“Part blocks” 98/13 and 98/14 border the company’s existing onshore licences on the island itself.

The company’s subsidiary NP Solent will hold 62.5 per cent of the licences and is the operator.

The other shareholders are Magellan Petroleum (22.5 per cent),Encore Oil Plc (7.5 per cent), Montrose Industries (5 per cent) and Oil & Gas Investments (2.5 per cent).

Managing director Derek Musgrove said: "We are very pleased to have been offered part blocks 98/13 and 98/14. 

“This allows the joint venture to evaluate the oil and gas potential of the mapped well defined prospect that extends from the Isle of Wight into the English Channel.” 

One of Northern’s offshore blocks butts up against two of the five licences acquired by Wessex Exploration and its partner Norwest Energy of Australia.

They are building up acreage around Wytch Farm, Britain’s largest onshore oil discovery.

Europe-focused oil and gas explorer Northern Petroleum (LON:NOP) announced this morning that it has sold its interest in the Vinkega gas field in the Netherlands for €3.2 million

Discovered after the Vinkega-1 well was drilled in late 2009, the Vinkega field has been mapped as underlying both part of the Gorredijk licence (owned by Vermilion Oil & Gas Netherlands) and part of the Drenthe III licence, in which Northern Petroleum Nederland holds a stake.

The firm said today that all of the Drenthe III licence holders have agreed to the sale of their respective Drenthe III interests in the Vinkega field to Vermilion, with Northern Petroleum Nederland’s share of the consideration being €3.2 million. 70 percent of the purchase price has already been paid on signing of the sale and purchase agreement, with the remaining 30 per cent being payable following completion.

“The sale will enable a smooth transition into production under Vermilion's team and make a useful financial contribution to our hopefully successful exploration activities on the Drenthe III licence in the near future,” said Derek Musgrove, Northern Petroleum’s managing director. “Northern considered that Vinkega was not a prospect of sufficient size and structural appeal to have attracted a wildcat well on the Drenthe III licence alone. On behalf of the Drenthe III licence interest holders I thank Vermilion and their partners for their work and efforts.”

Northern Petroleum (LON:NOP) told investors that it has now completed a 2D seismic survey over a 600 square kilometre area in the Southern Adriatic.

The survey spanned two licences, F.R39.NP & F.R40.NP, which contain the Rovesti and Giove oil discoveries as well as ten mapped prospects.

In March this year Northern Petroleum agreed a new tie-up for the licences with Azimuth Ltd. The new partner will take a 15 percent stake in the permits by funding a share of the future work programmes.

This seismic survey is part of a work programme that is being funded by Northern Petroleum. 

The current work programme is designed to gather a more complete and better quality data set for the area, Northern said. This will then allow an upgrade definition of the encouraging prospects identified from older seismic surveys.

A further 3D seismic is planned in 2012. At the moment the company is awaiting approvals from all the relevant authorities before work begins.

One of the objectives of the Azimuth agreement is to define and delineate suitable appraisal and exploration drilling targets. 

Giove and Rovesti oil fields have been independently assessed to have 53.2 million barrels of probable oil reserves. 

While NOP estimates that they have more than 3 billion barrels of oil-in-place, and gas prospects with over 2 trillion cubic feet of gas-in-place - over 1 billion barrels oil equivalent.

The two partners are sharing a 2.5 per cent stake, each holding 1.25 per cent, in the Guyane Maritime license, which hosts the Zaedyus exploration well. Although these are fairly small stakes, the license is believed by analysts to have ‘billion-barrel’ potential therefore Zaedyus could prove to be very significant for these small-cap players.

While Zaedyus is a significant operational achievement for Tullow, the group’s fortunes are shared with a number of other partners. Two other main partners Shell (LON:RDSB) and Total (NYSE:TOT, EPA:FP) respectively own 45 and 25 per cent stakes in the Guyane Maritime license, that hosts the exploration well.

Shares in Wessex Exploration – which is the smaller of the two juniors – rocketed over 45 per cent in opening trade, while Northern Petroleum shares gained over 20 per cent. The market’s enthusiasm for the well result was not confined to these minority partners. Tullow shares advanced 121p, around 10 per cent, to trade at £13.46. 

