VPC Venture Prod.

RNS Number:1860G
Venture Production PLC
14 July 2006


                             VENTURE PRODUCTION plc
                         Operational and Trading Update

                                14th July, 2006

Venture Production plc ("Venture") today provides an operational and trading
update ahead of its Interim Results, which will be announced on 19th September,
2006.

Group Production

Average net daily production for the first six months of 2006 was 43,572 barrels
of oil equivalent per day, an increase of 79% over the comparable period last
year. This increase resulted from the impact of new field developments coming on
stream and good reservoir performance supported by high levels of production
facilities uptime.

Operations

During the first half of 2006, Venture continued the delivery of its development
programme across its entire North Sea business. Venture drilled and completed
five wells and received Field Development Plan ("FDP") approval for two new
fields, both of which are expected to be brought on stream during the second
half of 2006.

'A' Fields

Strong production performance has continued from Venture's southern North Sea
'A' Fields gas production hub. During the first half of 2006 the Company
completed drilling an in-fill well on the Ann field (Venture equity - 100%),
which was brought into production in April. In the ConocoPhillips operated
Saturn Unit (Venture equity - 22%), the third production well was drilled and
brought on stream in June. A well is currently being drilled into the Rhea
structure in the southern portion of the Unit area, which is expected to be
completed during the third quarter of 2006. In May, FDP approval was received
for development of the Mimas field (Venture equity - 15%) as a satellite to
Saturn. Mimas will be developed utilising a single production well drilled from
a minimum facilities platform that was installed in early July. The field is
expected to come on stream during late 2006.

Southern North Sea ("SNS") operated drilling activities are expected to
re-commence in late September with the arrival of a jack-up drilling rig, the
Noble Julie Robertson ("NJR"), on a two year contract to Venture. The first well
to be drilled using the NJR is anticipated to be an appraisal well on the Ensign
field, a large undeveloped gas discovery acquired during 2005 (Venture equity -
100%).

Greater Kittiwake Area ("GKA")

Strong production performance from the GKA production hub (Venture equity - 50%)
during the first half of 2006 was partially offset by an anchor collision
incident involving the Gadwall/Mallard pipeline in February. This led to both
fields being shut-in for a period of six weeks. A permanent solution was
completed in early July and production from the Mallard pipeline system has been
reinstated.

The first half of 2006 has also been a period of intense development activity on
GKA. During February, the Gadwall water injection well was completed and, in
July, drilling of a second water injection well on the Mallard field commenced.
This new development well is anticipated to be completed by the end of the third
quarter 2006. In January, FDP approval for the Goosander field was received. The
Goosander production well was completed and tested in April at a flow rate of
approximately 8,000 boepd on a restricted choke, in line with our expectations.
The sub-sea flowline bundle has now been installed and the project is on track
for first production later this quarter.

'Trees'

'Trees' production (Venture equity - 100%) has been steady during the first half
of 2006. The central Sycamore water injection well, SW-2, was completed in
November 2005 and brought on line in January. As previously announced, a second
central Sycamore water injection well, SW-1, drilled early this year,
encountered disappointing quality reservoir and has been suspended pending
further evaluation. An exploration well to test the Ash prospect in the south of
the 'Trees' block 16/12a is expected to be drilled as an extended reach well
from the Tiffany platform commencing around the end of the third quarter 2006,
with results anticipated around the year end.

Other Central North Sea

Development activity continued on the Chestnut field (Venture operated - 69.875%
equity) during the first half of the year. The Chestnut water injection well was
successfully drilled and completed in May and construction has commenced on the
Sevan SSP 300 floating production unit at the shipyard in China. Overall, the
Chestnut field development project remains on track for first oil production
during the third quarter of 2007.

On the Venture operated Pilot heavy oil field we increased our ownership to
70.37% in April. Venture is planning to drill an appraisal well in Pilot later
in the year, subject to regulatory approval. On Block 28/5a (Venture equity -
13.04%), BG has farmed-in to drill an exploration well later in the year. The
well will target an exploration prospect with potential gross reserves of up to
25 MMboe.

Corporate Development

During the first half of 2006, we have taken significant steps to build
Venture's longer term sustainable growth prospects. In April, we announced the
formation of North Sea Gas Partners ("NSGP"), a partnership between Venture and
three financial institutions to pursue jointly large scale SNS acquisition and
development opportunities. In June, we announced we had entered into two long
term drilling contracts with Noble Corporation ("Noble"). Venture, jointly with
BG, extended its existing contract on the semi-submersible drilling rig the
Noble Ton van Langeveld ("NTvL") for a further 12 months to June 2009. Venture
also committed for the construction of a new high specification jack-up rig for
delivery in early 2009. These contracts will give Venture access to high quality
drilling capacity to support its development programme into 2011.

Financial Performance and Outlook

During the first half of 2006, Venture benefited from strong commodity prices
for both oil and gas. This was partially offset by the residual impact of our
historic oil hedge position which will continue to unwind during the second half
of 2006 and will be fully closed out by the end of the year. From January 2007,
the lowest priced oil swap we will have in place will be at $72.68 per barrel.
Financial performance and costs for the six month period were in line with our
expectations and our forecast for 2006 capital expenditure remains approximately
#150 million. As anticipated, we have seen strong cashflow generation during
2006. This has enabled us to fund our capital expenditure programme, repay a
portion of our outstanding debt and utilise #17 million to date in 2006 to
acquire Treasury shares in the market to satisfy obligations to our employees
under long term share based incentive schemes.

Venture's effective tax rate for the first half of 2006 does not include the
impact of the yet-to-be enacted increase in the UK North Sea tax rate from 40%
to 50%. However, as previously indicated, we will provide for the impact of the
higher charge for the whole year. Venture does not anticipate to pay cash taxes
in the UK until 2007.

During the first half of 2006 we saw strong production performance. We are now
entering the summer period when planned maintenance and new field tie-in work
will, as forecast at the beginning of the year, result in several months where
production will be curtailed. As a result, notwithstanding the strong first half
result, our average production guidance for the full year remains 40 - 42,000
boepd, a 34 to 41% increase over the level achieved in 2005.


                                      ENDS

Contact:

Mike Wagstaff, Chief Executive
Marie-Louise Clayton, Finance Director
Jon Murphy, Chief Operating Officer
Rod Begbie, Corporate Development Manager                01224 619000

Patrick Handley, Brunswick
Chris Blundell, Brunswick                                020 7404 5959

John MacDonald, Weber Shandwick (Scottish Press)         01224 806600



                      This information is provided by RNS
            The company news service from the London Stock Exchange

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