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Northern Petroleum farms out 6 Italy licences to Shell


Thu Dec 4, 2008 4:28am EST

Dec 4 (Reuters) – Oil and gas explorer Northern Petroleum Plc (NOP.L: Quote,ProfileResearchStock Buzz) said on Thursday it farmed out six of its offshore Sicily Channel licences in Italy to an affiliate of Royal Dutch Shell Plc (RDSa.L:QuoteProfileResearchStock Buzz), sending its shares up 9 percent.

Shell will pay 1.9 million euros ($2.41 million) as back-costs to Northern Petroleum for the licenses. It will also pay the complete expenses related to reprocessing and seismic programmes, Northern said in a statement.

Under the agreement, Shell Italia E&P SpA will get 70 percent in three licenses and 55 percent in the remaining three from Northern Petroleum (UK) Ltd.

Northern Petroleum has a 50 percent stake in these blocks with the remaining stake held by Plus-quoted ATI Oil Plc (ATIP.PZ: QuoteProfile,ResearchStock Buzz). Northern has a 37.05 percent stake in ATI Oil.

Northern separately said that ATI Oil would assign to Northern its entire economic interest in the six exploration licences.

Northern will pay royalties and also extend an existing 2 million pound ($2.95 million) loan to ATI until December 2011.

The Shell farmout marked the completion of a second Italian deal in recent months and Northern viewed the Sicily Channel acreage as having significant potential.

In a separate release, Northern Petroleum said Dutch state-owned oil and gas company EBN would take a 40 percent stake in the Andel III production licence in the Netherlands.

The Andel III licence will run for 30 years from Nov. 19.

Shares of Northern Petroleum were up 5 pence at 62.5 pence at 0927 GMT on the London Stock Exchange. ($1=.7900 Euro) ($1=.6784 Pound) (Reporting by Balachander Surianarayanan in Bangalore; Editing by Gopakumar Warrier)



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