TIDMVPC
RNS Number : 6548X
Venture Production plc
19 August 2009
19 August 2009
Venture Production plc
('Venture', 'Company' or 'Group')
Half Year Results for the Six Months Ended 30 June 2009
Venture is a UK independent oil and gas company operating in the UK and Dutch
sectors of the North Sea. Venture's strategy is to acquire, develop and bring
into production discovered but undeveloped oil and gas fields, collectively
known as 'stranded' reserves.
Operational Highlights
* Production volumes up 16% to 52,988 boepd (2008 - 45,534 boepd).
* End Q1 proven and probable reserves up 12% on year end total to approximately
240 MMboe.
* Five out of seven commercially successful gas exploration appraisal wells in
2009 - Cygnus (x2), Kew, Carna and Marram.
* Five significant development projects due on stream prior to end of 2011.
* Chestnut P2 well brought on stream in first quarter.
* Active drilling programme for next 12 months - 10 wells planned targeting 239
MMboe of unrisked reserves.
Financial Summary
* Revenue up 14% to GBP274.7 million (2008 - GBP240.5 million).
* Long standing hedging programme limited impact of commodity price decline.
* Pre-tax profit of GBP105.2 million down 7% (2008 - GBP113.2 million).
* Profit for the financial period of GBP54.1 million down 1% (2008 - GBP54.7
million).
* Operating cash flow GBP143.6 million down 20% (2008 - GBP180.5 million).
* Total capital expenditure of GBP145.1 million (2008 - GBP124.5 million,
including asset acquisitions).
Business Development
* Portfolio management - partial sale/farm-out to Nuon will improve risk-reward
and highlights value.
* NOGAT pipeline acquisition improves economics for northern Dutch sector assets.
* Strong financial position - well placed to fund existing investment programme
and capitalise on new acquisition opportunities.
Outlook
The first half of 2009 has seen strong production performance across all areas
of our business and the joint Eris/Ceres gas field developments remain on track
for first gas production for mid-to-late fourth quarter. With planned shut-downs
occurring as usual in the third quarter, Venture continues to expect modest
production growth in 2009 over 2008 levels, as previously indicated.
Note: All comparatives are with the first half of 2008
Commenting on the results, Mike Wagstaff, Chief Executive of Venture said:
"The first half of 2009 has seen strong performance across all areas of
Venture's business in a challenging corporate and operational environment. We
have seen record production performance driven by the new fields which we
brought on stream during 2008 combined with good reservoir and facilities uptime
performance and costs in line with expectations. Despite the fall in oil and gas
prices we have experienced since mid-2008, our financial performance has
benefited from our long standing commodity hedging programme.
Our 2009/10 drilling programme has got off to an excellent start this year with
five out of seven wells drilled proving commercially successful and we have made
significant progress in moving our key development projects forward. Over the
next 12 months we have an active and exciting drilling programme which has the
potential to continue to add materially to our reserves base. Venture has a
strong financial position which gives us the ability to continue both to develop
our own asset base as well as give us the flexibility to make further
acquisitions."
Enquiries:
+--------------------------------------------+--------------------------------+
| VENTURE PRODUCTION plc | 01224 619 000 |
+--------------------------------------------+--------------------------------+
| Mike Wagstaff, Chief Executive | |
+--------------------------------------------+--------------------------------+
| Peter Turner, Finance Director | |
+--------------------------------------------+--------------------------------+
| Rod Begbie, Corporate Development Director | |
+--------------------------------------------+--------------------------------+
| Jonathan Roger, Chief Operating Officer | |
+--------------------------------------------+--------------------------------+
| | |
+--------------------------------------------+--------------------------------+
| BRUNSWICK GROUP | 020 7404 5959 |
+--------------------------------------------+--------------------------------+
| Patrick Handley | |
+--------------------------------------------+--------------------------------+
| | |
+--------------------------------------------+--------------------------------+
| | |
+--------------------------------------------+--------------------------------+
| John MacDonald | 07770 886912 |
+--------------------------------------------+--------------------------------+
A copy of the Half Year Report will not be mailed to shareholders but can be
obtained from the Company's website www.venture-production.com or by contacting
the Company Secretary at Kings Close, 62 Huntly Street, Aberdeen, AB10 1RS. A
copy of the Results presentation will be available on the Company's website at
08.00, Wednesday 19 August 2009. Chairman and Chief Executive's Statement
Overall, the first six months of 2009 have seen a period of strong performance
across all areas of Venture's business and we have made substantial progress in
the execution of our stated strategy, increasing both production and reserves,
and successfully agreeing two significant transactions. Production set new
record levels for a six month period due to the impact of new fields coming on
stream and very good field and facilities uptime performance. In addition, so
far in 2009 we have had excellent drilling results and made good progress on our
new field development projects. This has been achieved against a backdrop of
challenging economic conditions and commodity prices continuing the declining
trend seen in the latter part of 2008 into 2009, with short term weakness and
volatility.
In the first half of 2009, Venture continued to pursue its active field
development programme. In addition to completion of the first phase of
development of the Chestnut field in the period, we are actively working on the
development of five projects which are expected to come on stream prior to the
end of 2011 and are expected to boost production significantly from current
levels.
As previously communicated, 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 results with two successful appraisal wells on
the Cygnus gas field, a gas find with the exploration well on Carna and the
positive appraisal of both the Kew and Marram gas fields.
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 reserves is supported by an
independent assessment by DeGolyer and McNaughton. It reflects the positive
drilling results of the first Cygnus appraisal well and reserve additions from
the recently sanctioned second phase of development at Chiswick. The figure of
240 MMboe does not include the results of the second Cygnus, Kew and Marram
appraisal wells and the successful Carna exploration well. Venture will formally
update its reserves position again at year end.
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 ('NJR') is currently
drilling the Annabel East extension appraisal well in the 'A' Fields area. The
ENSCO 92 jack-up drilling rig is just completing a two well programme for
Venture in the East Irish Sea. The Noble Scott Marks ('NSM'), a new build heavy
duty jack-up drilling rig, has recently arrived in Rotterdam from the shipyard
in China where it was built 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 oilfield has been sanctioned to
be drilled by the Noble Ton van Langeveld ('NTvL') semi-submersible drilling rig
and will commence shortly.
Average daily production for the first half of the year increased by 16% to
52,988 boepd (2008 - 45,534 boepd), primarily due to the contributions of the
Chestnut, Grouse and Stamford fields which all came on stream in the second half
of 2008. Revenue increased by 14% to GBP274.7 million (2008 - GBP240.5 million)
due to higher production volumes offset by lower realised oil and gas prices,
albeit partially mitigated by our long standing commodity price hedging
programme. Pre-tax profits for the first half of the year were GBP105.2 million
(2008 - GBP113.2 million) and profit after tax was GBP54.1 million (2008 -
GBP54.7 million). During the first half of the year, operating cash flow
decreased by 20% to GBP143.6 million (2008 - GBP180.5 million) largely due to
working capital changes. Our balance sheet remains strong, with significant
cash balances and a largely unutilised debt facility of GBP365.0 million which
is available to fund the capital expenditures required to develop our existing
assets and to finance new acquisitions.
Operational Highlights
At 30 June 2009, Venture had interests in a total of 92 licence blocks in the UK
and Dutch sectors of the North Sea containing 48 proven oil and gas fields. Of
these, 21 are currently in production, five near-term developments are ongoing
and the remainder provide future upside potential and long term sustainability.
These fields are located in five discrete production hubs; the 'A' Fields and
the Greater Markham Area ('GMA') gas production hubs in the southern North Sea
('SNS') and the 'Trees', Greater Kittiwake Area ('GKA') and 'New Oil' oil
production hubs located in the central North Sea ('CNS').
The key drivers of the growth in production this year have been the Chestnut
oilfield which came on stream in September 2008, as well as contributions from
the Grouse oilfield 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 GKA in particular.
'A' Fields and Other UK Gas
Good production performance has continued from Venture's SNS 'A' Fields gas
production hub. During the first half of 2009, 'A' Fields produced at an average
rate of 13,376 boepd, 25% of Group production (2008 - 17,814 boepd and 39%). The
decrease in production was the result of anticipated natural decline and an
extended production shut-in of the Alison field. However, both Annabel (Venture
- 100%) and the Saturn Unit (Venture - 22%) have continued to perform in line
with expectations.
During the first half of 2009, Venture participated in the drilling of two
successful appraisal wells on the Cygnus gas field (Venture - 48.75%). The
results from these wells have exceeded pre-drill expectations and proved up the
eastern part of the field so confirming Cygnus to be one of the largest
undeveloped gas fields in the North Sea. The operator, GdF Suez, estimates gross
recoverable reserves for the eastern part of the field alone to be approximately
500 Bcf.
The Cygnus partnership is pursuing a phased development of the field which
could ultimately involve up to six platforms and 16 production wells for the
entire field. The first phase of the field development will involve a single
normally unmanned platform in the central part of the field, with two production
wells tied back to nearby infrastructure. The operator is integrating the
results of the most recent appraisal wells into development planning for the
second phase of development of the eastern part of the field and the operator
has also proposed drilling two additional appraisal wells in the western part of
the field during the first half of 2010.
