18.02.08

HIGHLIGHTS

• Booked reserves increased for the fifth successive year

• 26.47% increase in 2P reserves at 76.55 million barrels of oil equivalent at 31 December 2007

• 26.61 million of Italian reserves added during the year assessed as having an NPV10 value of $305 million

• £22 million cash mostly held in Euros and a receivable of €13 million deferred consideration

• Waalwijk and P12 revenues 10% above forecast at €5.6 million

• €18 million in cash, plus properties, received from Dyas B.V. for partial sale of six Netherlands oil and gas fields

• €14 million entry fee received under Strategic Alliance with Dyas B.V, payable in four instalments

Reserves

Booked reserves have increased for the fifth successive year. Northern now has 27.14 million barrels of oil equivalent (“mboe”) Proven and 49.41 mboe Probable, 26.47% increase during the year notwithstanding the sale of 13.91 mboe of Netherlands reserves to Dyas B.V.

The significant increase follows the issue of independent engineering reports by Blackwatch Petroleum Services (“Blackwatch”) over the Giove and Rovesti discoveries in the Southern Adriatic, which now allows us to report 2P reserves in each of our three core areas of operation - The Netherlands, Italy and United Kingdom.

The 26.61 million of Italian reserves added during the year have been assessed by Blackwatch as having an NPV10 value of $305 million, assuming a $70 per barrel price for Brent crude oil, and prior to examining financing options or leasing of FPSOs, the main capital expenditure item. A detailed breakdown of our year end reserve position will shortly available in the Operations section of our website, www.northpet.com.

Trading

During 2007, the Group acquired its first production in the Netherlands, with revenues from the Waalwijk and P12 fields of €5.6m, approximately 10% above expectation. Northern formally took over the Waalwijk field on 1 August 2007, and following its implementation of improvements in operational efficiency during the third quarter, total gas production for 2007 was 6.61% higher than the previous operator’s revised forecasts of June 2007.  

Oil production continued in the UK at Horndean and was 3.5% higher than in 2006, which aided by an increase in the average realised US$ sales price, generated revenues of approximately US$0.45m. Crude sales receipts of US$0.22 from the extended production test at Avington more than offset the cost of the test programme.

At the year end, the Group will report significant income and profits as a result of its two transactions with Dyas B.V. Northern sold 25% of its interests in six Netherlands oil and gas fields for €18m plus receipt of properties, and additionally entered into a Strategic Alliance which generated an entry fee of €14m payable in four instalments.

The Group had approximately £22 million net cash as at 31 December 2007. The majority of that cash is held in Euros, following significant Euro purchases in late 2006 and early 2007. This will result in the Group also reporting a significant foreign exchange gain for the year. In addition there remains €13 million of deferred consideration receivable from Dyas B.V.

The Group reported a pre-tax profit of £8.5 million for the six month period ended 30 June 2007.

Chris Foss, Finance Director of Northern, said:

“2007 has been a very successful year for Northern, in both financial and operational terms. Consequently we stand well positioned to achieve further success in 2008 and beyond. Being able to report an increase in 2P reserves for a fifth successive year over and above the sale of 13.91 million barrels of oil equivalent during the period attests to the capabilities of the Northern team and reflects well in comparison to most of our AIM peers.”

In accordance with the AIM Rules – Guidance for Mining and Oil & Gas Companies, the information contained in this announcement has been reviewed and signed off by the Exploration and Technical Director of Northern, Mr Graham Heard CGeol FGS, who has over 30 years experience as a petroleum geologist.

For further information please contact:

Northern Petroleum Plc
Derek Musgrove, Managing Director
Chris Foss, Finance Director
Graham Heard, Exploration and Technical Director
Tel: +44 (0)20 7469 2900

Investec
Michael Ansell / Patrick Robb
Tel: +44 (0) 20 7597 5000

Panmure Gordon & Co
Katherine Roe / Ashton Clanfield
Tel: +44 (0)20 7459 3600

Bishopsgate Communications Limited
Maxine Barnes / Nick Rome
Tel: +44 (0) 20 7562 3350