Northern announces that it has concluded an agreement (“the Agreement”) with Wessex International, a privately owned company registered in Texas, whereby Northern has acquired a 1.25 per cent. beneficial interest in a permit (“the Permit”) covering the whole of the offshore territory of Guyane, previously French Guiana, beyond the 12 mile coastal limit. The Permit covers some 65,000 square kilometres. Hardman Resources Limited (“Hardman”) is the Operator and holds a 97.5 per cent. interest in the Permit.

In 2003 Hardman recorded a 7500km. 2-D seismic regarded to be of excellent quality to supplement 3,945km. of 2-D seismic data recorded in the 1970s by Elf, Shell and Esso. This resulted in six prospects or leads in excess of one billion barrels of potential recoverable reserves being defined.

Under the terms of the Agreement Northern has acquired 50 per cent. of a company owning a 2.5 per cent. interest in the Permit for consideration of US$17,500 on signature and a further £40,000 when Hardman conclude proposed farm-out arrangements. Northern has also agreed to lend the company US$200,000 in order to help finance the drilling and testing of a well at an interest rate of 2 per cent per annum.

The key terms of the Permit are as follows:

• no royalty or annual lease payments
• 33.3 per cent. net profits tax from production in the first three years seismic programme, now completed
• in the following two years, a requirement to drill one exploratory well.

Derek Musgrove, Managing Director of Northern, stated, “The deal to obtain a 1.25 per cent. beneficial interest in the offshore Guyane Permit could be material to Northern, such is the high potential of the Permit.

It is estimated that the Matamata Prospect alone could contain recoverable reserves of the order of 500 million to 5.6 billion barrels with the estimated mean recoverable reserves calculated to be 2.4 billion barrels. (30 million net to Northern).

Whilst Guyane is in the EU it is not within Northern’s current core area of activity. However, this is an opportunity that should not be passed up and as a non-operator partner the project will make only small demands on management resources. In addition, as an offshore Operator in Italy and having applied as an Operator in the UKCS 22nd Round of Licensing, Northern expects to gain valuable operational experience in Guyane which might be relevant to these two projects. This strategy worked well for us from our 5 per cent. participation in the Avington-2 oil discovery last year.

I would add that we are pleased to work again with Hardman Resources after a gap of four years since the drilling of a gas discovery in Italy and appreciate the widening of our joint activities with Wessex.

We have also reached agreement with Wessex Exploration Limited to amend our Farmin agreement for PEDL 089 in the south of England. This now allows for the later commencement of drilling of the Bouldnor Copse-1 well reflecting delays in the process of obtaining Planning Consent. The Bouldnor Copse-1 well together with Sandhills-2 is part of Northern’s two well drilling programme on the Isle of Wight.”

Derek Musgrove
Managing Director, Northern Petroleum Plc
Tel. 020 7743 6080

Chris Roberts / Ben Simons
Hansard Communications
Tel. 020 7245 1100