In March 2009, Venture completed drilling the successful Carna exploration gas
well (Venture - 56% unitised interest). This well has proved to be a commercial
stand alone gas discovery with expectations of estimated net gas in place
('GIIP') ranging from 95 to 185 Bcf. Additionally the confirmation of productive
reservoir sands in Carna increases the attractiveness of five potential
follow-on exploration prospects in the surrounding Greater Carna Area. These
other prospects, whilst as yet undrilled, are expected to contain an additional
aggregate net GIIP ranging from 104 Bcf to 390 Bcf. Carna is the first
exploration well drilled on acreage acquired as part of the acquisition of WHAM
Energy plc in 2007.
Venture plans to continue the development of this acreage with an exploration
well on the high risk-high reward Morpheus exploration prospect (Venture 100%)
in late 2009 or early 2010. Venture is also continuing the processing and
interpretation of the new 3-D seismic shot survey over the Andromeda prospect
area in 2008 and currently plans to drill an exploration well on the Andromeda
exploration prospect (Venture - 100%) in 2010. As part of the recently announced
partial sale and farm-in transaction Nuon will farm-in to a 30% interest in both
the Morpheus and Andromeda prospects by paying a disproportionate cost of an
exploration well on each prospect.
The Andrea well (48/15b-10) (Venture - 100%) was drilled using the NJR on 6 June
2009 and reached a total measured depth of 10,200 feet on 16 July 2009. The well
was designed to test the Leman sandstone with gas being discovered in the upper
sands. Indications are however that the reservoir is tight and is unlikely to
flow without stimulation. The well has now been suspended pending further
analysis of well logs and core samples.The potential of the Andrea gas discovery
for commercial development will now be assessed, although any development of
Andrea would most likely be in conjunction with the nearby Ensign field.
The NJR is currently drilling an appraisal well on the Annabel East field
extension (Venture - 100%). In the event of success, the Annabel East well could
provide a material addition to reserves in the Annabel field and would be tied
back into the Annabel subsea facilities.
During the first half of 2009, work on the combined Eris/Ceres (Venture -
54%/90%) gas fields development project has continued. Commercial terms for
transportation and processing have been finalised and offshore tie-in activity
is continuing with first gas production anticipated before year end.
In July 2009, Venture commenced drilling the first of two exploration and
appraisal wells in the East Irish Sea ('EIS'). The Marram appraisal well,
(Venture - 70%) has proven gas in the eastern part of the field. The well
reached a total measured depth of 2,020ft on 9 July 2009 and encountered a gross
gas column of 469ft. Down hole samples were taken to confirm the gas quality and
the initial analysis indicates that the gas quality is within the pre-drill
expectation range and that the GIIP volume is also within the pre-drill range of
expected outcomes. The nitrogen content in the down hole samples is material but
other fields in the same area have been successfully developed with high
nitrogen contents. A final evaluation will be completed during the second half
of 2009 and potential development options are being reviewed. Earlier this
week Venture announced that the Whitbeck exploration prospect (Venture - 70%)
was a gas discovery but commerciality is still to be proven.
Greater Markham Area ('GMA') and Dutch Sector
The GMA production hub, which straddles the median line between the UK and Dutch
sectors of the North Sea, contributed 15,915 boepd or 30% of Group total
production (2008 - 11,989 boepd and 26%). This increase was the result of
excellent performance from the two Chiswick gas production wells (Venture -
100%) and the start-up of production from the Stamford field (Venture 100%) in
December 2008. Overall production performance from the hub has been good
although production from Stamford has been below expectations.
Following the strong performance of the Chiswick field since it was brought on
stream in 2007 Venture has recently completed a subsurface study on the field
which has led to a significant increase in the estimate of recoverable reserves
for the field. A second phase of the development of the field has now been
sanctioned which could involve the drilling of up to five additional wells. The
first two additional wells will be drilled during late 2009 and 2010 utilising
the NSM. In addition, in late 2008 Venture entered into a long term partnership
arrangement with Schlumberger to provide a stimulation vessel to support
Venture's SNS tight gas drilling and completion operations including Chiswick
Phase II development.
The Kew appraisal well drilled earlier this year proved gas in the northern
section of the field with gas found in the Silverpit, Leman and primary
Carboniferous reservoirs with Carboniferous GIIP volume higher than the
pre-drill best technical case, but within the range of expected outcomes. The
well, which was originally spudded in early December 2008 by the NJR had a
number of operational challenges, including a side-track, was suspended for use
as a producer at a later date. A field development plan utilising existing local
infrastructure is now being finalised. As well as confirming the development
potential of the Kew discovery, the results of this well further supports the
planned drilling of the nearby Wandsworth Carboniferous exploration prospect.
In 2008, Venture acquired operated interests in three undeveloped gas
discoveries in Quads A and B in the northern part of the Dutch sector thereby
expanding Venture's footprint in the Netherlands. The first of these
discoveries, F3-FA (Venture - 58% estimated) has moved rapidly into development.
The field development plan involves construction and installation of a self
installed production platform ('SIP') with a single production well tied into
the regional transportation facilities. Construction of the SIP commenced during
the second quarter at Heerema's fabrication yard in Vlissingen in the
Netherlands and first gas production is expected during winter 2010/11.
In mid-June Venture announced a significant sale and farm down transaction with
NV Nuon Energy ('Nuon') involving a sale of a 15% interest in the producing
Chiswick and Stamford field, a 25% interest in the Kew potential development and
an exploration farm-in to Morpheus and Andromeda as discussed above.
In July, a small interest in the NOGAT gas pipeline and onshore gas processing
terminal at Den Helder was acquired. This interest will ensure that future
production from the F3-FA, A15a and B17a discoveries attracts a reduced export
tariff. This will enhance field economics and give preferred access to capacity
in the NOGAT system.
Greater Kittiwake Area ('GKA')
The GKA production hub (Venture operated - 50%) contributed 12,508 boepd or 24%
of Group total production during the period (2008 - 9,995 boepd and 22%). GKA
production volumes were ahead of expectations during the first half due to good
oil and gas production efficiency along with strong reservoir performance from
the Grouse, Goosander and Mallard fields.
Platform process throughput optimisation continues and the now redundant
Kittiwake Loading Buoy and Kittiwake platform drilling derrick were safely
removed. Technical evaluations of several GKA near field Tertiary exploration
opportunities were completed and are being proposed for drilling in 2010/11.
'Trees'
During the first half of 2009, the 'Trees' production hub (Venture - 100%)
produced at an average rate of 2,723 boepd or 5% of Group total production (2008
- 5,146 boepd and 11%). 'Trees' production is returning to expected levels
following resolution of host facility gas lift and water injection supply
problems during the first half of 2009.
Activity on 'Trees' has focused on subsurface work to refine our understanding
of the 'Trees' reservoirs and identify additional investment opportunities. In
particular, on South Sycamore detailed drilling planning activities have
commenced following the confirmation of economically attractive investments.
Other Central North Sea ('New Oil')
The New Oil production hub contributed 8,002 boepd or 15% of total Group
production (2008 - nil). This was driven by the contribution from the Chestnut
oilfield (Venture - 69.875%) which came on stream in September 2008 and by a
small contribution from Halley (Venture - 40%).
Since the start-up of production on Chestnut, we have seen good well, reservoir,
facilities and tanker offloading performance and in late March the second
production well ('P2') which was drilled in 2008 was tied in and brought on
stream. Venture are utilising the subsurface technical expertise developed for
Chestnut to look regionally for additional Chestnut like opportunities.
In August 2008, the previously shut-in Halley oilfield was restored to
production on an extended well test basis. Since then, production has been
erratic due to facilities constraints. However, in early 2009 Venture completed
the negotiation of commercial terms for processing and transportation of
production from both Halley and the nearby Appleton fields. This has enabled the
Halley partnership to commit to drilling an appraisal well on the field in late
2009 and to move forward development planning for the Halley/Appleton complex.
In addition, Venture plans to drill an appraisal well on the Acorn oil discovery
(Venture - 100%) using the NTvL during the second half of 2009 to confirm long
term commercial flow rates.
Corporate and Business Development
The successful conclusion of a 2008 initiative to shape the Company's SNS gas
assets portfolio in terms of capital expenditure and risk 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. Completion of this
transaction remains subject to shareholder approval and other customary third
party consents.
Also in June 2009, 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. This transaction completed on 31
July 2009.
