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Northern Petroleum has been busy: it has started an intensive programme of drilling and fracture-stimulating wells in Holland and is completing the buy-out of a partner in Italy. The sale of gas storage interests to Star Energy "for greatly above the book cost" realised a profit of almost €9m (£8m), representing the bulk of the year's profit.
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The fracture-stimulation of six onshore wells in Holland to improve their flow rates has significantly exceeded previous predictions. Northern's share of initial production from the six fields is estimated at 2,100 barrels of oil equivalent per day (boepd) and is expected to rise to 6,000 boepd by 2013. Additionally, in Holland, Northern has started a two-well exploration programme targeting substantial gas reserves. In total, Northern is planning to drill more than 10 wells over the next 18 months.
Italy offers the greatest growth potential. The Savio-1 well recently disappointed, but the group has several other sizeable prospects in the promising Po Valley. Furthermore, the farm-out of six licences offshore Sicily underpins the value of these assets and brings in Shell as a valuable partner, with whom Northern might expand its Italian ventures. Northern's acquisition of ATI shares not already owned will give it greater control over its Italian licences and makes them more attractive to potential partners.
Prior to these results, Edison Investment Research was forecasting 2009 pre-tax profit of £9.4m and EPS of 8.4p.
| NORTHERN PETROLEUM (NOP) | ||||
|---|---|---|---|---|
| ORD PRICE: | 129p | MARKET VALUE: | £91.8m | |
| TOUCH: | 124-134p | 12-MONTH HIGH: | 163p | LOW: 53p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 10 | |
| NET ASSET VALUE: | 89¢ | NET CASH: | €34.9m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2004 | 0.47 | -0.49 | -0.98 | nil |
| 2005 | 0.50 | -0.40 | -0.80 | nil |
| 2006 | 0.30 | -1.70 | -2.70 | nil |
| (€m) | (€m) | (¢) | (p) | |
| 2007 | 5.93 | 30.0 | 29.7 | nil |
| 2008 | 6.95 | 11.6 | 14.1 | nil |
| % change | +17 | -62 | -53 | - |
£1=€1.132 |
||||
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