United Kingdom

Strategy summary

The activities in the south of England represent a good opportunity to add value at current oil prices but with most of the productive oil fields being held by a subsidiary of Petronas it is thought that the opportunity for building a core area of significant contribution to Northern’s targets is limited.

After testing the market to ascertain if a short term realisation of a sufficient proportion of the potential value could be achieved, via a sale, efforts now refocus on moving forward to realise value through drilling operations. The first of which was the Markwells Wood-1 oil discovery which is to be tested shortly. At the time of writing, analyses of the core and log data were being finalised ahead of an extended well test planned for the summer of 2011.

Northern’s holdings include 10 licences in the south of England covering the Weald Basin and Isle of Wight. Production currently comes from two producing fields, at Avington and Horndean, with near term drilling of discoveries at Hedge End and Baxters Copse, and an exploration prospect at Havant.

Excellent news from the Markwells Wood-1 well came in December 2010. An oil bearing sequence was encountered in the target Great Oolite reservoir. This success at Markwells Wood, helped by current oil prices, will enhance the value of the other undeveloped discoveries and exploration prospects held under licence by Northern in the UK.

Future

Reprocessing of all the available 2D seismic data is being carried out for Licences PEDL’s 126, 155 and 256 plus PL 211 to better image structure and assist with well planning. The Havant exploration well, with operations scheduled to commence later in 2011 will commence when the results of the reprocessing have been integrated with the regional well control. Meanwhile Providence Resources has plans to drill the Baxters Copse appraisal well in 2012. This well will be drilled from the Singleton production facilities, negating the requirement for a new surface location from which to drill. The well will target a Proven Plus Probable reserves volume of 5.36 million barrels, with upside potential for 15.06 million barrels (Proven Plus Probable Plus Possible Reserves).

Also this year, a suitable site has been identified for a production test to appraise the Hedge End-1 oil discovery and negotiations with the land owner are ongoing to obtain a lease for the site.