Market optimism with regard to the availability of large asset packages may
increase during the second half of 2009 and into 2010 as larger players seek to
adjust their portfolios. Global economic conditions during the second half of
2008 and early 2009 coupled with the fall in commodity prices may provide the
catalyst for majors to dispose of their non-core North Sea assets. To the extent
these assets have redevelopment potential in the hands of a focused, experienced
and well funded operator this would play to Venture's strengths.
Board Development
In March it was announced that Jon Murphy, Chief Operating Officer ('COO'),
would step down from the Board at the Annual General Meeting in May but would
remain in employment with the Company until the end of the year. In a planned
succession move, Jonathan Roger, previously General Manager Producing Assets,
replaced Jon as COO and has been appointed to the Board of Venture Production
plc.
Since he joined Venture in March 1999, Jon has been a very important part of the
Venture team that has built the Company from a virtual start-up operating
onshore in Trinidad to one of the largest and most successful independent E&P
companies in the North Sea. The Board would like to thank Jon for his huge
contribution to our success over the last 10 years and wish him good luck in the
future.
Jonathan has 17 years experience in the oil and gas industry with a broad
commercial and technical background. He joined Venture in 2003 and led the
Company's SNS gas business, including expansion into the Dutch sector, following
the acquisition of CH4. In late 2007, Jonathan's role was expanded to cover all
of Venture's producing business units in the North Sea.
In late March, Graeme Sword, 3i Group plc's representative on the Board since
2007 resigned.
Financial Summary
+-------------------------------------------------------+--------------+--------------+
| | First half | First half |
+-------------------------------------------------------+--------------+--------------+
| | 2009 | 2008 |
+-------------------------------------------------------+--------------+--------------+
| Key statistics: | (GBP/boe) | (GBP/boe) |
+-------------------------------------------------------+--------------+--------------+
| | | |
+-------------------------------------------------------+--------------+--------------+
| Effective realised price (GBP/boe sold) | 30.95 | 33.12 |
+-------------------------------------------------------+--------------+--------------+
| | | |
+-------------------------------------------------------+--------------+--------------+
| Lifting costs (excluding dry holes) (GBP/boe | 9.07 | 6.71 |
| produced) | | |
+-------------------------------------------------------+--------------+--------------+
| | | |
+-------------------------------------------------------+--------------+--------------+
| Depreciation, depletion and amortisation (GBP/boe | 8.54 | 6.37 |
| produced) | | |
+-------------------------------------------------------+--------------+--------------+
| | | |
+-------------------------------------------------------+--------------+--------------+
| Production (boepd) | 52,988 | 45,534 |
+-------------------------------------------------------+--------------+--------------+
| | | |
+-------------------------------------------------------+--------------+--------------+
Revenue for the period was GBP274.7 million (2008: GBP240.5 million), an
increase of GBP34.2 million or 14%. This is primarily due to higher production
in 2009, with contributions from Chestnut, Grouse and Stamford, partially offset
by lower realised prices. Natural gas accounted for 53% (2008: 59%) of revenue
and 57% (2008: 65%) of production at an effective realised price ('ERP') of
45p/therm (2008: 47p/therm). This is a decrease of 4% over the ERP achieved for
the same period last year.The average spot market gas price for the first half
of 2009 was 37p/therm (2008: 57p/therm) which is 35% lower than 2008. The
financial impact of the reduction in the spot market price was partially offset
by our existing gas hedges (46% of gas sales were hedged in the first half at an
average price of 51p/therm). Oil makes up the balance of Venture's revenue with
a decrease of 26% in the ERP to GBP36/boe (2008: GBP46/boe). The average hedged
price for oil was $67/boe (GBP45/boe) and covered 29% of oil sales, compared to
an average spot price of $52/boe (GBP35/boe). Overall, hedging increased first
half revenues by GBP29.7million.
Unit lifting costs were in line with expectations at GBP9.07/boe in the first
half of 2009 (2008: GBP6.71/boe). The primary driver of the increase in unit
costs across the business is the continuation of the effect seen in the second
half of 2008, where the overall costs of production increased at new hubs such
as Chestnut whilst the fixed costs of existing older hubs are spread over lower
production volumes as these fields naturally decline. The impact of movements in
foreign exchange rates have also increased the unit costs, as the costs of
operating our FPSO on the Chestnut field are incurred in US dollars and the
costs of operating the Markham platform are primarily incurred in Euros. Also
included in the first half of 2009 was the cost of well work overs of GBP2.9
million (2008: GBP1.4 million). Included within the first half costs of 2009 is
an impairment charge of GBP10.8 million (2008: nil) relating to the costs of the
Andrea well as at 30 June 2009, pending the conclusion of the assessment of the
commerciality of a future development of the field. An additional charge of
approximately GBP5 million will be taken in the second half of 2009 relating to
the costs of the Andrea well incurred after 30 June 2009. The increase of the
unit depreciation, depletion and amortisation charges reflect the mix of new
fields coming on stream and the impact of historic cost inflation on
developments seen over the last few years. The increase in administrative costs
is primarily due to the costs associated with the unsolicited offer for the
Company by Centrica Resources (UK) Limited of GBP5.2 million (2008: nil) and
higher costs of the employee share-related incentive schemes as a result of a
higher take-up in the deferred shares award and an increased national insurance
provision due to the increase in the Company's share price.
Operating profit for the period of GBP82.4 million (2008: GBP122.0 million),
reflects the lower realised prices and higher costs, as described above,
partially offset by higher levels of production.
Net finance income of GBP14.8 million (2008: net finance charge of GBP11.4
million) was as a result of a foreign exchange gain of GBP25.9 million on the
translation of our financial assets and liabilities offset by net finance
expenses.
Profit before tax for the first half of the year was GBP105.2 million (2008:
GBP113.2 million). The tax charge of 49% (2008: 52%) reflects the fact that the
majority of the Group's profits are taxed at a UK Corporation Tax rate of 30%
plus a Supplementary charge rate of 20%. Profit after tax for the first six
months of 2009 was GBP54.1 million (2008: GBP54.7 million), with fully diluted
earnings per share of 35.0p (2008: 35.2p).
The Group had property, plant and equipment assets of GBP1,052.5 million (2008:
GBP896.6 million) reflecting continuing field development activity over the
period, particularly as a result of Venture's active appraisal and exploration
drilling campaign. Intangible assets of GBP47.1 million arose primarily on the
acquisition of CH4 in 2006. The derivative financial instrument asset of GBP42.7
million shown in the balance sheet relates to gas hedges of GBP36.0 million, oil
hedges of GBP5.6 million, and a foreign exchange derivative asset of GBP1.1
million.
In June 2009, the Group announced the disposal of 15% of its interest in both
the Chiswick and Stamford fields to N.V. Nuon Energy. The Sale and Purchase
Agreement for the disposal had been signed as at 30 June 2009, and as such the
major classes of assets and liabilities of these interests have been classified
as held for sale. Completion of the transaction is subject to shareholder
approval, any necessary consents from banks and noteholders, and other customary
third party approvals. The transaction is expected to complete later in 2009.
The Group's net debt position at 30 June 2009 was GBP276.4 million, an increase
of GBP18.9 million from the 2008 year end. This movement reflects retranslation
of our net US dollar foreign currency liability and net cash invested in the
business during the first half of the year.
Net cash generated from operating activities was GBP132.1 million (2008:
GBP156.6 million). This was utilised by capital expenditure of GBP145.1 million
(2008: GBP84.9 million), asset acquisitions of nil (2008: GBP39.6 million) and
other investing activities of GBP1.0 million. A final dividend of 13p/share was
paid in the period (GBP19.2 million) in respect of 2008. In accordance with our
dividend policy, there will be no interim dividend declared.
With a largely unutilised GBP365.0 million committed corporate debt facility and
a cash balance of GBP147.5 million, we have the financial resources to develop
Venture's existing asset base as well as fund potential future acquisitions.
Outlook and Summary
In recent months we have seen a material strengthening of oil prices on the back
of improving economic sentiment since the lows recorded in the first
quarter.Spot UK gas prices have exhibited normal seasonal weakness, but forward
prices for winter 2009/10, and beyond, have remained 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).
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 on stream during late 2009. The
strong 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.
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 Group has
the balance sheet strength and liquidity to invest in, and capitalise on, its
recent drilling success and pursue acquisition 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.
Principal Risks and Uncertainties
In accordance with DTR 4.2.7, the Board confirms that the principal risks and
uncertainties facing the Company in the remaining six months of the financial
year have not materially changed since the publication of the Annual Report and
Accounts for the year ended 31 December 2008.
