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Norway’s Northern Oil Buys Offshore Oil Licenses in Brazil

Vancouver-based Naftex Energy Corporation announced yesterday that Norway’s Northern Oil, its parent company, has executed a definitive agreement to purchase 3 offshore licenses in the Camamu and Almada Basin, Brazil.

On one of the licenses, a significant natural gas discovery was made in 2000, the Manati field, which is currently being developed for anticipated mid 2006 production.


Northern Oil’s interest in this discovery is 10% and the project is expected to double the group’s current production and almost double P1 and P2 reserves.


In addition, Northern Oil will participate in the drilling of 5 scheduled exploration wells in 2005. Drilling is scheduled in each of the 3 licenses. Northern Oil’s interest is 18.33% in the other two licenses.


Northern Oil’s financial commitment under the purchase and sale agreement corresponds to approximately US$ 85 million. This includes dry hole and testing cost for the 5 exploration wells and costs for the drilling of delineation wells and infrastructure construction in the Manati gas field.


Northern Oil’s independent engineering firm Gaffney Cline has evaluated the reserves in the field to the 100% to be in P1 – 6.6Bm3, P1 and P2 – 21.9 Bm3. In addition, they anticipate around 0.2MMm3 of condensate in each of the categories.


Included in the project is the ownership of 10% in a 125 km long 24 inch pipeline (partly onshore, partly offshore) currently being constructed with a terminus point close the city of Salvador, in the state of Bahia.


At this point Petrobras, the purchaser of the natural gas under a long term take and pay contract, takes title to the gas. The contract is in reais, the local currency.


Northern Oil’s 10% license also has a discovery to the south of the Manati field. The anticipated oil reserves in this field, to the 100%, are by the consortium estimated at around 10 million barrels with around 2Bm3 of natural gas.


This field extends into a 3rd party license and a unitization process is needed in order to better allocate the reserves.


Northern Oil is currently working on various financing options for this transaction, which is anticipated to be closed with a combination of bank financing, equity and potentially also by issuing bonds.


Northern Oil has received encouraging support for bank financing, however the company will also have to raise risk capital in connection with this acquisition.


The agreement is executed allowing either Northern Oil ASA or affiliates or NaturGass(USA) AS or its affiliates to consummate the transaction, and has various subjects including financing and regulatory approval.


Naftex is the indirect owner of all of the shares in Coplex Brasil. Coplex Brasil participates with a 27.5% interest in three operating licenses offshore the Santo Catarina Coast in Southern Brazil, identified as the coral, Estrela-do-Mar and BS-3 licenses.


The partners in all three licenses are Starfish Oil & Gas (with 7.5% participating interest), Queiroz Galvão Perfurações S.A. (30% interest) and Petrobras (35% interest). Petrobras is the operator of all three licenses.


Northern Oil
www.northernoil.no


PRNewswire

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