However it takes a little more than an exploration well to move the needle for Shell (LON:RDSB) as the super major added just 0.4 per cent to its £55 billion dollar market value. Similarly Total’s Paris-listed shares gained just 1 per cent.

In a stock exchange statement this morning, Tullow revealed that the Zaedyus exploration well has successfully discovered oil offshore French Guiana.

The exploration well encountered 72 metres of net oil pay in two turbidite fans, Tullow revealed. The company said that it has found good quality reservoir sands that are ‘on prognosis’ with pre-drill expectations – based on results of drilling, wireline logs and samples.

With this well Tullow aimed to replicate the success of the Jubilee discovery in Ghana, but this time off the coast of South America. The Zaedyus target is said to ‘mirror’ the large Jubilee oilfield, which came on stream last year. "The discovery at Zaedyus has proved the extension of the Jubilee-play across the Atlantic and made an important new discovery in French Guiana,” said Tullow’s exploration director Angus McCross.

“Tullow has built a commanding and unique acreage position in South America and this result marks the start of a significant and potentially transformational long-term exploration and appraisal campaign in the region."

According to Tullow, Zaedyus opens up a whole new hydrocarbon basin, in which it has already mapped several neighbouring prospects, and the result reduces the exploration risk associated with Tullow's prospect inventory offshore French Guiana, Suriname and Guyana.

An appraisal programme and extensive follow-up exploration activities will now be considered.

Meanwhile drilling will continue on the Zaedyus well. The deep-water well, which is in water depths of around 2,000 metres, has currently been drilled to a depth of 5,711 metres. It will now be deepened, to over 6,000 metres, so that Tullow can calibrate the deeper geology and it is likely to be sidetracked so that cores can be obtained over the reservoir sections.

Wessex Exploration chairman David Bramhill, in a stock exchange statement, told investors: "(We are) obviously extremely pleased with the results of the well.

“The project is being very professionally managed by the operator and the other joint venture partners and we are delighted to be associated with the initial success received to date.  At the time of our AIM admission in March 2011 we had high hopes for the well and are delighted to be able to share this success with shareholders."

Meanwhile in a separate statement, Northern Petroleum managing director Derek Musgrove added: "This has been and continues to be an adventurous well both in terms of petroleum geology and technical operations challenge in over 2,000 metres of water. 

“It has taken some time, but we are beginning to feel that the results are encouraging.

“It is a pleasurable experience to be working in an exploration group with Tullow, Shell and Total encountering and overcoming the operational challenges. I trust that we have gained some useful experiences to apply in the future offshore Italy where our interests are greater."

At 8:41, Wessex Exploration shares were up 1.75p a share, about 36 per cent, trading at 6.575p. Meanwhile Northern Petroleum shares were changing hands at 90.5p – up 18.5p, or 25 per cent each

Northern Petroleum (LON:NOP)  has begun operations for an extended well test at its Markwells Wood oil discovery in West Sussex, UK.

The test is designed to help Northern and its joint venture partners, Magellan Petroleum and Egdon Resources, to evaluate the potential and plan for future development of Markwells Wood – which is targeting 2P reserves of 5.7 million barrels.

The firm said that the workover rig arrived on site yesterday and that the installation of testing facilities will begin in early October. Production testing may take 40 days and will use a linear reciprocal pump that has a lower height profile, lower noise emission and a smaller footprint than the more traditional ‘nodding donkey’ pump.

Northern has a 50 per cent interest in Licence 126, which covers Markwells Wood.

“Oil was encountered during the drilling of Markwells Wood towards the end of 2010,” commented Derek Musgrove, Northern’s managing director. “A core sample in the Great Oolite reservoir formation was successfully recovered and subsequently subjected to many laboratory tests. These established petrophysical characteristics of the formation and preferred stimulation treatments if required. Following completion of this work, the current programme was designed and contracts issued.”

Northern – a geographically-diversified hydrocarbons explorer and producer that focuses on areas of low risk – has operations in the Netherlands, Italy, French Guiana and Spain, as well as in the UK where production provides low-cost cash flow for the firm’s developments elsewhere. 

