Partial Sale and Farm-out of SNS Gas Assets
June 18 2009 - 8:12AM
UK Regulatory
TIDMVPC
RNS Number : 1257U
Venture Production plc
18 June 2009
18 June 2009
VENTURE PRODUCTION plc
Partial Sale and Farm-out of SNS Gas Assets
Venture Production plc ("Venture"), the Aberdeen headquartered UK independent
oil and gas production company, today announces that it has entered into an
agreement with N.V. Nuon Energy ("Nuon") to sell and farm-out a package of
minority, non-operated interests in certain of its producing, development and
exploration gas assets in the UK southern North Sea ("the Sale Package").
Venture is selling a 15% interest in the Chiswick and Stamford producing gas
fields together with a 25% interest in the undeveloped Kew gas discovery. The
Sale Package also includes 25% interests in the Battersea and Wandsworth
exploration prospects which Venture expects to drill as part of the current
southern North Sea drilling programme and which, if successful, could be tied-in
to the existing Greater Markham Area ("GMA") infrastructure. Venture will
continue to operate and hold majority stakes in each of the assets as well as
operatorship of the GMA infrastructure through which they export. The
consideration for the Sale Package is GBP96.5 million to be received in cash at
completion and the Effective Date for the transaction is 1 January 2009.
At 31 March 2009, the Sale Package accounted for booked proven and probable gas
reserves of 43.8 billion standard cubic feet of gas ("Bcf") and 700,000 barrels
of gas condensate, net to the 15% interests in the Chiswick and Stamford fields
that are being sold. This equates to approximately 8.0 million barrels of oil
equivalent ("MMboe"). In the period from 1 January 2009 to 31 March 2009 the
Chiswick and Stamford fields produced 198,000 boe net to the 15% interests being
sold.
In addition, on 21 May 2009 Venture announced the successful appraisal of the
Kew discovery and at 31 March 2009 Venture was carrying Contingent reserves of
8.0 Bcf or 1.3 MMboe for Kew, net to the 25% interest being sold. It is likely
that these will now be recategorised as Probable reserves once final analysis of
the well results has been completed.
The Chiswick and Stamford fields are expected to produce an average of just over
2,000 barrels of oil equivalent per day ("boepd") in calendar year 2009 net to
the interests being sold and the Kew discovery is expected to be brought on
stream once the Battersea and Wandsworth prospects have been drilled.
Operating Profits from the assets included in the Sale Package were GBP12.3
million in 2008 and the Gross Assets at 31 December 2008 were GBP42.4 million.
In addition to the partial asset sale, as part of a new gas basin partnership,
Nuon has agreed to farm-in to two exploration wells to be drilled in the Greater
Morpheus and Andromeda areas, parts of the southern North Sea where Venture
plans a drilling campaign that will start in 2010. A disproportionate payment of
60% of exploration well costs will earn Nuon a 30% interest in each of the
Greater Morpheus and Andromeda areas.
Venture is currently subject to an offer period as defined by the City Code on
Takeovers and Mergers and, as a result, completion of the transaction remains
subject to shareholder approval. Completion also remains subject to other
customary regulatory and third party approvals but is anticipated to occur
during the third quarter of 2009.
Commenting on the news, Mike Wagstaff, Chief Executive, said:
"In late 2008, and as indicated at our capital markets day back in November, we
decided to start shaping our rapidly growing southern North Sea portfolio,
potentially through a partial disposal and farm-out in 1H 2009. Our objectives
for this process were to manage our exploration risk, release capital for
reinvestment in future drilling and development, highlight the value we have
unlocked in key assets and bring in a partner who is strategically aligned with
us. In Nuon Energy and the package of southern North Sea gas assets included in
today's announcement we believe we have identified an ideal gas basin partner
and an investment package that we look forward to developing together rapidly
over the coming years.
Less than half of the 2P reserves in the asset package we are selling today are
developed and in production. However, with our planned Phase 2 development work
on Chiswick, the potential to now develop the Kew discovery and a range of
near-term exploration prospects close to existing infrastructure, this package
mirrors the shape of Venture's overall business and so we look forward to
applying our proven skill sets and operating experience to unlock its potential.
We are also delighted to welcome Nuon Energy as a new field partner and aligned
co-investor."
Øystein Løseth, CEO of Nuon, said:
"With this transaction, we increase our own gas production and thereby
strengthen our position in the entire gas chain. The deal concerns interests in
several gas fields in varying stages of development, including production,
appraisal and exploration. This demonstrates Nuon's commitment to invest in the
entire Exploration and Production cycle. In Venture, we have found a strategic
partner with an outstanding track record who will help us achieve our
objectives."
End
Contact
Mike Wagstaff, Chief Executive
Rod Begbie, Corporate Development Director
Peter Turner, Finance Director 01224 619 000
Patrick Handley, Brunswick 0207 404 5959
John MacDonald (Scottish Press)07770 886 912
Notes to Editors:
Transaction Summary
· Sale of 15% interests in Chiswick, Stamford producing fields.
· Sale of 25% interest in Kew discovery.
· 2 for 1 farm-ins to 30% of Greater Morpheus Area and Andromeda areas.
· Consideration GBP96.5 million to be paid in cash at completion.
