VPC Venture Prod.

RNS Number:7144P
Venture Production PLC
18 January 2007


18th January, 2007


                             VENTURE PRODUCTION plc

                         Operational and Trading Update

Venture Production plc ("Venture"), the Aberdeen based independent oil and gas
production company, today provides the following pre-close period operational
and trading update.

Group Production and Reserves

Average net daily production for 2006 was 44,706 barrels of oil equivalent per
day ("boepd"), an increase of 50% over 2005. This increase resulted from new
field developments coming on stream combined with good reservoir and well
performance supported by improved levels of production facilities uptime.
Venture's southern North Sea ("SNS") gas fields contributed 60% of total 2006
production, slightly higher than expectations, with the balance from Venture's
central North Sea ("CNS") oil fields.

During the fourth quarter of 2006, despite difficult offshore operating
conditions toward the end of the year, Venture's average production rate was
approximately 54,000 boepd. As a consequence of natural field decline, planned
and unplanned shut-downs and other operational factors, this rate is not
representative of an expected average rate for the calendar year 2007.

At 31st December 2006, net proven and probable reserves are estimated to total
221.2 million barrels of oil equivalent ("MMboe"), a 37% increase over 2005.
This growth reflects a reserve replacement ratio, including acquisitions, of
approximately 468%, which has been achieved net of the sale of part of Venture's
interest in the Ensign development during the year.

Operations

During the second half of 2006, Venture continued with the development of its
North Sea asset base, participating in the drilling of eight new wells and
working with partners to bring two new fields on stream. Overall, operational
delivery has been on schedule and within budget for those activities under our
direct control and, as we enter 2007, Venture currently has three operated
drilling units in the North Sea. Total planned and unplanned downtime during the
year was within management expectations. However, during the fourth quarter of
2006 and continuing into 2007, we have experienced unusually poor offshore
weather conditions, in common with other North Sea operators. This impacted all
of Venture's drilling operations during the period and has also resulted in a
deferment of some GKA production due to the storage and offloading tanker being
unable to stay on station during severe weather.


'A' Fields

Strong production performance has continued from Venture's SNS 'A' Fields gas
production hub and, in particular, from Annabel and Saturn.

The Ensign appraisal well (Venture operated - 50.0% net) was spudded in late
September utilising the Noble Julie Robertson ("NJR") jack-up drilling rig. The
well was successfully drilled, hydraulically fractured and tested. The well
tested at rates of 12-15 MMcfpd, towards the lower end of expectations. This is
interpreted to be the result of a smaller than expected fracture as a result of
operational issues rather than reservoir properties. The well is currently being
suspended as a future production well and the well results are being evaluated
and incorporated into our development planning including timing for first
production. Upon completion of the Ensign well testing programme the NJR will
move to sidetrack the Amanda discovery well (Venture operated - 66.7% net).

During the second half of 2006, the Rhea production well was successfully
brought on stream and is now contributing to production from the Saturn Unit
(Venture - 22.0% net). In the fourth quarter the development well on the Mimas
field (Venture - 15.0% net) was drilled and tested at a rate of 43 MMcfpd. The
Mimas field is planned to be tied back to the Saturn production facilities and
brought on stream during the first quarter of 2007.

Greater Markham Area ("GMA")

The acquisition of CH4 Energy Limited ("CH4") in August 2006 gave Venture a
second SNS gas production hub. This new production hub has been named GMA and is
centred upon the Venture operated Markham field which straddles the UK/Dutch
median line.

During the second half of 2006, GMA development activity was focused on two key
projects, the Markham compression tower ("CT") (Venture operated - 37.5%
unitised) and the Chiswick field development (Venture operated - 95.0% net).
Installation of the Markham CT is now complete and commissioning is ongoing.
Markham field production performance during the period has been slightly ahead
of expectations.

On the Chiswick field development the platform and inter-field pipeline to
Markham have now been installed. The jack-up drilling rig, the Noble Kolskaya,
was delayed in arriving from its previous operator until mid-December. As a
result, drilling of the first Chiswick production well is slightly later than
scheduled with first gas production from Chiswick now anticipated in May.


Greater Kittiwake Area ("GKA")

Strong production performance from all fields in the GKA production hub (Venture
operated - 50.0% net) continued during the second half of 2006 and peak
production rates reached record levels of around 16,500 boepd net to Venture
during the fourth quarter. However, as noted earlier, actual production during
the fourth quarter has been limited by significantly greater weather related
downtime than normal and, to a lesser degree, by design limits on the processing
capacity of the platform production facilities.