Northern Petroleum (LON:NOP) is set to step up its activity in the South Adriatic after the Italian ministry of economic development signed off on its plans.

The work, primarily consisting of seismic exploration, will centre on two permits that host the Rovesti and Giove oil discoveries which currently host 53.2 million barrels of 2P reserves between them.

A 2D seismic survey is already contracted and scheduled for later this year (late Q3/early Q4). This 2D survey should help de-risk the area’s significant exploration prospects, Northern said. Subsequently Northern is planning two 3D seismic surveys over Rovesti and Giove.

The 3D programme is slated for Q4 and Northern said that the planning phase will intensify, now that the ministry has approved its plans.

"Exploration of the Southern Adriatic area is a major priority for Northern, so I am delighted to be able to report greater visibility on our forward plans as a consequence of the approval of our enhanced work programmes for the two permits,” said managing director Derek Musgrove.

“CGG Veritas should be commencing a 2D survey in late Q3 / early Q4, and we look forward to also firming up the 3D surveys, the first activities with our new partner, Azimuth, within our 2011 programme.”

Speaking about a potential cooling of the Italian government’s stance on offshore oil exploration, Musgrove added: "I note the recent offshore permit award announced by ADX Energy, after a twelve month hiatus. 

“I am hopeful is a positive sign of the start of the award of new offshore permits to both Northern and other applicants."

Northern believes the permits have the potential over 3 billion barrels of oil-in-place and gas prospects with a mean of over 2 trillion cubic feet of gas-in-place.

All this work is being funded by Azimuth Ltd who agreed to farm-in to the permits, by covering certain exploration costs, back in March. Through the deal the privately held firm can earn a 15 percent stake.

Azimuth chief executive Aaron D'Este said: "Receiving Ministry approval for the enhanced work program is excellent news. 

“We already know that there is an active petroleum system in the Adriatic  basin and 3D seismic is the natural next step to highlight commercial accumulations. Working closely with Northern Petroleum, we will complete the planned surveys as quickly and safely as possible, and then move on to defining drillable targets early in the New Year."

The forecast of between 1,550 to 1,650 barrels of oil equivalent per day was significantly more than the 1,195 boepd produced in 2010, he said. "This would still be the best year for production yet," he said.

The company was well positioned to withstand unforeseen events, he also told the meeting, as he went through the firm's activities.

"The balance sheet remains strong, with the group's year end net cash of €21.4 million having risen to €24.5 million as of 27 June this year. Northern has no external debt, but has the production and reserve base to, in due course, obtain debt on appropriate terms."

He said the firm held a little over 89 million barrels of oil equivalence of proven and probable reserves and that activity over the next 12 months would be focused on progressing and de-risking assets included in this reserve and those with high potential exploration.

Long term tests on the Markwells Wood (UK) and Ottoland oil (Netherlands)  discoveries will begin this summer, he said.

The Papekop-2 and Geesbrug-2 wells, also in the Netherlands, are being planned for drilling in late 2011 / early 2012 and gas from Geesbrug-2 can be put on-stream immediately from existing facilities, he added.

Meanwhile, he said the first stage of resolving technical difficulties at  Wijk en Aalburg had been completed and the well is back on a limited production.

2D and 3D seismic studies are planned for H2 on the company's southern Adriatic permits, alongside its new 15 percent partner Azimuth.

Meanwhile, Latham added: "The drilling of the 300-700 million barrel Zaedyus prospect offshore Guyane, with Tullow, Shell and Total as partners, is ongoing. The well is now currently expected by the operator to finish drilling in early August 2011. If successful, this well could open up a new petroleum province where currently at least six similar structures have been mapped."

He also revealed that further work is being done to quantify the oil resource potential of the shale in the licences in the West Netherlands basin.

The company's share price was up 3.16 percent today - changing hands at 81.50 pence.

Shares in oil and gas group Northern Petroleum (LON:NOP) edged up in early trade after it sounded a confident note on outlook, pointing in particular to the “significant” upside potential of projects in Italy.

