northern petroleum jv shell 1.9 billion

Northern Petroleum expanded its footprint in the waters off of Sicily this morning, confirming that it had been preliminarily awarded offshore permits d25G and d26G which are adjacent to six licences the company placed into a joint venture with Shell’s (LSE: RDSB) Italian subsidiary in December 2008.

The two licences cover 897 square kilometres in the Apennine-Maghreb Thrust Belt, bringing the company’s total offshore acreage in Italy to 5,267 square kilometres.

“The geological elements there offer significant oil and gas potential in this already recognised province, similar to the large Val d'Agri fields in Southern Italy," commented Derek Musgrove Managing Director, Northern Petroleum. "The "Thrust Belt" is one of four core areas offshore Italy that contain some of the greatest medium and long term growth potential for the Company. We have already mapped several prospects of a billion barrels plus. These applications were a follow up to the results from reprocessing and mapping of our 2006 seismic survey. We, together with Shell, have subsequently moved forward on the six licences with the recording of a further 2D seismic survey in 2009."

Northern Petroleum's joint venture with Shell will see the supermajor earn up to 55% in three licences (GR17-NP, GR18-NP & GR19-NP) and 70% in a further three licences (GR20-NP, 21, & 22).

Shell also paying 100% of the costs for seismic reprocessing and a 2008/2009 2D seismic programme, and two additional 3D seismic surveys if proposed by Shell.

Shell will also pay 100% of the cost of the first well, if it elects to drill. Northern Petroleum said that the gross estimate of the work programme was in excess of €100 million, which it would be free carried.

The current unaudited, mean, combined and unrisked Prospective Resources of all mapped prospects in the six licences estimated by Northern Petroleum is 1.9 billion barrels recoverable.

Northern further stated at the time that it was continuing discussions with Shell about expanding their partnership in Italy.