19 May 2015 07:00
Northern Petroleum Plc
("Northern Petroleum" or "the Company")
Production update
Northern Petroleum, the AIM quoted oil company focusing on production led growth, provides the following update regarding production activities in north west Alberta, Canada.
Highlights
§ Production package for well 100/16-19 now ready to be transported to well site with production start up planned for beginning of June
§ Start up production rate of between 75 and 100 barrels of oil per day ("bopd") expected from the well
§ The pump on well 102/15-23 has been installed and expected production of approximately 150 bopd will start following remedial maintenance on the pipeline by the local operator - forecast for Q3 2015
§ At US$55 WTI, operating net back after royalty is forecast to be approximately US$30 per barrel
§ At current oil prices, net cashflow from both wells is expected to cover most of the total general and admin costs for the Company
§ Planning continues to re-start economic production from other shut-in wells
Keith Bush, Chief Executive Officer, commented:
"Recent work has been focused on ensuring the business can operate effectively in the current oil price environment. The benefits of this work can now be seen, where production from only two wells is expected to effectively support the whole group. The timing of the production shut-in during the first quarter of 2015 will also benefit cashflow due to the recent firming in oil prices and a reduction in operating costs as a result of reduced service rates."
Production operations
100/16-19
A production package for the 100/16-19 well was purchased and following the implementation of some design changes is now ready to be installed at the well pad. The package includes an 800 barrel storage tank, separator and flare stack. The pump and heater have also been configured to be powered by associated gas produced from the well, which brings operating cost savings. The larger storage tank will provide better onsite oil and water separating capability and a reduction in regular trucking movements, which will benefit production uptime during the wet periods. Starting in June, the well is expected to produce at 75 to 100 bopd, subject to well reservoir performance and associated water production.
102/15-23
The pump on 102/15-23 has now been installed and the local operator, who owns and manages the pipeline and processing infrastructure that 102/15-23 is tied into, has undertaken a programme of maintenance which has affected the well. Work required to ensure the integrity of the pipeline that the well is tied into will be conducted early in the third quarter, after which production will restart. An initial production rate of approximately 150 bopd is planned and reservoir performance and water cut will determine future production rates and decline.
Remaining well stock
The remaining Company wells have a total production capacity of approximately 250 bopd at water cuts greater than 50 per cent. Establishing disposal of the produced water as economically as possible is key to the restart of production from these wells. Other operators in the area have demonstrated that wells can produce economically at water cuts greater than 95 per cent and the Company is now reviewing the options for each well to ensure that the recovery and value from the wells is maximised.
-Ends-
For further information please contact:
Northern Petroleum Plc Tel: +44 (0)20 7469 2900
Keith Bush, Chief Executive Officer
Nick Morgan, Finance Director
Westhouse Securities Limited (Nomad and Joint Broker) Tel: +44 (0)20 7601 6100
Alastair Stratton
Robert Finlay
FirstEnergy Capital LLP (Joint Broker) Tel: +44 (0)20 7448 0200
Jonathan Wright
David van Erp
Note to Editors:
Northern Petroleum is an oil and gas company focused on production led growth. The Company is undertaking a redevelopment and production project in north west Alberta and has a broader portfolio of exploration and appraisal opportunities in countries of relatively low political risk, primarily Italy. Comprehensive information on Northern Petroleum and its oil and gas operations, including press releases, annual reports and interim reports are available from Northern Petroleum's website: www.northernpetroleum.com