The company, which announced a profit warning last month, revealed a small loss over its full year.

For its full year to December 2010 the group posted a loss of €200.000 on revenues of €15 million. Average production for the year increased to 1,195 barrels of oil equivalent per day (boepd) compared to a 2009 average of 365 boepd.

The loss is attributed to charges including impairment. The cash position currently stands at €23 million of cash.

The company’s shares were badly hurt last month when it cut reserve estimates at three of its five gas fields in the Netherlands and issued a profits warning.

Today the group indicated production for 2011 will be in the range 1,550 to 1,650 boepd, assuming three months of downtime to allow for remedial action at its Wijk en Aalburg field in the Netherlands, one of the three affected by the cut in reserves.

Wijk en Aalburg, which only began commercial production in December 2010, initially produced increasing quantities of oil but this was eventually followed by increasing quantities of water, hitting production levels.

Northern is planning on providing further guidance on production later in 2011.
  
The group’s chairman Richard Latham struck an especially upbeat note on prospects in Italy which the group believes have “significant upside” potential and of a different order of magnitude to the ventures in the Netherlands.

In Italy Northern is continuing discussions with existing and potential future new partners to explore and drill large licence positions containing “significant prospects with highly material potential”. In addition, the group is moving forward the developments of its Rovesti and Giove oil fields with 53 million barrels of proven and probable oil reserves. “Even allowing for new partners providing the required finance our interests in these projects should remain substantial,” said Latham.

In response to the results Will Arnstein, analyst at finncap, said the numbers look in line but that "there is little new to get excited about on the operational side and production guidance for 2011 is disappointing". As a result, Arnstein reckons the risk to finncap's forecasts is on the downside. "With few catalysts we see no reasons to upgrade our rating at this time," he adds.

finncap has an 85p target price on the stock and rates it at 'hold'.

In early morning trade Northern Petroleum shares were up 1.5p to 80p, valuing the company at £74m.

Northern Petroleum (LON:NOP) has cut its Dutch gas reserves and lowered its production forecasts for this year because of problems at three of its gas fields.

It is currently carrying out an economic and technical evaluation of the assets. 

NOP has been reprocessing 3D seismic data for some time.  Once this is complete the field models will be updated with the production data. It will then be possible to make a further assessment of the reserves, the company said.

In total the group’s reserves – proved plus probable (2P) – has been reduced by 75.24 billion standard cubic feet of gas (Bscf), which equates to 12.97 million barrels of oil equivalent. At the last count – the June 2010 interims - the group’s total 2P reserves stood at 102.67 million barrels of oil equivalent.

NOP said it now expects it will report a loss, for the year ended 31 December 2010, because of additional non-cash depletion and impairment charges to the income statement. 

On AIM the shares fell around 35 percent in early deals, dropping almost 40 pence a share. At 8:15 shares were changing hands at 72.75 pence each.

In 2010 average production was about 1,200 barrels oil equivalent per day and NOP expects to report 2010 revenues of €15 million – which is said was broadly in line with market expectations. 

In 2011 average production reached 1,900 barrels of oil equivalent a day during the first four months, NOP also highlighted that Dutch gas prices have risen by 13 percent.

At Geesbrug – the largest of the three affected fields - 1P reserves reduced from 73.63 to 60.22 Bscf and 2P reserves were cut from 137.85 to 72.79 Bscf.

This reduction is due to a new static reservoir model. Additionally the field was analysed in terms of its production profile to date as well as the disappointing results from the Tiendeveen-1 well which was drilled five kilometres away.

NOP said that the drilling of the new Geesburg-2 production well is being pushed back, so that the reprocessed 3D seismic data can be used to determine the most appropriate well location. It won’t be drilled in 2011 as originally planned instead it will be drilled in early 2012.

Geesburg-2 will be a 3,000 – 4,000 foot lateral well which will use multi-stage fracturing. This is designed to allow for higher production rates compared to near vertical wells. 

At the Grolloo gas field – where 1P reserves were cut from 6.44 to 2.29 Bscf and 2P reserves dropped from 10.52 to 3 Bscf – there has been a pressure issue.

