VPC Venture Prod.

    RNS Number : 9508X
  Venture Production PLC
  01 July 2008
   

    VENTURE PRODUCTION plc 

    Operational and Trading Update

    1st July, 2008

    Venture Production plc ('Venture' or 'the Company') today provides an operational and trading update ahead of the announcement of its
half year results which will be on 28th August, 2008.
    
 
    Overall, the first half of 2008 has been a period of strong performance with production close to record levels for a six month period
and with Venture resuming its growth path again. In addition, we have had good drilling results and made solid progress in the development
of our new fields. We have seen higher levels of new business activity which has added to our longer term development inventory which has
all been achieved against the backdrop of record global commodity price levels.  

    Production 
    Average Group net daily production for the first six months of 2008 was approximately 45,700 barrels of oil equivalent per day, 8%*
above the comparable period in 2007.  During the period approximately 65% of total Group production was from our southern North Sea gas
assets.

    The key drivers of higher production have been the two new Chiswick production wells, the first of which came on stream in September
2007 and the second in February 2008.  Elsewhere, gas production has performed ahead of expectations despite an earlier than usual planned
maintenance shut-down at Audrey in June, with continued strong performance from both the Annabel and Saturn fields.  

    Oil production from our existing fields has also been strong, with the installation of a pipeline from the Kittiwake platform to the
Forties Pipeline System late last year improving overall uptime in the Greater Kittiwake Area. Strong performance from Goosander has been
offset by some scaling issues on the Mallard well, which is likely to require a rig-based well intervention to restart production. On
'Trees' we have seen steady production performance across Birch, Larch and Sycamore, although we have yet to see any evidence of 'blow-down'
within the Birch reservoir.

    Trading Environment
    The increase in commodity prices experienced in the early part of 2008 has resulted in Venture generating more sales revenue for its oil
and gas production in comparison with either the first or second half of 2007.  In particular, conditions in the gas market have been much
stronger during 2008 than in 2007 where pricing was particularly weak.  The financial impact of higher commodity prices is partially offset
by our existing oil and gas price hedges and by the impact of our long-standing gas sales agreements on Markham and Audrey/Annabel ('Tranche
A') where realised prices lag the effect of spot commodity prices.  

    Project Development and Drilling
    In the first half of 2008, Venture continued to pursue its active development programme.  Beyond the completion of the first phase of
development of the Chiswick field, we are actively working on development of an additional seven new projects. These are expected to come on
stream within the next two years to boost net production significantly from today's levels.  

    In the short term, the Company continues with hook-up and commissioning activities on the Chestnut field which, as previously announced
is expected to deliver first oil during the third quarter of 2008.  The tie-back of the Grouse well to the Kittiwake platform has recently
been sanctioned and will take place later this year with first production expected during the first half of 2009.  Among our longer term
developments, the Ensign appraisal well was successfully tested in February at the top end of our expectations and we have recently
completed drilling the Barbarossa well and expect to test the well shortly.  Commercial negotiations with neighbouring host infrastructure
owners for the development of both the Ensign and Channon/Barbarossa developments are progressing but at a somewhat slower pace than
anticipated. 

    The second half of 2008 sees an equally active drilling programme.  After completing the Barbarossa well, the Noble Julie Robertson
('NJR') jack-up drilling rig moves to drill the Stamford development well as a Markham satellite with first gas production anticipated in
the winter 2008/9 period.  The NJR is then expected to conduct a workover on the Ann A4 gas well to return it to production, before moving
to drill the Kew appraisal well in the Greater Markham Area.  The ENSCO 92 jack-up drilling rig has recently been contracted to drill the
Carna exploration well in the southern North Sea, and a second Chestnut production well has been sanctioned to be drilled by the Noble Ton
van Langeveld semi-submersible drilling rig later in 2008. 
    
 
    Business Development
    High levels of acquisition activity were seen during the first six months of 2008. Venture is now active for the first time in the East
Irish Sea and in the Northern part of the Dutch offshore sector. In addition, through the recent acquisition of interests in a number of
undeveloped discoveries within Quadrant 44 in the southern gas basin, Venture has now added a significant new undeveloped gas resource to
its portfolio. Overall, our recent acquisitions have limited impact on near term production but provide Venture with development inventory
to support longer term production growth and with our strong financial position we remain well placed to pursue additional opportunities.

    Venture is also pursuing new licence interests through its active participation in the 25th Seaward Licensing Round and awards to
successful applicants are expected to be made later in 2008. Venture expects to devote on average between 10 and 15% of its annual capital
investment toward exploration activity in the North Sea and its latest licensing round applications cover a range of licences containing
both exploration prospects and undeveloped discoveries close to existing infrastructure.

    Outlook
    Overall, the first half of 2008 has been a period of strong performance from existing producing fields and a period in which we have
continued to make solid progress in the development of our growing portfolio of new fields. Alongside a favourable outlook for commodity
prices this means we can look forward to operational cashflow generation significantly in excess of levels anticipated when these projects
were sanctioned.  With the exception of the timing delay on Chestnut, overall Company production performance is broadly in line with our
expectations. As previously discussed, timing of first oil from Chestnut clearly remains the principal uncertainty of second half production
performance which in aggregate we expect to be somewhat higher than the first half and we anticipate average daily production for 2008 to be
within the previously announced guidance range. 

    In summary, the combination of strong operational performance, high commodity prices and increased business development activity mean
that the Board remains highly confident in the outlook for Venture's business in 2008 and beyond.

    
* Subject to final reconciliation

    ENDS

    Contact:

    Mike Wagstaff, Chief Executive 
    Jon Murphy, Chief Operating Officer
    Peter Turner, Finance 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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