Northern Petroleum – Tosca well abandoned – almost irrelevant

PUBLISHED: Sep 07 2012 @ 03:44 | Comments (0) | More info about Tom Winnifrith

AIM listed oil and gas producer and explorer Northern Petroleum (LSE:NOP) farmed out its La Tosca gas play in the Po valley. So its costs in drilling the well were trivial. It was announced today that the well has been abandoned as a write off. In the greater scheme of things this is pretty irrelevant. It might have been worth a couple of pence per share to Northern it is now worth zero pence in total.

In contrast (given that at 65.5p the company is valued at £62.5 million),the company sits on three assets each of which could easily be worth £60 million or more: Dutch gas (which generates cash of £10-20 million a year), Italy ( the offshore acreage where there is 52mmboe) and Guyane ( see recent bid activity by Total). And it has £20 million of cash. For a more detailed analysis see here. The stance remains strong buy.

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