The second half of 2006 continued to be a period of intense development activity
on GKA. In August the Goosander field was brought on stream and production
performance has been significantly better than anticipated. In November, Venture
announced the construction of a new 10" oil export pipeline linking GKA to the
Forties Pipeline System. This pipeline is currently being manufactured and is
scheduled to come on stream during the fourth quarter of 2007. Replacing the
existing tanker based offloading system with the new pipeline is expected to
result in significantly better operational uptime performance, particularly
during poor weather.


'Trees'

'Trees' production (Venture - 100%) has been steady during the second half of
2006. During the fourth quarter, production from the central Sycamore production
well, SP2, was restored after reservoir repressurisation as a result of water
injection and the well is producing steadily.

An exploration well to test the Ash prospect in the south of the 'Trees' block
16/12a is currently being drilled as an extended reach well from the Tiffany
platform. Drilling of this well commenced in December, with results anticipated
late in the first quarter of 2007.

Other Central North Sea

Development activity continued on the Chestnut field (Venture operated - 69.9%
net) during the second half of the year. Construction of the Sevan 300 floating
production unit continues at the shipyard in China and is scheduled for
completion during the first quarter of 2007. The unit will then be moved to
Rotterdam for installation of the processing equipment and commissioning prior
to installation in the field. The project is on track for first oil production
during the fourth quarter of 2007.

In late December 2006, Venture entered into an agreement giving it the option to
use a second new-build Sevan 300 floating production unit as the development
solution for the Pilot heavy oil field (Venture operated - 70.4% net). Venture
is planning to drill an appraisal well on Pilot during the second quarter of
2007, subject to regulatory approval. Field development sanction for Pilot is
then expected to be sought later in 2007 with first oil anticipated in 2009.
Venture is also planning an appraisal well on the adjacent 28/2a-1 heavy oil
discovery (Venture - 100%) during 2007.

In August 2006 Venture farmed into the Moonraker exploration prospect (Venture -
20.0% net) but an exploration well subsequently drilled on the prospect was
unsuccessful. On Block 28/5a (Venture - 13.0% net), we participated in the
drilling of an exploration well in September 2006. This well targeted the medium
risk North Channel prospect but was unsuccessful. Total dry hole costs for both
wells were limited to approximately #4 million pre-tax, within the limits on
capital exposure to exploration risk that are appropriate for Venture's business
model.

Corporate Development

2006 was Venture's most active ever year for acquisitions. A total of six
transactions completed including the recently announced Barbarossa (Venture
operated - 90.0% net) farm-in. Of these, the most significant was the
acquisition of CH4 for Euro224 million (#153 million), for which the consideration
was satisfied partly in cash, partly in new Venture equity. This is the largest
acquisition in our Company's history and the first corporate acquisition. CH4
has now been successfully integrated into the Venture business.

In early 2006, we announced the formation of North Sea Gas Partners ("NSGP"), a
partnership between Venture and three financial institutions to jointly pursue
large-scale SNS acquisition and development opportunities. During the second
half of the year, we entered into agreements with NSGP to sell down part of our
interest in the Ensign development and to farm-down a portion of our interest in
the Amanda/Agatha drilling prospects to the partnership.


Financial Performance and Outlook

During 2006, Venture continued to benefit from relatively strong commodity
prices for both oil and gas. However, these prices fell during the fourth
quarter, particularly during November and December. This was partly as a result
of unseasonably warm weather affecting UK demand for natural gas as well as the
global decline in the price of crude oil. However, this reduction in realised
sales price partially offset revenue realised from the record production rates
delivered in the fourth quarter.

Overall, financial performance and costs remained in line with management
expectations and during 2006 capital expenditure totalled approximately #148
million. The value of total acquisitions completed during 2006 amounted to #157
million, of which #70 million was satisfied by the issue of new Venture shares.
These acquisitions added a total of 42.0 MMboe to proven and probable reserves.
For the first full year in its history, Venture generated significant free
cashflow after development capital expenditures.

Venture's effective tax rate for 2006 includes the impact of the increase in the
UK North Sea tax rate from 40 to 50%. The 2006 tax charge is not expected to
result in a cash tax charge at this time due to the utilisation of capital
allowances.

Commenting on the announcement, Mike Wagstaff, Chief Executive said:

"2006 was a record year for Venture, both operationally and financially and we
have continued to make great progress in increasing both production and
reserves. Whilst our earnings remain leveraged to commodity prices in the short
term we continue to deliver increasing profitability underpinned by improving
realised prices and effective cost control. As we enter 2007 activity is at
record levels despite the tight market for equipment and services and we are
confident that the momentum we have established will continue."

Preliminary results for the year ended 31st December, 2006 will be released on
17th April, 2007.


ENDS

Contact:

Mike Wagstaff, Chief Executive
Marie-Louise Clayton, Finance Director
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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