Northern Petroleum Plc
LSE : NOP

April 17, 2009 02:30 ET

Trading Update and Accounting Policy Changes

Embargoed for release: 0730 on 17 April 2009

                                                 
                                      Northern Petroleum Plc
                            ("Northern", "the Group" or "the Company")
                                                 
                         2008 Trading Update and Accounting Policy Changes

HIGHLIGHTS

    *        £7 million in cash received from Star Energy Group Plc for sale of interests in non-core
             underground gas storage projects
        
    *        €34.9  million  cash mostly held in Euros and a receivable of €8.5  million  deferred
             consideration
        
    *        Waalwijk and P12 revenues of approximately €6 million, 11% above 2007 actual of  €5.4
             million
        
    *        Change in the Company's functional  currency to Euros with effect from 1 July 2008
        
    
Production

Northern's  net  attributable production for 2008 was approximately 0.12 million boe  (2007:  0.16
million  boe). The majority of this production came from the Waalwijk and P12 gas fields,  with  a
combined  total of approximately 0.66 bcf (2007: 0.88 bcf). Production at the Horndean  oil  field
totalled  6,564 barrels for the year, just 2.7% lower than in 2007. Oil production  from  Avington
commenced in early 2009.

Trading

During  2008,  revenues from the Group's producing fields were obviously enhanced  by  the  higher
hydrocarbon prices that persisted for much of the year.

The  Waalwijk and P12 fields contributed revenues of approximately €6.0m (2007: €5.4m), 11% higher
than during 2007. Oil revenues at Horndean increased to approximately US$0.6m (2007: US$0.45m).

In  the  2008  results,  the Group will account for its transaction with  Star  Energy  Group  Plc
("Star"),  a  subsidiary of Petronas International Corporation Limited. Northern sold  its  entire
interests in the Waalwijk underground gas storage projects to Star for an initial consideration of
£7m, with further contingent payments payable of up to £3m.

The  Group had approximately €34.9m net cash as at 31 December 2008. The majority of that cash  is
held  in  Euros,  which  provides  a  natural hedge for the Group's  ongoing  capital  expenditure
programme.  In  addition there remains €8.5m of deferred consideration receivable from  Dyas  B.V,
with  the next instalment of €4.5m due on 30 April. Since the year end Northern has received  back
costs of approximately €0.96m from Shell Italia and also back costs plus interest of approximately
€4.95m from EBN in respect of the Andel III production licence.




Change in Functional Currency and other accounting policy changes


Following  a review of certain accounting policies by the Board, and discussions with the  Group's
auditors, KPMG Audit Plc ("KPMG"), the following changes have been agreed:



    1.      The Company has changed its functional currency to Euros with effect from 1 July 2008. As
        such the 2008 Annual Report and Financial Statements will be presented in Euros. These changes
        reflect the primary economic environment in which the Northern Group now operates.
        
        The  impact  on  the  financial statements will be a restatement into Euros  of  the  2007
        reported results including the opening 2007 balance sheet.
        
    2.      An amendment to the Group's accounting policy on capitalisation of directly attributable
        salaries, with salaries consolidated at the subsidiary level no longer to be written back to the
        income statement to the extent that they have not been recovered from co-venturers. This change
        brings Northern's policy in line with most of its industry peers and complies with International
        Financial Reporting Standards.
        
        The  net  effect of this change will be to increase consolidated net assets  and  increase
        consolidated  retained  earnings by approximately £2.4m (approximately  €3.2m)  as  at  31
        December 2007.
        
    3.      In accordance with IFRS 2 'Share-based payments' the charge to the income statement is now
        to be spread over the period between award and vesting.
        
        This change will have no effect on reported consolidated net assets, but will result in an
        increase  in  the  share  incentive  plan reserve and a decrease  of  approximately  £1.7m
        (approximately €2.2m) in consolidated retained earnings as at 31 December 2007.
        


More  detailed  information  on these changes will be disclosed in  the  2008  Annual  Report  and
Financial Statements.

In  addition to the Company, three subsidiaries of Northern have also changed their functional and
presentational currencies to Euros from the same effective date.


Notice of Results

The  figures in this announcement are unaudited. Northern expects to release its results  for  the
year ended 31 December 2008 in mid May 2009.


Chris Foss, Finance Director of Northern, commented:

"2008  has  been another year of significant financial and operational progress.  Consequently  we
stand  well  positioned  to  deliver on our primary near term  objective  of  bringing  our  Dutch
developments  onstream, whilst looking forward with anticipation to exploration success.  Northern
sees  the  current  market turmoil as a significant growth opportunity, and is delighted  to  have
expanded  its  Italian  footprint by agreeing terms of the acquisition of ATI  Oil  Plc  with  its
independent directors."

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.
                                            ---ENDS---
                                                 
                                                 
For further information please contact:

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

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

Blue Oar                                          Tel: +44 (0) 20 7448 4400
Jerry Keen / Toby Gibbs

Jefferies International                           Tel: +44 (0) 20 7029 8000
Chris Snoxall / Schuyler Evans

Bishopsgate Communications (Press)                Tel: +44 (0) 20 7562 3350
Nick Rome / Michael Kinirons

Buchanan Communications (Analysts)                Tel: +44 (0) 20 7466 5000
Tim Thompson / Ben Romney


Contact Information

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