· Effective Date 1 January 2009.
· Completion adjustments will include normal elements covering working capital
movements in the period between the Effective Date and completion which will
include payment of approximately GBP10 million representing 25% of the recently
drilled Kew appraisal well.
Sale Interests
+---------+-----------+--------------+------------+------------+---------------+
| Licence | Blocks | Fields / | Venture | Operator | Other |
| / Unit | | Discoveries | Interest | | Partners |
| Area | | / Prospects | Sold or | | |
| | | | Farmed-out | | |
| | | | 1 | | |
+---------+-----------+--------------+------------+------------+---------------+
| Producing Fields |
+------------------------------------------------------------------------------+
| P468, | 49/4a, | Chiswick | 15% | Venture | Nuon |
| P1186 | 49/4c | | | (85%) | |
+---------+-----------+--------------+------------+------------+---------------+
| P1447 | 49/10c | Stamford | 15% | Venture | Nuon |
| | | | | (85%) | |
+---------+-----------+--------------+------------+------------+---------------+
| Discoveries |
+------------------------------------------------------------------------------+
| P1186, | 49/4c, | Kew | 25% | Venture | Nuon |
| P468 | 49/5b, | | | (75%) | |
| | 49/4a | | | | |
+---------+-----------+--------------+------------+------------+---------------+
| Exploration Acreage |
+------------------------------------------------------------------------------+
| Greater Markham Area |
+------------------------------------------------------------------------------+
| P468 | 49/4a | Battersea | 25% | Venture | Nuon |
| | | | | (75%) | |
+---------+-----------+--------------+------------+------------+---------------+
| P1186 | 49/5b | Wandsworth | 25% | Venture | Nuon |
| | | | | (75%) | |
+---------+-----------+--------------+------------+------------+---------------+
| Greater Morpheus Area |
+------------------------------------------------------------------------------+
| P1245 | 48/3a, | Morpheus | 30% | Venture | Nuon |
| | 48/4, | | | (70%) | |
+---------+-----------+--------------+------------+------------+---------------+
| P1669 | 43/28 | Morpheus | 30% | Venture | Nuon, Ithaca, |
| | | | | (30%) | Volantis |
+---------+-----------+--------------+------------+------------+---------------+
| P1245 | 48/3a | Hypnos | 30% | Venture | Nuon |
| | | | | (70%) | |
+---------+-----------+--------------+------------+------------+---------------+
| P1669, | 43/28, | Hypnos | 30% | Venture | Nuon, Ithaca, |
| P1670 | 43/29 | | | (30%) | Volantis |
+---------+-----------+--------------+------------+------------+---------------+
| P1245 | 48/3a | Endymion, | 30% | Venture | Nuon |
| | | 48/3a-4 | | (70%) | |
+---------+-----------+--------------+------------+------------+---------------+
| TBC | 48/8c2 | Endymion | 30% | Venture | Nuon |
| | | | | (60%) | Volantis |
+---------+-----------+--------------+------------+------------+---------------+
| Andromeda Area |
+------------------------------------------------------------------------------+
| P1334 | 43/11, | Andromeda | 30% | Venture | Nuon |
| | 43/12 | | | (70%) | |
+---------+-----------+--------------+------------+------------+---------------+
1 Assuming legal completion of the contemplated transaction and regulatory
approval
2 2-for-1 farm-in to 30% of the licence containing Block 48/8c will also be
included if Venture-led group is successful in its bid for this licence in the
25th Licensing Round
Background
· Venture acquired its interests in Chiswick, Kew, Battersea and Wandsworth
through its acquisition of CH4 Energy Limited in August 2006.
· Licence interests containing the Chiswick discovery had been owned by more
than a dozen separate companies before Venture became operator and successfully
developed the field with first gas achieved in September 2007.
· The second well in Phase 1 of the Chiswick development came into production in
February 2008 and Venture plans to develop Phase 2 by drilling between three and
five in-fill wells to drain additional fault blocks.
· The Stamford licence interest was awarded to Venture in February 2007 and the
field appraised and brought into production in early December 2008.
· Venture acquired its interests in the Greater Morpheus Area through its
acquisition of WHAM Energy plc announced in August 2007 and through acquiring
the interests of Tullow Oil in June 2008 and the interests of Dana Petroleum and
Ithaca Energy in December 2008.
· Venture acquired its interests in the Andromeda Area through its acquisition
of WHAM Energy plc announced in August 2007.
· Venture acquired the remaining 5% in the Chiswick field in March 2008 through
buying out a minority partner.
A webcast of Venture's 2008 Results presentation, including the Q&A session, is
available on the company's website (www.venture-production.com).
Venture was advised on this transaction by Jefferies International Limited and
Stronachs LLP.
N.V. Nuon Energy
N.V. Nuon Energy is a wholly owned subsidiary of N.V. Nuon, a Dutch energy
company with more than 10,000 employees which supplies or transports energy to
over 3 million households and business customers in the Netherlands, Belgium and
Germany.
Vattenfall, the Swedish energy company, is expected to acquire ownership of N.V.
Nuon Energy in a staged process commencing mid 2009, as announced in a press
release dated 23 February 2009.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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