of gross profit to the company for the 12 months ended 31 December 2013.

The book value of the UK assets in the consolidated accounts for the group as at 31 December 2013 was ?300 000 and stated proven and probable reserves were 60 000 bbls of oil. The consideration from the sale will be reinvested in Northern Petroleum's production and redevelopment project in northwest Alberta, Canada.

Commentary

Keith Bush, Chief Executive Officer, commented: "The sale of the UK portfolio allows us to focus additional time and financial resource on operations that provide the best opportunity for value growth in a reasonable time frame.

"The company continues to move forward with its production led growth strategy with operations on the three summer wells in Alberta due to commence in August. We expect the results of the wells to further de-risk the potential of the whole Albertan redevelopment and allow us to achieve our forecast year end exit production rate of 500 barrels of oil per day."

Adapted from press release by Cecilia Rehn

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/24072014/oil-company-northern-petroleum-plc-announces-sale-of-uk-assets/