Northern Petroleum Shares Rise Following JV Agreement With Shell

By Alex MacDonald

LONDON--Shares in Northern Petroleum PLC (NOP.LN) rose Thursday after the U.K.-listed oil and gas firm said it has entered into a joint venture agreement with oil major Royal Dutch Shell PLC (RDSB.LN) to explore for oil and gas at Northern's onshore Cascina Alberto permit in north-west Italy.

Under the terms of the agreement, Northern Petroleum will transfer an 80% stake in the permit plus operatorship to Shell in return for $850,000 in cash plus coverage of certain exploration and development costs.

Shell will be responsible for covering up to $4 million of the costs related to any seismic research on the permit. The oil major will also assume responsibility for covering up to $50 million of the costs associated with any future exploration well.

Shell will also have a pre-emptive right to buy Northern's remaining interest in the Cascina Alberto permit in the event of any change in control at the asset or corporate level.

The Cascina Alberto permit was awarded to Northern Petroleum in July 2014.

At 0856 GMT, Northern Petroleum's shares were up 6.5% at 5.75 pence a share, resulting in a market capitalization of 5 million pounds ($7.9 million).

The joint venture agreement is subject to approval from Italian authorities.

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