|
Northern, having built a portfolio of 24 oil and gas licences and preliminary awards (together “licences”), will have on full award of all licences more exploration acreage under management than Eni, the former state company. This is an enviable position in a country where the vast majority of the acreage is held in proven petroleum basins not as extensively explored as basins in Northwest Europe and under a fiscal regime that has only recently seen corporation tax reduced to 27.5% from 33% and regional taxes reduced to 3.75%. Activity levels in exploration licencing have now seen a marked increase over the last few years and Northern is confident that the move to acquire acreage before the recent increase in oil prices will be suitably rewarded.
Northern considers Italy to be an attractive country in which to develop fields and explore with a better than average chance of drilling success. The now deregulated gas and power market gives considerable potential for high commodity prices as Italy imports a high percentage of its oil and gas requirements. Under the licence terms all acreage is held on a drill or drop basis meaning there is minimal financial exposure to Northern ahead of a decision to drill and the portfolio approach ensures that the Company has a variety of opportunities in oil and gas provinces with different geological risk and reward profiles. When taken with the excellent licensing and fiscal terms the opportunity for substantial reward to Northern can be clearly recognised.
Northern has progressed significantly in the last year to report independently verified 2P reserves on two oil fields and six substantial exploration prospects in the Southern Adriatic and announced planned drilling onshore in the Po Basin. Importantly the portfolio now includes the potential for substantial oil prospects now being recognised more fully from the work undertaken in the last year and demonstrating that a portfolio of multi billion barrel potential across a number of the licences is now ready for Northern to progress to drilling. We expect that this opportunity under farmout arrangements will be attractive to other companies.
The portfolio in Italy is all operated by Northern and covers an area in excess of 13,000 km², equivalent in area to more than 60 UK North Sea blocks. Northern holds a 100% interest (50% beneficial interest) in these licences, and in addition owns 37.05% of the shares of ATI Oil Plc (“ATI”), whose subsidiaries are the remaining 50% beneficial interest owners, thus bringing the total Northern net beneficial interest to 68.53%. A position that allows for deals to be progressed with Northern maintaining a strong position.
We look forward to adding to the progress made in the last year and to development and exploration drilling activities under arrangements with other companies earning equity in return for funding.
Licences in detail
Full details of onshore and offshore operations in Italy
Further information
|