When the field came online in late 2009 NOP’s plan was to install compression equipment to boost production, once the pressure had stabilised. However NOP now says that as yet no stabilisation has occurred and it does not think it is feasible to add compression in time to make a material impact to 2011 production. 

Meanwhile at the third field Wijk en Aalburg – where 1P reserves were reduced from 3.82 to 0.36 Bscf and 2P reserves fell from 5.49 to 2.83 Bscf – there has been increasing volumes of water production. NOP said that there are several possible explanations for such behaviour and the issues are being addressed.

It emphasised that instruments were placed in the well on 25 May, as a first step in identifying possible intervention options. 

The company warned that if well intervention ultimately proves unsuccessful, then it would expect a significant non-cash depletion and impairment charges for the year ending 31 December 2011. NOP said that the size of these impairments will depend on future field performance and gas prices. 

At the end of 2010 Wijk en Aalburg was deemed to be worth €8 million. 

Elsewhere NOP highlighted that the first Papekop oil development well is planned for later this year, this well will include a horizontal hydraulically fractured section.

Onshore UK at Markwells in Surrey NOP is at the advanced planning stage for a production test, which is scheduled this summer.

It said it is also making progress towards the drilling high impact exploration prospects in Italy.

Azimuth Ltd has taken a 15 percent stake in the permits by funding a share of the future work programmes.

The Giove and Rovesti oil fields have been independently assessed, by Blackwatch Petroleum Services, to have 53.2 million barrels of probable oil reserves. While NOP estimates that they have more than 3 billion barrels of oil-in-place, and gas prospects with over 2 trillion cubic feet of gas-in-place - over 1 billion barrels oil equivalent.

The company also has an interest in another project in South America, which has the potential to be very significant. 

It has a 1.25 percent stake in the Zaedyus exploration prospect offshore Guyane (French Guiana), which is currently being drilled by Tullow Oil (LON:TLW) alongside its partners Total (NYSE:TOT) and Shell. AIM-market new boys Wessex Exploration (LON:WSX) also have a 1.25 percent interest in the prospect.

The Zaedyus well is targeting a 700 million barrel P10 prospective resource.

Northern Petroleum (LON:NOP) has a new partner for the Rovesti and Giove oil discoveries, and ten mapped prospects, in the south Adriatic sea.

Azimuth Ltd will take a 15 percent stake in the permits by funding a share of the future work programmes.

Giove and Rovesti oil fields have been independently assessed, by Blackwatch Petroleum Services, to have 53.2 million barrels of probable oil reserves. While NOP estimates that they have more than 3 billion barrels of oil-in-place, and gas prospects with over 2 trillion cubic feet of gas-in-place - over 1 billion barrels oil equivalent.

"This deal brings additional resources and skills to assist Northern to progress the future development of reserves and drilling of exploration prospects in the permits in one of our key areas in the Italian offshore,” managing director Derek Musgrove said.

"The Rovesti field was discovered in 1978 by Eni and the nearby Giove field was discovered in 1998 by Enterprise Oil Plc. Blackwatch have assigned P2 oil reserves of 33.6 million barrels to Rovesti and 19.6 million barrels to Giove and support the view that there is high potential within the two permits.”

Musgrove adds: “We have surmised that the decisions by previous companies not to move these two discoveries towards development could be attributed to the depth of water of Rovesti in the context of the then prevailing oil industry capabilities and costs, and that Giove was found to be smaller than originally mapped and at the time low oil prices prevailed."

This new forecast is actually in-line with current prices that have broken through the US$100 mark for the first time since 2008, amid the political uncertainty in North Africa and the Middle East.

The banking giant’s London-based analyst team looked at several E&P juniors and they tipped a handful stocks in particular – including Dominion Petroleum (LON:DPL) and Chariot Oil (LON:CHAR) - who could benefit from important farm-out deals in the coming months.

Goldman upgraded Dominion to a ‘buy’ and increased its price target from 7.28 to 10.53 pence per share - which implies 54 percent upside from the current price.