The key risks to Venture's business remain unchanged from the year end and are
summarised below:
Development Timing - Reference is made above to the uncertainty on the timing of
start-up of production from new projects coming on stream which could impact
upon production in the second half of the year and beyond. Low/Volatile
Commodity Price - The volatility of commodity prices and the fall from 2008
levels will be a continuing factor in the financial performance of the business
during the second half of the year and beyond. Financial and Credit Markets -
The reduced availability of capital in the financial markets and its potential
impact on Venture is being closely monitored. Technical and Geological - There
is a constant review and analysis of subsurface and topside asset risks. The
drilling of exploration and appraisals wells contains the inherent risk that we
may not encounter commercially productive hydrocarbon reservoirs. Communication
with Investors, Analysts and External Parties - Resulting from the difficulties
in providing accurate and consistent information about business performance when
the outcomes are subject to influences outside direct management control.
Safety and Environmental - HSE is reviewed at every scheduled Board meeting and
is a key focus for all staff. Organisational Capability - A key priority for
management remains the recruitment and retention of talented people. Third
Party Infrastructure - The Company retains a strong reliance on third parties to
deliver its products to markets. Business Model - The Board still believes that
the Venture Business Model remains valid but the volatility of the market in
which we operate means that the Board has to keep this under regular review.
Gas/Oil Balance - The Board also keeps under regular review the gas/oil balance
as a shift in this mix could alter the analysis of risk in the business.
Misstatement of Reserves - Although perceived to be a relatively low risk, the
Board believes it should be highlighted as a key risk because of its fundamental
relationship to value. Contractor/Supplier Risks - We remain dependent on the
performance of our contractors and suppliers.
A more detailed explanation of these risks can be found on pages 23 and 24 of
the 2008 Annual Report and Accounts - copies are available on the Company's
website www.venture-production.com.
Related Party Transactions
Details of related party transactions in accordance with Disclosure and
Transparency Rule 4.2.8 can be found in Note 18 to the Accounts below.
Forward-looking Statements
Certain statements in this Half Year Report are forward-looking statements that
reflect the Group's current expectations regarding future events.
Forward-looking statements inherently involve risks and uncertainties. Actual
events could differ materially from those expected and depend on a number of
factors including the general economic outlook, commodity prices and successful
production. Although the Company believes that the expectations reflected in
these forward-looking statements are reasonable, it can give no assurance that
these expectations will prove to have been correct. The Company undertakes no
obligation to update any forward-looking statements whether as a result of new
information, future events or otherwise.
Other Principal Events Occurring in 2009
On 10 July 2009, Centrica Resources (UK) Limited ('Centrica') made an
unsolicited conditional offer to acquire the Company. The Board of Venture
unanimously rejected that offer, which it believes substantially undervalues the
Company. Centrica posted its offer document to Venture shareholders on 16 July
2009, to which Venture responded with a circular posted on 24 July 2009 and an
independent valuation of Venture's assets on 4 August 2009.
Copies of the regulatory announcements and relevant published materials can be
accessed via the Venture website www.venture-production.com.
Statement of Directors' Responsibilities
Each of the Director's confirms that to the best of his knowledge this Half Year
Report has been prepared in accordance with IAS 34 as adopted by the European
Union, and that the interim management report herein includes a fair review of
the information required by DTR 4.2.7 and DTR 4.2.8, namely:
* an indication of important events that have occurred during the first six months
and their impact on the Half Year Report, and a description of the principal
risks and uncertainties for the remaining six months of the financial year; and
* material related party transactions in the first six months and any material
changes in the related party transactions described in the last Annual Report.
The Directors of the Company as at the date of this report are:
John Morgan, Non-Executive Chairman
Mike Wagstaff, Chief Executive
Peter Turner, Finance Director
Rod Begbie, Corporate Development Director
Jonathan Roger, Chief Operating Officer
Mark Nicholls, Non-Executive Deputy Chairman
Tom Blades, Non-Executive Director
Andrew Carr-Locke, Non-Executive Director
Tom Ehret, Non-Executive Director
Alan Jones, Non-Executive Director
Larry Kinch, Non-Executive Director
Robb Turner, Non-Executive Director
By Order of the Board
John MorganMike Wagstaff
ChairmanChief Executive
19 August 2009
Report by the Financial Advisers to Venture Production plc
Venture Production plc
Kings Close
62 Huntly Street
Aberdeen
AB10 1RS
19 August 2009
Report by the financial adviser to Venture Production plc ('Venture') in
connection with the offer by Centrica Resources (UK) Limited for Venture (the
'Centrica Offer')
Dear Sirs
We refer to the unaudited financial information contained within the
announcement dated 19 August 2009 of the interim results of Venture for the
period ended 30 June 2009 ('Interim Financial Information').
We have read the Interim Financial Information including the independent review
report of the Interim Financial Information ('Independent Review Report')
prepared for Venture by PricewaterhouseCoopers LLP, auditors to Venture. We have
discussed the Interim Financial Information and the Independent Review Report
with the Directors of Venture.
This letter is provided to you solely in connection with Rule 28.3(b) of The
City Code on Takeovers and Mergers and is given for the purpose of complying
with that rule and for no other purpose.
On the basis of the foregoing, we consider that the Interim Financial
Information, for which you as Directors are solely responsible, has been
prepared with due care and consideration. N M Rothschild & Sons Limited
('Rothschild') has given and not withdrawn its consent to the publication of the
Interim Financial Information dated 19 August 2009 with the inclusion of its
letter and the references to its name in the form and context in which they
appear.
Rothschild, which is authorised and regulated by the Financial Services
Authority in the United Kingdom, is acting as financial adviser to Venture and
no one else in connection with the Centrica Offer and will not be responsible to
anyone other than Venture for providing the protections afforded to clients of
Rothschild or for providing advice in relation to the Centrica Offer or for any
other matter referred to herein.
Yours very truly
for and on behalf of
N M Rothschild & Sons Limited
Roger Ader David Hemmings
+------------------------+-------------------------------+-----------------------+
| | | |
+------------------------+-------------------------------+-----------------------+
| N M Rothschild & Sons | Telephone +44 (0)20 7280 5000 | Registered number |
| Limited | Investment Banking Facsimile | 925279 England |
| New Court, St | +44 (0)20 7280 5671 | Registered office as |
| Swithin's Lane | www.rothschild.com | shown |
| London EC4P 4DU, | | Authorised and |
| United Kingdom | | Regulated by |
| | | the Financial |
| | | Services Authority |
+------------------------+-------------------------------+-----------------------+
Independent Review Report to Venture Production plc
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June
2009, which comprises the income statement, balance sheet, statement of
comprehensive income, statement of changes in equity, cash flow statement and
related notes. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed set of
financial statements.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the Directors. The Directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
As disclosed in Note 1, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, 'Interim Financial Reporting', as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review. This report, including the conclusion, has been prepared for and only
for the Company for the purpose of:
* the Disclosure and Transparency Rules of the Financial Services Authority; and
* to satisfy Rule 28.3(b) of The City Code on Takeovers and Mergers
and for no other purpose. We do not, in producing this report, accept or assume
responsibility for any other purpose or to any other person to whom this report
is shown or into whose hands it may come save where expressly agreed by our
prior consent in writing.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2009 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
19 August 2009
32 Albyn Place
Aberdeen
AB10 1YL
PricewaterhouseCoopers LLP has given and not withdrawn its consent to the
publication of the half-yearly financial report for the six months ended 30 June
2009 in the announcement dated 19 August 2009 with the inclusion of its report
in the form and context in which it appears.
Notes:
(a) The maintenance and integrity of the Venture Production plc website is the
responsibility of the Directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.
