Northern Petroleum’s wholly owned subsidiary, Northern Petroleum (UK) Ltd., has signed a farm-out agreement, which includes the agreed terms of a joint operating agreement, with Shell Italia E&P SpA, a wholly owned subsidiary of Royal Dutch Shell Plc, in respect of its Cascina Alberto permit, which is located onshore in northwest Italy.
Key terms include that Northern Petroleum will farm out an 80% equity interest in the Cascina Alberto permit and will transfer operatorship to Shell, which will pay US$850,000 in cash on completion. Shell will carry Northern Petroleum for the costs of the exploration campaign, which will include a carry on the acquisition of any new seismic until the seismic costs reach US$4 million and a carry on any exploration well until the well costs reach US$50 million.
Shell has a preemptive right over Northern Petroleum’s remaining interest in the Cascina Alberto permit in the event of any change in control at the asset or corporate level. Completion is subject to approval of the interest transfer by the Italian regulatory authority.