Northern Petroleum provides production and development update

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Northern Petroleum (AIM: NOP), the AIM quoted oil company focusing on production led growth, provides the following update regarding production and development in north west Alberta, Canada:

  • net average oil production from 1 April up to and including 18 April was 449 barrels of oil per day (‘bopd’)
  • regional trucking restrictions were imposed between 19 and 29 April due to the expected annual spring thaw, which can cause wet and difficult road surface conditions:
    • production from wells tied in via pipeline continued at a rate of approximately 212 bopd for the remainder of April
    • overall average production for the whole of April was therefore 354 bopd
  • trucking restrictions were lifted on 29 April due to unusually dry weather allowing the local roads to dry out quicker than in previous years
    • trucked wells now back in production
  • 9-25 battery ready for start up once final approvals are obtained from regulator, which will initially add another three producing wells
  • costs incurred to date at the Rainbow redevelopment project indicate that operating costs per barrel are between US$20 and US$25, when measured at an average production rate of 400 bopd
  • the variable operating costs per barrel of incremental production over and above 400 bopd are forecast to be between US$4 and US$10 per barrel, depending on whether the oil is transferred to the processing facility by pipeline or truck
  • following the completion of the current programme, a summer work programme will be developed for Q3, to achieve further production enhancements and operating cost synergies.

Keith Bush, Chief Executive Officer, commented:

‘The operations team in Canada and London have done well to more than double production in the last three months, with production from the 9-25 battery yet to be added. This has provided a production base which gives valuable net cashflow for the group.

‘Additional production above the current level comes at very low incremental cost and is a key focus once the current work programme is completed. The Company has substantial owned infrastructure which can process much higher volumes of production with a limited increase in fixed operating costs. Building production from here will create an asset with very attractive net cashflow and value, even at current oil prices.’

 

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