Condensed Group Income Statement
For the six months ended 30 June 2009
+---------------------------------+-------+------------+------------+------------+
| | | Unaudited | Unaudited | Audited |
| | | Interim | Interim | Full Year |
| | | June 2009 | June 2008 | December |
| | | | | 2008 |
+---------------------------------+-------+------------+------------+------------+
| |Notes | GBP000 | GBP000 | GBP000 |
+---------------------------------+-------+------------+------------+------------+
| Revenue | 2 | 274,747 | 240,481 | 494,878 |
+---------------------------------+-------+------------+------------+------------+
| Cost of sales | | (158,746) | (115,726) | (248,085) |
+---------------------------------+-------+------------+------------+------------+
| Impairment of assets | | (10,836) | - | (6,200) |
+---------------------------------+-------+------------+------------+------------+
| Gross profit | | 105,165 | 124,755 | 240,593 |
+---------------------------------+-------+------------+------------+------------+
| Administrative expenses | | (15,646) | (2,986) | (9,047) |
+---------------------------------+-------+------------+------------+------------+
| Loss on foreign exchange | | (7,180) | (18) | (491) |
+---------------------------------+-------+------------+------------+------------+
| Other operating income | | 18 | 261 | 19 |
+---------------------------------+-------+------------+------------+------------+
| Operating profit | 2,3 | 82,357 | 122,012 | 231,074 |
+---------------------------------+-------+------------+------------+------------+
| Finance income | 5 | 26,246 | 2,156 | 4,998 |
+---------------------------------+-------+------------+------------+------------+
| Finance expense | 5 | (11,456) | (13,601) | (39,499) |
+---------------------------------+-------+------------+------------+------------+
| Change in fair value of | 4 | 6,817 | (296) | (6,253) |
| derivative financial | | | | |
| instruments | | | | |
+---------------------------------+-------+------------+------------+------------+
| Share of profit/(loss) of | 9 | 1,187 | 2,910 | (6,131) |
| associates | | | | |
+---------------------------------+-------+------------+------------+------------+
| Profit before tax | | 105,151 | 113,181 | 184,189 |
+---------------------------------+-------+------------+------------+------------+
| Income tax expense | 6 | (51,067) | (58,502) | (107,533) |
+---------------------------------+-------+------------+------------+------------+
| | | | | |
+---------------------------------+-------+------------+------------+------------+
| Profit for the financial period | | 54,084 | 54,679 | 76,656 |
| | | | | |
+---------------------------------+-------+------------+------------+------------+
| | | | | |
+---------------------------------+-------+------------+------------+------------+
| Earnings per ordinary share | | | | |
+---------------------------------+-------+------------+------------+------------+
| Basic earnings per share | 7 | 36.6p | 38.2p | 52.7p |
+---------------------------------+-------+------------+------------+------------+
| Diluted earnings per share | 7 | 35.0p | 35.2p | 50.5p |
+---------------------------------+-------+------------+------------+------------+
| | | | | |
+---------------------------------+-------+------------+------------+------------+
| Dividends paid per ordinary | | | | |
| share | | | | |
+---------------------------------+-------+------------+------------+------------+
| Ordinary dividend paid per | 8 | 13.0p | 12.0p | 12.0p |
| share | | | | |
+---------------------------------+-------+------------+------------+------------+
All items dealt with in arriving at the profit for the period relate to
continuing activities.
Condensed Group Statement of Comprehensive Income
For the six months ended 30 June 2009
+--------------------------------------+--+------------+------------+------------+
| | | Unaudited | Unaudited | Audited |
| | | Interim | Interim | Full Year |
| | | June 2009 | June 2008 | December |
| | | | | 2008 |
+--------------------------------------+--+------------+------------+------------+
| | | GBP000 | GBP000 | GBP000 |
+--------------------------------------+--+------------+------------+------------+
| Profit for the financial period | | 54,084 | 54,679 | 76,656 |
+--------------------------------------+--+------------+------------+------------+
| Cash flow hedges: | | | | |
+--------------------------------------+--+------------+------------+------------+
| - Fair value gain/(losses) net of | | 14,950 | (98,307) | 30,078 |
| tax | | | | |
+--------------------------------------+--+------------+------------+------------+
| - Reclassified and reported in net | | (14,871) | 16,570 | 24,637 |
| profit | | | | |
+--------------------------------------+--+------------+------------+------------+
| Currency translation differences | | (248) | - | - |
+--------------------------------------+--+------------+------------+------------+
| Total comprehensive | | 53,915 | (27,058) | 131,371 |
| income/(loss) for the period | | | | |
+--------------------------------------+--+------------+------------+------------+
Statement of Changes in Equity
For the six months ended 30 June 2009
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| | Share | Share | Other | Retained | Total |
| | Capital | Premium | reserves | earnings | equity |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| Balance at 1 January 2009 | 599 | 136,242 | 161,206 | 126,471 | 424,518 |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| Profit for the period | - | - | - | 54,084 | 54,084 |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| Other comprehensive income/(loss) | - | - | (169) | - | (169) |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| Total comprehensive income/(loss) for the | - | - | (169) | 54,084 | 53,915 |
| period | | | | | |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| Employees share schemes | - | - | 6,369 | 248 | 6,617 |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| Dividends paid | - | - | - | (19,216) | (19,216) |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| | - | - | 6,369 | (18,968) | (12,599) |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| Balance at 30 June 2009 | 599 | 136,242 | 167,406 | 161,587 | 465,834 |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| | | | | | |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| | Share | Share | Other | Retained | Total |
| | Capital | Premium | reserves | earnings | equity |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| | GBP000 | GBP000 | GBP000 | GBP000 | GBP000 |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| Balance at 1 January 2008 | 573 | 107,207 | 105,070 | 68,340 | 281,190 |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| Profit for the period | - | - | - | 54,679 | 54,679 |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| Other comprehensive income/(loss) | - | - | (81,737) | - | (81,737) |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| Total comprehensive income/(loss) for the | - | - | (81,737) | 54,679 | (27,058) |
| period | | | | | |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| Employees share schemes | - | 34 | (148) | (981) | (1,095) |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| Conversion of convertible bonds | 11 | 12,489 | - | - | 12,500 |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| Dividends paid | - | - | - | (17,201) | (17,201) |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| | 11 | 12,523 | (148) | (18,182) | (5,796) |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
| Balance at 30 June 2008 | 584 | 119,730 | 23,185 | 104,837 | 248,336 |
+---------------------------------------------+----------+------------+------------+-------------+-----------+
The figures provided in the above table are unaudited.
Condensed Group Balance Sheet
As at 30 June 2009
+--------------------------------+--------+-------------+------------+--------------+
| | | Unaudited | Unaudited | Audited |
| | | Interim | Interim | Full Year |
| | | June 2009 | June 2008 | December |
| | | | | 2008 |
+--------------------------------+--------+-------------+------------+--------------+
| | Notes | GBP000 | GBP000 | GBP000 |
+--------------------------------+--------+-------------+------------+--------------+
| Assets | | | | |
+--------------------------------+--------+-------------+------------+--------------+
| Non-current assets | | | | |
+--------------------------------+--------+-------------+------------+--------------+
| Property, plant and equipment | 10 | 1,052,547 | 896,626 | 1,024,261 |
+--------------------------------+--------+-------------+------------+--------------+
| Intangible assets | | 47,067 | 53,291 | 53,291 |
+--------------------------------+--------+-------------+------------+--------------+
| Investments accounted for | 13 | 39,821 | 42,450 | 33,409 |
| using the equity method | | | | |
+--------------------------------+--------+-------------+------------+--------------+
| Convertible loan notes | | 6,558 | 5,495 | 7,528 |
| receivable | | | | |
+--------------------------------+--------+-------------+------------+--------------+
| Derivative financial | | 15,201 | - | 27,358 |
| instruments | | | | |
+--------------------------------+--------+-------------+------------+--------------+
| | | 1,161,194 | 997,862 | 1,145,847 |
+--------------------------------+--------+-------------+------------+--------------+
| Current assets | | | | |
+--------------------------------+--------+-------------+------------+--------------+
| Inventories | | 2,328 | 1,488 | 4,552 |
+--------------------------------+--------+-------------+------------+--------------+
| Trade and other receivables | | 116,984 | 92,725 | 118,916 |
+--------------------------------+--------+-------------+------------+--------------+
| Derivative financial | | 32,688 | 203 | 21,712 |
| instruments | | | | |
+--------------------------------+--------+-------------+------------+--------------+
| Cash and cash equivalents | | 147,537 | 144,099 | 207,969 |
+--------------------------------+--------+-------------+------------+--------------+
| | | 299,537 | 238,515 | 353,149 |
+--------------------------------+--------+-------------+------------+--------------+
| Assets classified as held for | 11 | 42,689 | - | - |
| sale | | | | |
+--------------------------------+--------+-------------+------------+--------------+
| Total assets | | 1,503,420 | 1,236,377 | 1,498,996 |
+--------------------------------+--------+-------------+------------+--------------+
| Liabilities | | | | |
+--------------------------------+--------+-------------+------------+--------------+
| Current liabilities | | | | |
+--------------------------------+--------+-------------+------------+--------------+
| Trade and other payables | | (111,195) | (107,908) | (152,950) |
+--------------------------------+--------+-------------+------------+--------------+
| Derivative financial | | (5,227) | (137,528) | (13,386) |
| instruments | | | | |
+--------------------------------+--------+-------------+------------+--------------+
| Income taxes payable | | - | (8,197) | (974) |
+--------------------------------+--------+-------------+------------+--------------+
