The Northern Group announces that it has exchanged a 20% holding in all its licence interests in Italy for ordinary shares in ATI Oil Plc (“ATI”). ATI has submitted an application for admission to trading on OFEX.

Northern will be the second largest shareholder in ATI, which has concluded a private placing to raise £500,000 prior to making the OFEX application in order to cover 18 months of working capital. The placing is conditional upon acceptance by OFEX of ATI’s application. Following the placing the Northern Group will hold 35,018,000 ordinary shares in ATI, representing 38.72% of ATI’s enlarged ordinary share capital. Northern has two representatives on the ATI board: Derek Musgrove as Chairman and Chris Foss as Finance Director.

ATI holds a 50% interest in 16 licences and applications (“the Licences”) both onshore and offshore Italy, Europe’s third largest producer of oil and gas. Northern, through its wholly owned subsidiary Northern Petroleum (UK) Limited, is the operator of the Licences and owns the remaining 50% interest in the Licences. In total the Licences cover a prospective area of approximately 8450 km², the size of over 40 North Sea blocks.

The offshore areas, with perhaps a billion barrel prospectivity are now attractive and being explored for the first time since the 1980’s with access to modern deeper water technology. Northern and ATI are also taking advantage of the de-monopolisation of the Po Valley Basin at a time when computer advances offer much greater abilities to handle and interpret seismic data. There the Northern Group is looking at seven prospects each in the order of 60 to 100 bcf of gas underlying a highly industrialised area with an existing network of pipelines.

The Directors consider these opportunities greatly superior to most of those now being chased in the highly competitive North Sea environment and look forward to the future with confidence arising out of the quality of the Northern Group’s holdings.

Managing Director, Derek Musgrove, commented:

“The Northern position in Italy has been acquired relying on the technical skills of our partner, a geologist with 25 years of experience in Italy. The applications were made on a basis that granted a 70% interest in the eventual licences to Northern and 30% to our partner. It is important that Northern’s partner should be financially competent and the Company decided that it would encourage ATI’s entry to OFEX by the assignment to ATI of 20% out of the Northern Group’s 70% holdings in the Licences to add to our partner’s 30% interests already assigned to ATI. This has enabled the investment of funds into ATI sufficient to fast-track key parts of the exploration programme.

Northern will continue to operate and manage the Licences with only the marginally reduced net beneficial interest of 69.36% in the Licences, thus protecting the interests of Northern shareholders. The activity for the immediate future will be to fast-track seven Po Valley gas prospects to the point of drilling and to undertake sufficient seismic reprocessing to fully establish the prospectivity of the 3 offshore licences with the highest upside potential.”

Further enquiries:

Northern Petroleum Plc
Derek Musgrove, Managing Director
Chris Foss, Company Secretary Tel: 020 7743 6080

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