It also upgraded it guidance on Cove Energy (LON:COVE) and Coastal Energy (LON:CEO) adding both stocks to its buy list, targeting 155 and 775 pence respectively.

Meanwhile the analysts also revised its price targets for several other companies due to the higher oil price forecast.

Goldman rates Aurelian Oil & Gas (LON:AUL)  as a ‘buy’ and it upped its target from 103 to 152 pence per share. 

Similarly it maintains a ‘buy’ rating for Nighthawk Energy (LON:HAWK, OTCQX:NHEGY) and Northern Petroleum (LON:NOP), with price targets being raised to 20.35 and 258 pence respectively.

The analysts kept their ‘neutral’ rating for Gulf Keystone Petroleum (LON:GKP) although the price target has been increased from 172 to 234 pence per share.  Gulfsands Petroleum (LON:GPX) also has a ‘neutral’ rating but the target increases from 421 to 478 pence.

The discovery was initially reported in December 2010. This morning Northern revealed that the entire Great Oolite drilled reservoir sequence was oil bearing in Markwells Wood-1. The well was drilled between two producing fields in West Sussex, Horndean and Singleton. 

"The Markwells Wood-1 well has to date presented us with encouraging results,” managing director Derek Musgrove said. 

“An oil bearing sequence has been encountered in the target reservoir adjacent to the producing Horndean oil field within its mapped structural closure. Detailed analysis of the core and logs will provide information on reservoir quality.”

He added: “Success at Markwells Wood, helped by current oil prices, should enhance the value of the other undeveloped discoveries and exploration prospects held under licence by Northern in the UK."

Northern confirmed that mobile, or ‘live’ oil was observed when 30 feet of core was extracted from the well. 

Furthermore initial analysis indicates that the well penetrated a gross hydrocarbon bearing interval of 275 feet, with a calculated net reservoir of 192 feet with an average porosity of 13-14% - which is typical for this kind of reservoir in nearby oilfields. 

It said that Markwells Wood-1 achieved its primary objective, to find oil above the Horndean Field oil water contact (4,446 feet sub-sea). 

Northern noted that the core is still being analysed and once complete the data will be integrated with the petrophysical evaluation and image logs to design the testing programmes.

It will subsequently test pressures and flow rates in the existing wellbore. This will help determine the discovery’s reserve potential and it will provide the basis for production planning.

Markwells Wood is being explored via a joint venture with Northern Petroleum holding a 50 percent interest and acting as operator, while privately-held Magellan Petroleum and Egdon Resources (LON:EDR) hold 40 and 10 percent respectively.

This morning it announced that production has now started at the Wijk en Aalburg gas field, which is expected to produce 5.6 million standard cubic feet per day, or 963 barrels of oil equivalent per day (boepd).

Subsequently NOP’s daily production capacity is now expected to reach the higher end the forecasted 2,200 - 2,300 boepd.

Finance director Chris Foss said: "We have achieved earlier first production than expected through the sterling efforts of the operations team over recent months, latterly during sub zero weather conditions,” NOP director Chris Foss said.

He adds: “We can take pleasure that our 2010 new production from Brakel and Wijk en Aalburg has coincided with a rise in received prices of little over 27 percent during this year.” 

“The next stage is to focus on the development of the Papekop and Ottoland oil fields and further development drilling at Geesbrug."

Separately Northern also updated investors on a number of boardroom changes at its wholly-owned subsidiary Northern Petroleum Nederland BV (NPN).

NPN has appointed Brian A. Hepp and Cornelis Nicolaas (Nico) Tielens to its board of directors, replacing Derek Musgrove - NOP’s managing director - and Birger Polkamp on the NPN board.

NPN has retained Polkamp as a commercial advisor.

Hepp is currently NOP’s director of group operations and Tielens is NPN’s current operations manager and its acting country manager.

"NPN has brought three gas fields into production, with another to follow imminently. It has become a significant gas producer and project manager,” Northern Petroleum MD Musgrove said.

“Following these achievements, it is an appropriate moment for these changes to be made to the NPN board.” 

He adds: “Further appointments to the NPN board are expected in due course, reflecting the company's increase in size and activities.