Northern Petroleum Plc announces that its wholly owned subsidiary Northern Petroleum (GB) Limited (“Northern”) has completed a Farmin Agreement with Magellan Petroleum (NT) Pty Ltd. to increase its interest by 17.5% in both UK Onshore licences PEDL 098 and PEDL 113 and a 5% increased interest in PEDL 099 in consideration paying 35% of the cost of drilling and ten days of testing a well to the middle Jurassic Great Oolite formation. The well will fulfil a licence obligation. Northern’s other partners in these licences are Hereward Ventures Plc (5%) and Black Rock Resources (UK) Limited (5%) and Oil and Gas Investments Limited (5%).

Northern also announces the exercise, on changed terms, of its option with Wessex Exploration Limited (“Wessex”). Northern will become the Operator and acquire an 80% interest in a part of PEDL 089, defined in the agreement as PEDL 089 Area (A) by meeting the costs of drilling a well in 2004, but no later than 30th January 2006. The well is to be drilled ten metres into the Triassic Sherwood Sandstone Formation at a location of Northern’s choice and making two payments of £40,000 to Wessex, one immediately and one upon completion of the drilling.

As part of this deal Northern will gain a 10% interest in the remainder of PEDL 089 and UKCS Licence P1153 containing Blocks 98/7b and 98/8a, which are offshore but restricted to drilling only from an onshore location, and be appointed the Operator.

Northern have committed to pay 12.5% of the cost of a well drilled to test the Hurst Castle prospect mapped by Wessex at the level of the Jurassic Bridport Sandstone Formation and the Triassic Sherwood Sandstone Formation within Licence P1153 and an area of PEDL 089 defined in the agreement as PEDL 089 Area B, should Wessex proceed with the drilling of a well.

Map of the referenced areas - click to enlarge

Download this map in PDF format (567K)

All transfers of licence interest and the appointment as Operator are subject to the approval of The Secretary of State for Trade and Industry.

Derek Musgrove, Managing Director, stated "These acquisitions are the result of many months of well log analysis, seismic interpretation and mapping work. They clearly display our increased levels of confidence in the drilling targets and also our desire to make progress in this area where we hold a major licence position.

During work upon the Wessex owned licences we identified a significant Triassic Sherwood sandstone prospect larger than the original prospect in the Jurassic which led to Northern’s original option agreement with Wessex. The Sherwood Sandstone Formation is the prolific reservoir at the Wytch Farm oilfield, part of which is as close as 15 km. to the west of PEDL 089.

With the assistance of our partners, old and new, we will now move forward to drill two wells as soon as possible in a region which we believe to be of high potential".

For further information please contact:

Derek Musgrove, Managing Director or Graham Heard, Exploration Manager
Northern Petroleum Plc on 020 7743 6080.

Or

Chris Roberts/Ben Simons
Hansard Communications Limited on 020 7245 100