| Financial liabilities - bank | | - | - | (9,017) |
| overdraft | | | | |
+--------------------------------+--------+-------------+------------+--------------+
| | | (116,422) | (253,633) | (176,327) |
+--------------------------------+--------+-------------+------------+--------------+
| Net current | | 183,115 | (15,118) | 176,822 |
| assets/(liabilities) | | | | |
+--------------------------------+--------+-------------+------------+--------------+
| Non-current liabilities | | | | |
+--------------------------------+--------+-------------+------------+--------------+
| Financial liabilities - | 12 | (423,920) | (391,560) | (456,445) |
| borrowings | | | | |
+--------------------------------+--------+-------------+------------+--------------+
| Deferred income tax | | (381,548) | (168,418) | (343,924) |
| liabilities | | | | |
+--------------------------------+--------+-------------+------------+--------------+
| Other non-current liabilities | | (10,168) | (9,780) | (14,113) |
+--------------------------------+--------+-------------+------------+--------------+
| Provisions | | (85,445) | (71,349) | (83,669) |
+--------------------------------+--------+-------------+------------+--------------+
| Derivative financial | | - | (93,301) | - |
| instruments | | | | |
+--------------------------------+--------+-------------+------------+--------------+
| | | (901,081) | (734,408) | (898,151) |
+--------------------------------+--------+-------------+------------+--------------+
| Liabilities directly | 11 | (20,083) | - | - |
| associated with assets | | | | |
| classified as held for sale | | | | |
+--------------------------------+--------+-------------+------------+--------------+
| Total liabilities | | (1,037,586) | (988,041) | (1,074,478) |
+--------------------------------+--------+-------------+------------+--------------+
| Net assets | | 465,834 | 248,336 | 424,518 |
+--------------------------------+--------+-------------+------------+--------------+
| | | | | |
+--------------------------------+--------+-------------+------------+--------------+
| Shareholders' equity | | | | |
+--------------------------------+--------+-------------+------------+--------------+
| Called up share capital | 14 | 599 | 584 | 599 |
+--------------------------------+--------+-------------+------------+--------------+
| Share premium | 14 | 136,242 | 119,730 | 136,242 |
+--------------------------------+--------+-------------+------------+--------------+
| Other reserves | 14 | 167,406 | 23,185 | 161,206 |
+--------------------------------+--------+-------------+------------+--------------+
| Retained earnings | | 161,587 | 104,837 | 126,471 |
+--------------------------------+--------+-------------+------------+--------------+
| Total shareholders' equity | | 465,834 | 248,336 | 424,518 |
+--------------------------------+--------+-------------+------------+--------------+
Condensed Group Cash Flow Statement
For the six months ended 30 June 2009
+-----------------------------------+--------+-------------+-------------+------------+
| | | Unaudited | Unaudited | Audited |
| | | Interim | Interim | Full Year |
| | | June 2009 | June 2008 | December |
| | | | | 2008 |
+-----------------------------------+--------+-------------+-------------+------------+
| | Notes | GBP000 | GBP000 | GBP000 |
+-----------------------------------+--------+-------------+-------------+------------+
| | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| Cash flows from operating | | | | |
| activities | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| Operating cash flow | 16 | 143,636 | 180,476 | 350,778 |
+-----------------------------------+--------+-------------+-------------+------------+
| Interest received | | 325 | 1,791 | 4,920 |
+-----------------------------------+--------+-------------+-------------+------------+
| Interest paid | | (12,478) | (10,787) | (20,813) |
+-----------------------------------+--------+-------------+-------------+------------+
| Income tax received / (paid) | | 592 | (14,841) | (29,932) |
+-----------------------------------+--------+-------------+-------------+------------+
| Net cash generated from | | 132,075 | 156,639 | 304,953 |
| operating activities | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| Cash flows from investing | | | | |
| activities | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| Purchase of property, plant | | (145,142) | (124,496) | (279,657) |
| and equipment | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| Acquisition of subsidiary | | - | (1,074) | (1,074) |
| (net of cash acquired) | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| Proceeds from disposal of | | - | - | 3,010 |
| property, plant and equipment | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| Investments in joint ventures | | - | (23,368) | (23,199) |
| and associates | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| Payments made for | | (937) | (1,880) | (3,006) |
| decommissioning liabilities | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| Net cash used in investing | | (146,079) | (150,818) | (303,926) |
| activities | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| Cash flows from financing | | | | |
| activities | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| Shares acquired by Employee | 14 | (3,000) | (3,000) | (6,000) |
| Benefit Trust | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| Dividends paid to | 8 | (19,216) | (17,201) | (17,201) |
| shareholders | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| Proceeds from exercise of | | - | 34 | 61 |
| share options | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| Net cash used in financing | | (22,216) | (20,167) | (23,140) |
| activities | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| Net decrease in cash and cash | | (36,220) | (14,346) | (22,113) |
| equivalents | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| Opening cash and cash | | 198,952 | 158,445 | 158,445 |
| equivalents | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| Effect of foreign exchange | | (15,195) | - | 62,620 |
| rate changes | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
| Closing cash and cash | | 147,537 | 144,099 | 198,952 |
| equivalents | | | | |
+-----------------------------------+--------+-------------+-------------+------------+
Notes to the Financial Statements
1. Accounting policies for the six months ended 30 June 2009
Basis of preparation
The financial statements have been prepared in accordance with IFRS and IFRIC
interpretations endorsed by the European Union (EU) and with those parts of the
Companies Act 2006, applicable to companies reporting under IFRS.
The interim financial statements for the six months ended 30 June 2009 have been
prepared in accordance with the Disclosure and Transparency Rules of the
Financial Services Authority and with IAS 34 'Interim Financial Reporting'. The
accounting policies are consistent with those of the annual financial statements
for the year ended 31 December 2008.
Taxes on income in the interim periods are accrued using the tax rate that would
be applicable to expected total annual earnings.
This condensed consolidated interim financial information does not comprise
statutory accounts within the meaning of section 434 of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2008 were approved by the
Board of directors on 16 March 2009 and delivered to the Registrar of Companies.
The report of the auditors on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement under section 498
of the Companies Act 2006.
The following standards, amendments and interpretations to published standards
were mandatory for the financial year beginning 1 January 2009.
* IAS 1 (revised), 'Presentation of financial statements'. The revised standard
prohibits the presentation of items of income and expenses (that is 'non-owner
changes in equity') in the statement of changes in equity, requiring 'non-owner
changes in equity' to be presented separately from owner changes in equity. All
'non-owner changes in equity' are required to be shown in a performance
statement.
The group has elected to present two statements: an income statement and a
statement of comprehensive income. The interim financial statements have been
prepared under the revised disclosure requirements.
* IFRS 8, 'Operating segments'. IFRS 8 replaces IAS 14, 'Segment reporting'. It
requires a 'management approach' under which segment information is presented on
the same basis as that used for internal reporting purposes. This has not
resulted in a change in the number of reportable segments presented. Operating
segments are reported in a manner consistent with the internal reporting
provided to the chief operating decision-maker.
* IAS 23 (amendment), 'Borrowing costs'. The amended standard requires borrowing
costs related to the acquisition, construction or production of a qualifying
asset to be capitalised as part of the cost of the asset. All other borrowing
costs should be expensed as incurred. The adoption of this standard has not had
any impact on the accounting policies applied by the group.
The following new standards, amendments to standards and interpretations are
mandatory for the first time for the financial year beginning 1 January 2009,
but are not currently relevant for the Group.
* IFRIC 13, 'Customer loyalty programmes'.
* IFRIC 14, 'The limit on a defined benefit asset, minimum funding requirements
and their interaction'.
* IFRIC 15, 'Agreements for the construction of real estate'.
* IFRIC 16, 'Hedges of a net investment in a foreign operation'.
* IAS 39 (amendment), 'Financial instruments: Recognition and measurement'.
The following new standards, amendments to standards and interpretations have
been issued, but are not effective for the financial year beginning 1 January
2009 and have not been early adopted:
* IFRS 3 (revised), 'Business combinations' and consequential amendments to IAS
27, 'Consolidated and separate financial statements', IAS 28, 'Investments in
associates' and IAS 31, 'Interests in joint ventures'.
* IFRIC 17, 'Distributions of non-cash assets to owners'.
* IFRIC 18, 'Transfers of assets from customers'.
2. Segmental reporting
The chief operating decision-maker has been identified as the Board of
Directors. The Board reviews the Group's internal reporting in order to assess
performance and allocate resources. The Board has determined the operating
segments based on these reports.
After review of the segments identified by the previous standard, IAS 14 Segment
Reporting, the Board believe that the current segments still apply under IFRS 8.
The Group is organised around differences in products, being crude oil and
natural gas production.
The Group uses operating profit for internal performance analysis and therefore
the Group's measure of segment profit is operating profit.
Primary Segment - Business Segments
Oil Business Segment
The oil segment consists of all activities connected with the Group's oil
assets, currently the 'Trees', Other Oil and GKA hubs.
Gas Business Segment
The gas segment consists of all activities connected with the Group's gas
assets, currently the Gas UK and GMA hubs.
