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National Petroleum Company

National Petroleum Company Industry: Upstream Oil & Gas
Investment date: December 2005
Investment type: Consolidation
Citadel Capital ownership: 15%
Company Website: www.npc-petzed.com

The National Petroleum Company (NPC) is an upstream oil and gas exploration and production Platform Company with a MENA footprint. In 2006, NPC acquired 100% of Petzed Project Management and Investments Ltd. (Petzed), with a majority ownership stake in the productive Shukheir Offshore Concession, which consists of the Gamma and Shukheir Bay fields located in the Gulf of Suez. In addition to the Shukheir Offshore Concession, Petzed currently holds 100% of the contractor’s share in two exploration concessions; East Kheir, under ratification by Egypt’s People’s Assembly, and North El Maghara. Petzed also holds 100% of the contractor’s share in the exploration / development concession of South Abou Zenima that includes the Muzhil discovery.

Moreover, NPC also holds shares in Nile Valley Petroleum Limited, which owns participating interests in three exploration blocks in Sudan, and in National Oil Petroleum Company, which has a heavy oil asset in Egypt and a gas field in Pakistan.

OPERATIONAL HISTORY

Based on local, regional and global supply gaps in the energy sector, Citadel Capital saw a compelling opportunity to create a large-scale oil and gas exploration and production company that would consolidate small independent operators and assets in Egypt and the region.

Through Petzed, NPC’s concessions cover approximately 3,294 square kilometers in the Gulf of Suez and Northern Sinai.

With a combination of exploration and production assets — as well as assets such as SAZ that are classified as production under development — NPC has balanced exploration and risk with a number of mitigating factors.

Based on the Ryder Scott Company reserves report audited in December of 2009, the Muzhil field’s 2P reserves consist of 8.5 million barrels of oil. Production from the Muzhil field is expected to commence in 2Q12 and reach 6,116 barrels of oil per day by 3Q12.

Within SAZ, significant upside potential also lies primarily in the EE84-2 field, adjacent to the Muzhil field. According to the RS resource report audited in March of 2010, P50 recoverable resources in SAZ are estimated at 91 mmbo.

In November 2010, SHB-6 well was drilled in the Shukheir Bay field of the Shukheir Offshore Concession. Production of SHB-6 stabilized during December 2010 to reach an average daily production rate of 756 BOPD. As such, NPC’s average daily production reached 1,923 BOPD during December 2010.

CITADEL CAPITAL WRITE DOWN

Citadel Capital has written-down its equity investment in NPC by 50%. This does not reflect technical difficulties at NPC, but rather at NOPC / Rally Energy, in which NPC has an equity stake.

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