VPC Venture Prod.

 

TIDMVPC 
 
RNS Number : 8336U 
Venture Production plc 
01 July 2009 
 

1 July 2009 
 
 
VENTURE PRODUCTION plc 
 
 
Operational and Trading Update 
 
 
 
 
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 27 August 2009. 
 
 
During the first half of 2009, Venture has made substantial progress through the 
execution of its stated strategy, growing both production and reserves, 
and successfully agreeing two significant transactions. 
 
Production 
Average Group net daily production for the first six months of 2009 was 
approximately 52,9001 barrels of oil equivalent per day, 16%1 above the 
comparable period in 2008. During the period approximately 55% of total Group 
production was from the Companys southern North Sea gas assets. 
 
The key drivers of the increase in production have been the contribution from 
the new Chestnut oil field which came on stream in September 2008, as well as 
important contributions from the Grouse oil field, and the Stamford gas field, 
which both came on stream in December 2008. Across all hubs we have seen good 
facilities uptime and reservoir performance, with a marked improvement from the 
Greater Kittiwake Area. 
 
 
The second half of the calendar year includes normal planned summer maintenance 
shutdowns and the start-up of production from the new Eris and Ceres gas fields. 
It is anticipated that these can be brought onstream during late 2009. The solid 
performance achieved during the first half of the year means that production 
expectations for the full year remain in line with the earlier forecast of 
modest growth over 2008 levels. 
 
 
1Subject to final reconciliation. 
 
Drilling and Project Development 
Venture's 2009/10 drilling programme has a greater emphasis on medium-term 
reserves growth rather than near-term additions to production. The initial phase 
of our busy and exciting drilling schedule has already delivered some important 
successful results with two appraisal wells on the Cygnus gas field, the 
exploration well on Carna and the appraisal of the Kew field. 
As a result, at the end of March 2009, Venture reported a 12% increase to year 
end total proven and probable reserves to approximately 240 million barrels of 
oil equivalent ('MMboe'). This increase in Venture's reserves is supported by an 
independent assessment by DeGolyer and McNaughton. It reflects the positive 
drilling results this year and reserve additions from the recently 
sanctioned second phase of development at the Chiswick field. 
 
 
The next 12 months will bring an equally active drilling programme, with a 
balance of development, appraisal and potentially higher impact exploration 
drilling. The Noble Julie Robertson jack-up drilling rig is currently drilling 
the Andrea exploration prospect, before moving on to drill the Annabel East 
extension appraisal well. The ENSCO 92 jack-up drilling rig has recently started 
a two well programme for Venture in the East Irish Sea; it has recently spudded 
the Marram appraisal well prior to drilling an exploration well on the Whitbeck 
prospect.  The Noble Scott Marks, a new build heavy duty jack-up drilling rig, 
has recently left the shipyard in China and is due to start drilling the first 
of two second phase development wells on the Chiswick field late in the third 
quarter.  In the central North Sea an appraisal well on the Acorn field has been 
sanctioned to be drilled by the Noble Ton van Langeveld 
semi-submersible drilling rig later in 2009. 
 
 
In terms of project development, the tie-in and topsides modification work for 
Eris/Ceres is on schedule to deliver first gas in the fourth quarter of 2009, 
and construction work is underway for the 'self-installing' platform for the 
F3-FA development. 
 
 
Business Environment 
Commodity prices continued the declining trend seen in the latter part of 2008 
into 2009, with short term weakness and volatility. However, over the last few 
months we have seen a marked strengthening of oil prices on the back of 
improving economic sentiment. 
 
 
As we enter the summer gas season, short-term gas prices have weakened in line 
with normal seasonal trends. However, prices for winter 2009/10 and beyond 
remain strong reflecting market expectations of the longer-term 
underlying supply and demand balance. We have commodity price hedging in place 
which protects a significant proportion of our revenues during 2009 and 2010. 
 
 
Additionally, the change in the oil and gas tax regime announced in the 
recent Budget, will be beneficial for the development of our portfolio of small 
fields below 2.75 to 3.5 million tonnes (or approximately 20 to 25 MMboe 
recoverable resources). 
 
 
Business Development 
The successful conclusion of a 2008 initiative to shape the Company's southern 
North Sea gas assets portfolio was announced on 18 June with the partial sale 
and farm-out to N.V. Nuon Energy of a package of minority, non-operated 
interests in certain producing, development and exploration assets. The key 
objectives were to manage exploration risk, release capital for reinvestment in 
future drilling and development and to bring in a strategically aligned 
gas-basin partner. The price achieved for this package reflects both the value 
that Venture has added to its 2006 and 2007 corporate acquisitions of CH4 Energy 
Limited and WHAM Energy plc and the exploration potential contained within the 
Morpheus and Andromeda areas. 
 
 
Also in June, Venture announced the acquisition of a 1.8% interest in NOGAT 
B.V., a private company incorporated in the Netherlands that owns and operates 
the NOGAT pipeline and associated onshore gas processing terminal at Den Helder. 
The acquisition of this interest provides Venture with third party tariff income 
and a reduced export tariff for its own northern Dutch sector fields, including 
the F3-FA gas field currently in development. 
 
 
Outlook 
In summary, Venture has had an excellent first half of 2009 across all areas of 
its business, with strong production performance and a great start to an 
exciting and busy drilling programme. The focus for the second half of 2009 and 
into 2010 remains on proving up significant reserves additions. The Company has 
the balance sheet strength and liquidity to invest in, and capitalise on, its 
recent drilling success and pursue M&A opportunities. Combined with solid 
operational delivery and an improving external market environment, this 
reaffirms the Board's confidence in the outlook for Venture's business. 
 
 
 
 
ENDS 
 
 
Contact: 
Mike Wagstaff, Chief Executive 
Rod Begbie, Corporate Development Director 
Jonathan Roger, Chief Operating Officer 
Peter Turner, Finance Director  01224 619000 
 
 
Patrick Handley, Camilla Gore, Natalia Erikssen, Brunswick0207 404 5959 
John MacDonald (Scottish Press)  07770 886 912 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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