Segment results
+---------------------------------+-----------------+-----------------+-----------------+-----------------+
| | | | Unallocated | |
| | Oil | Gas | Corporate | Total |
| | GBP000 | GBP000 | GBP000 | GBP000 |
+---------------------------------+-----------------+-----------------+-----------------+-----------------+
| At 30 June 2009 | | | | |
+---------------------------------+-----------------+-----------------+-----------------+-----------------+
| Revenues | 134,798 | 139,949 | - | 274,747 |
+---------------------------------+-----------------+-----------------+-----------------+-----------------+
| Impairment of assets | - | (10,836) | - | (10,836) |
+---------------------------------+-----------------+-----------------+-----------------+-----------------+
| Other expenses | (96,118) | (64,524) | (20,912) | (181,554) |
+---------------------------------+-----------------+-----------------+-----------------+-----------------+
| Operating profit | 38,680 | 64,589 | (20,912) | 82,357 |
+---------------------------------+-----------------+-----------------+-----------------+-----------------+
+--------------------------------+----------------+----------------+----------------+----------------+
| | | | Unallocated | |
| | Oil | Gas | Corporate | Total |
| | GBP000 | GBP000 | GBP000 | GBP000 |
+--------------------------------+----------------+----------------+----------------+----------------+
| At 30 June 2008 | | | | |
+--------------------------------+----------------+----------------+----------------+----------------+
| Revenues | 98,855 | 141,626 | - | 240,481 |
+--------------------------------+----------------+----------------+----------------+----------------+
| Other expenses | (48,753) | (66,554) | (3,162) | (118,469) |
+--------------------------------+----------------+----------------+----------------+----------------+
| Operating profit | 50,102 | 75,072 | (3,162) | 122,012 |
+--------------------------------+----------------+----------------+----------------+----------------+
+---------------------------------+-----------------+-----------------+-----------------+-----------------+
| | | | Unallocated | |
| | Oil | Gas | Corporate | Total |
| | GBP000 | GBP000 | GBP000 | GBP000 |
+---------------------------------+-----------------+-----------------+-----------------+-----------------+
| At 31 December 2008 | | | | |
+---------------------------------+-----------------+-----------------+-----------------+-----------------+
| Revenues | 192,921 | 301,957 | - | 494,878 |
+---------------------------------+-----------------+-----------------+-----------------+-----------------+
| Impairment of assets | (6,200) | - | - | (6,200) |
+---------------------------------+-----------------+-----------------+-----------------+-----------------+
| Other expenses | (123,576) | (125,948) | (8,080) | (257,604) |
+---------------------------------+-----------------+-----------------+-----------------+-----------------+
| Operating profit | 63,145 | 176,009 | (8,080) | 231,074 |
+---------------------------------+-----------------+-----------------+-----------------+-----------------+
All income and expenses below the operating profit line relate to the
unallocated corporate segment.
Secondary Segment - Geographic Segments
All of the Group's activities are in the UK and Dutch sector of the North Sea,
which is considered to be one geographic segment.
3. Operating profit
The following items have been charged/(credited) in arriving at operating
profit:
+----------------------------------+--------------+--------------+--------------+
| | Unaudited | Unaudited | Audited |
| | Interim | Interim | Full Year |
| | June 2009 | June 2008 | December |
| | | | 2008 |
+----------------------------------+--------------+--------------+--------------+
| | GBP000 | GBP000 | GBP000 |
+----------------------------------+--------------+--------------+--------------+
| (Underlift)/overlift | (8,633) | 8,727 | 13,187 |
+----------------------------------+--------------+--------------+--------------+
| Operating expenses | 87,808 | 52,683 | 112,510 |
+----------------------------------+--------------+--------------+--------------+
| Well workover expenses | 2,922 | 1,410 | 15,855 |
+----------------------------------+--------------+--------------+--------------+
| Impairment of assets | 10,836 | - | 6,200 |
+----------------------------------+--------------+--------------+--------------+
| Depreciation, depletion and | 81,143 | 52,081 | 105,965 |
| amortisation | | | |
+----------------------------------+--------------+--------------+--------------+
An impairment charge of GBP10,836,000 has been made relating to the costs of the
Andrea well as at 30 June 2009, pending the conclusion of the assessment of the
commerciality of a future development of the field.
4. Change in fair value of derivative financial instruments
The change in fair value of derivative financial instruments, which are not
designated as cash flow hedges for accounting purposes, is the effect of the
movement in fair value of the Company's forward foreign exchange contracts,
which are marked to market under IAS 39.
5.Finance income and expense
Finance income for 2009 includes GBP25,864,000 of a foreign exchange gain
relating to the translation of our financial assets and liabilities. The net
foreign exchange movement for the half year to 30 June 2008 was not significant.
6.Income tax expense
Analysis of charge for the year
In respect of the Group's UK operations, tax has been calculated based on a rate
of 30% plus the Supplementary tax of 20% (2008: 30% plus 20% supplementary). The
effective tax rate for the six months ended 30 June 2009 is 49% compared with
52% for the half year to 30 June 2008.
7. Earnings per ordinary share
Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the Company by the weighted average number of ordinary shares
in issue during the period, excluding ordinary shares purchased by EBT trusts.
+-----------------------------------+-------------+-------------+-------------+
| | Six months | Six months | Year ended |
| | ended 30 | ended 30 | 31December |
| | June 2009 | June 2008 | 2008 |
| | Unaudited | Unaudited | Audited |
+-----------------------------------+-------------+-------------+-------------+
| Profit attributable to equity | 54,084 | 54,679 | 76,656 |
| holders of the Company (GBP000) | | | |
+-----------------------------------+-------------+-------------+-------------+
| Weighted average number of | 147,904 | 143,209 | 145,568 |
| ordinary shares in issue | | | |
| (thousands) | | | |
+-----------------------------------+-------------+-------------+-------------+
| Basic earnings per share (pence | 36.6 | 38.2 | 52.7 |
| per share) | | | |
+-----------------------------------+-------------+-------------+-------------+
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all dilutive
potential ordinary shares. The Company has two categories of dilutive potential
ordinary shares: convertible debt and share options.
The convertible debt is assumed to have been converted into ordinary shares and
the net profit is adjusted to eliminate the interest expense less the tax
effect. For the share options a calculation is done to determine the number of
shares that could have been acquired at fair value (determined as the average
annual market share price of the company's shares) based on the monetary value
of the subscription rights attached to outstanding share options. The number of
shares calculated as above is deducted from the number of outstanding share
options to give the number of share options with dilutive effect.
+-----------------------------------------------+-----------------+-----------------+-----------------+
| | Six months | Six months | Year ended |
| | ended 30 | ended 30 | 31 December |
| | June 2009 | June 2008 | 2008 |
| | Unaudited | Unaudited | Audited |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Profit attributable to equity holders of the | | | |
| Company (GBP000) | 54,084 | 54,679 | 76,656 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Interest expense on convertible debt (net of | | | |
| tax) GBP000 | 3,599 | 3,608 | 6,694 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Profit used to determine diluted earnings per | | | |
| share (GBP000) | 57,683 | 58,287 | 83,350 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Weighted average number of ordinary shares in | | | |
| issue (thousands) | 147,904 | 143,209 | 145,568 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Adjustments for: | | | |
| - assumed conversion of convertible debt | | | |
| (thousands) | 16,575 | 21,697 | 19,399 |
| - share options (thousands) | 123 | 652 | 76 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Weighted average number of ordinary shares | | | |
| for diluted earnings per share (thousands) | 164,602 | 165,558 | 165,043 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
| Diluted earnings per share (pence per share) | 35.0 | 35.2 | 50.5 |
+-----------------------------------------------+-----------------+-----------------+-----------------+
8. Dividends
During the period, an ordinary dividend of GBP0.13 (2008: GBP0.12) per share was
paid, amounting to GBP19,216,000 (2008: GBP17,201,000). This was approved at the
Company's AGM on 14 May 2009 and paid on 28 May 2009.
9. Share of profit/(loss) of associates
The share of profit from interests in associated undertakings amounted to
GBP1,187,000 (2008: GBP2,910,000). This is the Group's share of the results
after tax of Ten Degrees North Energy Limited GBP677,000 loss (2008: GBP920,000
profit), North Sea Infrastructure Partners Limited GBP3,336,000 profit (2008:
GBP2,005,000 profit) and Sevan Production General Partnership GBP1,472,000 loss
(2008: GBP15,000 loss).
10. Property, plant and equipment
Additions to property, plant and equipment during the period amounted to
GBP153,539,000 (2008: GBP90,465,000) and mainly related to costs associated with
Kew, F3-FA, Cygnus and Carna projects (2008: Barbarossa, Ensign, Chiswick and
Chestnut projects). In 2008, there was also expenditure relating to a number of
asset acquisitions totalling GBP39,600,000, the most significant of which was
the interests in a number of undeveloped discoveries within Quadrant 44 in the
southern gas basin.
11. Assets classified as held for sale and disposal groups
On 18 June 2009, the Group announced its disposal of 15% of its interests in
both the Chiswick and Stamford fields to Nuon Exploration & Production UK
Limited. At 30 June 2009, the Sale and Purchase Agreement for the disposal had
been signed, subject to shareholder and other customary third party approvals,
and the deal is expected to complete later in 2009.
