VPC Venture Prod.

RNS Number:7587L
Venture Production PLC
15 January 2008


15th January, 2008


                             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. Preliminary results for the year ended 31st December, 2007
will be released on 18th March, 2008.


Group Production, Operations and Reserves


Average net daily production for 2007 was 41,228 barrels of oil equivalent per
day ("boepd"), a decrease of 7.7% over 2006. During 2007, the benefit of
Venture's strong underlying reservoir and well performance was constrained by
certain exceptional operational events; higher than anticipated downtime on GKA,
delay in the start-up of production from the Chiswick field, delay in start-up
of production from Chestnut and the continued delay in the anticipated gas 'blow
down' within the Birch reservoir. Elsewhere in the portfolio however, Annabel,
Saturn and Goosander all outperformed expectations with strong individual field
performances in each case.


During the second half of 2007, Venture continued the development of its North
Sea asset base, participating in the drilling of eight new wells and bringing
one new field on stream. In addition, we have either completed or reached
important milestones on a number of key projects which, in aggregate, have
substantially de-risked a number of our core assets.


At 31st December 2007, net proven and probable reserves are estimated to total
202.4 million barrels of oil equivalent ("MMboe"), including the Company's
proportionate share of reserves in Trinidad. This represents an 8.5% fall from
end 2006 and is principally the result of production in the year and the
re-categorisation of probable reserves from the Pilot field to contingent
resources as previously indicated it also reflects the absence of any completed
acquisitions of proven and probable reserves during a period in which business
development activity has largely delivered important additions to our
exploration and appraisal portfolio. Excluding the impact of Pilot, Venture's
organic reserve replacement ratio was 90% for 2007.


In terms of hydrocarbon split, Venture's southern North Sea ("SNS") gas fields
contributed 60% of total 2007 production with the balance coming from Venture's
portfolio of central North Sea ("CNS") oil fields.


'A' Fields


Strong production performance has continued from Venture's SNS 'A' Fields gas
production hub and, in particular, from Annabel (Venture - 100%) and Saturn
(Venture - 22%) which both continued to exceed expectations.


During the fourth quarter, after drilling the successful Channon exploration
well, the Noble Julie Robertson ("NJR") jack-up drilling rig went on to complete
drilling the Ensign appraisal well (Venture - 100%). The well was subsequently
hydraulically fractured utilising the boat and equipment developed for the
Chiswick field and it is currently being production tested. Subject to a
successful production test and post well evaluation, the results of this well
will enable Venture to commit to the development of the Ensign field with a
target of first gas during the second half of 2009. Upon completion of Ensign
well operations, the NJR will move to drill the Venture operated Barbarossa
appraisal/production well on Block 47/9c (Venture - 90%).


Greater Markham Area ("GMA")


During the second half of 2007, production from the core Markham area fields has
been in line with expectations.


The highlight of the second half of 2007 was the start-up of production from the
Chiswick field (Venture - 95%) at the end of September. While first gas
production was some six months later than originally planned due to the
unexpected and unavoidable lack of an available stimulation vessel in the North
Sea, Venture's ability to recover through the development of an innovative
solution utilising a pumping spread on the back of a large supply boat is
testament to our operational capability. Since start-up of the field, initial
production has been somewhat lower than anticipated due to a slower than
expected clean up of the well although this is not expected to impact longer
term production performance or produced volumes anticipated for 2008. In
addition, Venture has now successfully drilled and fractured the second Chiswick
production well. This new well is expected to be brought on stream during the
first quarter of 2008.


Greater Kittiwake Area ("GKA")


Production from the GKA hub (Venture - 50%) was adversely affected by poor
uptime availability of the tanker loading and export system prior to its
replacement with a new pipeline. This temporary loss of productive capacity
continued into the fourth quarter but was partially offset by continued strong
reservoir performance, particularly from Goosander which has continued to
produce ahead of expectations. The recent focus on development activity on GKA
has been on the construction and installation of the new export pipeline between
the Kittiwake platform and the Forties Pipeline System. The new pipeline was
successfully installed and brought on stream in November and is expected to
substantially improve operational uptime, lower overall operating costs and
allow GKA field life to be extended. With reservoirs performing, in aggregate,
ahead of expectations this is a major step forward.


In addition, Venture successfully drilled an appraisal well on the Grouse oil
field. This will lead to a fast track development of the field which is expected
to come on stream in the first half of 2009.


'Trees'


'Trees' production (Venture - 100%) has been stable during 2007. The Birch oil
field has produced steadily but the gas 'blow-down' of the reservoir has not yet
occurred. It is inevitable that this natural change in production
characteristics will happen at some point; more associated gas will start to be
produced, thus raising the overall field production rates. However, the
financial impact of this later than expected increase in Birch production is
extremely limited as the gas produced from Trees is sold offshore at a very
large discount to benchmark market prices.


Other Central North Sea


Field development activity in the central North Sea during 2007 was focused on
the Chestnut field (Venture - 69.875%). Installation and commissioning of the
production and support facilities on the new Sevan 300 floating production unit,
the Hummingbird, was completed in December in Rotterdam. The Hummingbird was
installed in the Chestnut field at the end of the year and offshore hook-up and
commissioning work is ongoing. First oil is currently anticipated in the second
quarter.


During the fourth quarter of 2007, drilling continued on the Selkirk appraisal
well (Venture - 31%, non-operated). The well was sidetracked into the crest of
the reservoir structure but has been suspended due to operational difficulties.
The well has, however, proved up commercial reserves and the operator has
commenced development planning.


Financial Performance and Outlook


During the second half of 2007, Venture benefited from stronger commodity prices
for both oil and gas than were seen in the first half of the year. These higher
realised sales prices largely offset lower than anticipated production volumes.


Overall, financial performance, operating costs and capital expenditures
remained in line with management expectations. Once again, Venture generated
positive free cashflow after development capital expenditures.


The 2007 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:


"Operationally, 2007 was a year of contrasts for Venture during which the strong
underlying performance of our asset base was partially frustrated by a small
number of project and activity timing issues. However, these issues are largely
behind us now and, as we go into 2008, we have substantially reduced the risk on
many of our core assets and development projects.



In other respects, 2007 was an exciting year of operational and strategic
progress for Venture. We successfully completed some of the largest and most
complex engineering and field development projects ever undertaken by the
Company. In addition, we substantially strengthened the balance sheet and
brought two new strategic investors into the Company ahead of what we anticipate
will be an increasingly active period of corporate expansion and industry
consolidation.


Financially, during the second half of 2007 we have benefited from strengthening
oil and gas prices which have offset lower than expected production volumes. A
large proportion of our production remains unhedged and so even during a period
when production was somewhat curtailed we have seen the continuation of
Venture's extremely strong financial performance."



ENDS


Contact:

Mike Wagstaff, Chief Executive
Peter Turner, Finance Director
Rod Begbie, Corporate Development Director                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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