Centrica PLC (CNA.LN), a utility company, said Wednesday that the Resource Investment Strategy Consultants, or RISC report, posted by Venture Production PLC (VPC.LN) lacks credibility and is relying on overly optimistic assumptions regarding the outlook for gas prices.

MAIN FACTS:

-70% of Venture's reported 2P reserves are natural gas. Therefore, gas prices are the key driver of Venture's fundamental valuation.

-The RISC Report is based on theoretical gas prices that include an 80% increase in nominal terms over the next five years, from a starting level that is almost double the current price of 23 pence/therm.

-Gas prices in the U.K. have continued to be weak and volatile and have not improved as oil prices have done this year.

-Structural factors are impacting gas prices, including uncertainty around global gas demand, increases in global gas supplies, and the availability of import facilities for liquefied natural gas, or LNG, in the U.K..

-The RISC Report values Venture's reserves without appropriate regard to the risks associated with their possible development.

-Proven reserves account for only 37% of Venture's total 2P reserves, per the D&M 2P reserves estimate of 243 millionmboe.

-Non-proven reserves are subject to a range of risks including the potential need for further appraisal drilling. The RISC Report makes insufficient adjustment in this respect, in Centrica's view.

-As disclosed in Venture's 2008 Annual Report, almost half of Venture's 2P reserves relate to assets that are not in production.

-Such reserves are therefore subject to risk as to both timing and cost of development and indeed it

is uncertain whether all of these reserves can be developed on a commercially viable basis.

-Venture continues to draw valuation comparisons on a 2P multiple basis, as well as to "peer group" share price performance. Centrica's view is that such comparisons are inappropriate.

-2P transaction multiples cited by Venture do not appropriately highlight other sources of value apart from the 2P reserve base, such as tax allowances.

-The Offer of 845 pence in cash is final and will not be increased, except that Centrica Resources reserves the right to revise and/or increase the offer if a competitive situation arises.

-The first closing date is 1200 GMT on August 13.

 
-By London Bureau, Dow Jones Newswires; Contact Ian Walker; +44 (0)20 7842 9296; ian.walker@dowjones.com
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