The major classes of assets and liabilities of these interests classified as
held for sale at 30 June 2009 are as follows:
+----------------------------------------------------------------------------------+------------------+
| | 2009 |
| | GBP000 |
+----------------------------------------------------------------------------------+------------------+
| Assets held for sale: | |
+----------------------------------------------------------------------------------+------------------+
| Property, plant and equipment | 34,426 |
+----------------------------------------------------------------------------------+------------------+
| Intangible assets | 6,224 |
+----------------------------------------------------------------------------------+------------------+
| Trade and other receivables | 2,039 |
+----------------------------------------------------------------------------------+------------------+
| Total assets | 42,689 |
+----------------------------------------------------------------------------------+------------------+
| | |
+----------------------------------------------------------------------------------+------------------+
| Liabilities associated with assets held for sale: | |
+----------------------------------------------------------------------------------+------------------+
| Trade and other payables | (2,182) |
+----------------------------------------------------------------------------------+------------------+
| Deferred tax | (16,600) |
+----------------------------------------------------------------------------------+------------------+
| Other liabilities | (75) |
+----------------------------------------------------------------------------------+------------------+
| Provisions | (1,226) |
+----------------------------------------------------------------------------------+------------------+
| Total liabilities | (20,083) |
+----------------------------------------------------------------------------------+------------------+
12. Financial liabilities - borrowings
In 2009, the movement on the financial borrowings is due to foreign exchange
rate movements.In 2008, there was a conversion of GBP12,500,000 of the Group's
GBP29,000,000, 4.25% convertible bonds, that were originally issued on 19 July
2005 and due to mature on 26 October 2010. The conversion equated to 2,802,690
ordinary shares at a conversion price of GBP4.46 per share.
13. Investments
Sevan Production General Partnership
During 2009, Hummingbird Oil Pte Limited, a subsidiary undertaking of the Group,
was retranslated from US$ to GBP, resulting in an increase in the sterling value
of the investment of GBP5,225,000, compared to the historic investment.
In 2008, Hummingbird Oil Pte Limited, invested an additional GBP23,200,000 in
Sevan Production General Partnership. Hummingbird Oil Pte Limited owns 20% of
the ordinary shares of Sevan Production General Partnership (2007: 20%). There
has been no additional investments during 2009.
14.Share capital and reserves
During the period there were no share options exercised by employees. In 2008
21,605 shares were issued to honour share options exercised by employees.In
2008, a further 2,802,690 shares were issued as part of the conversion of
GBP12,500,000 of convertible debt. At 30 June 2009, 149,769,828 ordinary shares
were allotted, called up and fully paid (31 December 2008: 149,769,828).
The Company trnsferred GBP3,000,000 (2008: GBP3,000,000) to the EBT, which was
used to purchase 456,861 (2008: 396,258) ordinary shares in the market. In
addition, 344,743 (2008: 414,519) shares were released by the EBT to honour the
EABP 2006 and ADSBP 2006 (2008: ADSBP 2005) share schemes.
At 30 June 2009, the EBT held 1,810,884 ordinary shares (2008: 1,106,858) which
represented a market value of GBP14,704,000 (2008: GBP9,619,000) based on the
closing share price of GBP8.12 (2008: GBP8.69).
During the period, the Group fair valued its oil and gas derivative financial
instruments, resulting in an increase of GBP79,000, net of taxation, to the cash
flow hedging reserve under the provisions, per IAS 39 'Financial instruments:
recognition and measurement'.
15. Financial instruments
The main risks arising from the Group's financial instruments remain unchanged
from those reported in the annual financial statements for the year ended 31
December 2008 (Note 22).
They can be summarised as market risk, foreign exchange risk, commodity risk,
interest rate risk, credit risk, liquidity risk and capital risk.
16. Cash flow from operating activities
Reconciliation of operating profit to net cash inflow from operating activities:
+------------------------------+---------------+---------------+---------------+
| | Six months | Six months | Year ended |
| | ended 30 | ended 30 | 31 December |
| | June 2009 | June 2008 | 2008 |
| | Unaudited | Unaudited | Audited |
+------------------------------+---------------+---------------+---------------+
| | GBP000 | GBP000 | GBP000 |
+------------------------------+---------------+---------------+---------------+
| Operating profit | 82,357 | 122,012 | 231,074 |
+------------------------------+---------------+---------------+---------------+
| Depreciation charge | 81,143 | 52,081 | 105,965 |
+------------------------------+---------------+---------------+---------------+
| Impairment of assets | 10,836 | - | 6,200 |
+------------------------------+---------------+---------------+---------------+
| Share-based transactions | 7,016 | 2,368 | 3,928 |
+------------------------------+---------------+---------------+---------------+
| Changes in working capital: | | | |
+------------------------------+---------------+---------------+---------------+
| - Inventories | 1,968 | 233 | (2,831) |
+------------------------------+---------------+---------------+---------------+
| - Trade and other | 725 | 14,567 | (22,521) |
| receivables | | | |
+------------------------------+---------------+---------------+---------------+
| - Trade and other payables | (40,409) | (10,785) | 28,963 |
+------------------------------+---------------+---------------+---------------+
| Operating cash flow | 143,636 | 180,476 | 350,778 |
+------------------------------+---------------+---------------+---------------+
+----------------------+------------+----------+---------+-----------+------------+
| Analysis of net debt | At 1 | Cash | Other | Exchange | At 30 June |
| | January | flow | non | Movements | 2009 |
| | 2009 | GBP000 | cash | GBP000 | GBP000 |
| | GBP000 | | changes | | |
| | | | GBP000 | | |
+----------------------+------------+----------+---------+-----------+------------+
| Cash and cash | 198,952 | (36,220) | - | (15,195) | 147,537 |
| equivalents | | | | | |
+----------------------+------------+----------+---------+-----------+------------+
| Long term borrowings | (456,445) | - | (3,225) | 35,750 | (423,920) |
+----------------------+------------+----------+---------+-----------+------------+
| Net debt | (257,493) | (36,220) | (3,225) | 20,555 | (276,383) |
+----------------------+------------+----------+---------+-----------+------------+
17.Guarantees
The Company has provided credit guarantees totalling GBP35,748,000 (2008:
GBP35,327,000) as decommissioning security for assets in the North Sea.
18. Related party transactions
Intra-group related party transactions, which are eliminated on consolidation,
are not required to be disclosed in accordance with IAS 24.
The following table provides the total amount of transactions, which have been
entered into with related parties for the relevant financial period.
+------------------------------------+-------------+------------+--------------+------------+------------+
| Sales/purchases from related | | Sales to | Purchases | Amounts | Amounts |
| parties | | related | from related | owed by | owed to |
| | | parties | parties | related | related |
| | | GBP000 | GBP000 | parties | parties |
| | | | | GBP000 | GBP000 |
+------------------------------------+-------------+------------+--------------+------------+------------+
| Associate: | | | | | |
+------------------------------------+-------------+------------+--------------+------------+------------+
| North Sea Infrastructure Partners | Jun 2009 | 200 | 18,664 | 33 | 3,295 |
| Limited | Jun 2008 | 13,037 | 14,077 | 751 | - |
+------------------------------------+-------------+------------+--------------+------------+------------+
Venture Infrastructure Limited has a 49.9% interest in North Sea Infrastructure
Partners Limited (2008: 49.9%).
+-------------------------------------+-------------+--------------------------+------------------------+
| | | | Amounts owed by |
| Loans from/to related party | | Interest received | related parties |
| | | GBP000 | GBP000 |
+-------------------------------------+-------------+--------------------------+------------------------+
| Associate: | | | |
+-------------------------------------+-------------+--------------------------+------------------------+
| Ten Degrees North Energy Limited | Jun 2009 | 165 | 165 |
| | Jun 2008 | 136 | 136 |
+-------------------------------------+-------------+--------------------------+------------------------+
Venture Production plc owns 40% of the ordinary shares of Ten Degrees North
Energy Limited (2008: 40%). Interest receivable arises on the convertible loan
notes receivable of $10,000,000, which were issued by Ten Degrees North Energy
Limited (TDNEL) as part consideration in respect of the disposal of Venture
Production Trinidad Limited (VPTL).
19. Subsequent events
On 31 July 2009, the Group completed the acquisition of a 1.8% interest in NOGAT
B.V. for EUR9,000,000. NOGAT B.V. is a private company, incorporated in the
Netherlands, which owns the NOGAT pipeline and onshore gas processing terminal
at Den Helder.
20. Capital commitments
At 30 June 2009, the Group had capital commitments of GBP252,261,000 (June 2008:
GBP251,574,000) relating to capital equipment expenditure.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR QVLFFKVBLBBV
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