2nd UPDATE: Venture Production 1st Half Profit -1%,Says Outlook Strong
August 19 2009 - 4:35AM
Dow Jones News
Venture Production PLC (VPC.LN) Wednesday continued its robust
defense against a hostile takeover from U.K. utility Centrica PLC
(CNA.LN) as a big rise in output from new fields sustained profits
despite the fall in energy prices.
Venture emphasized the strong field-development program and
financial strength that it says will allow it to continue to thrive
as an independent company.
"The company is firing on all cylinders, despite the
distraction" of the Centrica bid, said Venture Chief Executive Mike
Wagstaff. "Our 2009-2010 drilling program 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."
Venture also has the financial strength to acquire additional
assets, Wagstaff said. There has been a dearth of opportunities in
the North Sea recently, partly because nobody wanted to sell at the
bottom of the market, he said. However, the change in economic
conditions means bigger packages of assets are coming onto the
market, such as the 25,000 barrels per day of North Sea oil
production Eni SpA (E) is planning to sell, he said.
These growth opportunities demonstrate that "Centrica's offer
substantially undervalues Venture," Wagstaff said.
Venture has delivered a strong set of results, with project
development on track and a smart hedging strategy that has
partially shielded it from the fall in energy prices, said
Evolution Securities analyst Richard Griffith. "The question is,
will it be enough to fend off Centrica," when some Venture
shareholders are clearly keen to pocket the cash, Griffith
said.
Centrica already owns 29.9% of Venture and said last week it has
received additional acceptances representing 10.9% of the company.
Its 845 pence per share offer for Venture is valid until 1200 GMT,
Aug. 28. Centrica has valued the deal at GBP1.3 billion.
Venture's net profit for the six months ended June 30 totaled
GBP54.1 million, compared with GBP54.7 million for first half of
2008. Venture's bottom line was affected by a non-recurring charge
of GBP10.8 million related to development costs of the Andrea well
and an extra GBP5.2 million in administrative costs from its
defense against Centrica's hostile bid.
Total oil and gas production averaged 52,988 barrels a day in
the first half, a rise of 16.4% from the first half of 2008.
Maintenance shutdowns later in the summer will reduce output in the
second half, but the company said it is on track for modest
full-year production growth over 2008 levels.
At the end of the first quarter, Venture's proven reserves were
up 12% on the previous year to 240 million barrels of oil
equivalent.
Total revenue for the first half was up 14.2% to GBP274.7
million from GBP240.5 million in the same period of 2008.
Diluted earnings per share were 35.0 pence compared with 35.2
pence in same period a year earlier.
At 0732 GMT, Venture shares were down 0.4%, or 3 pence, at 843
pence.
Company Web site: http://www.vpc.co.uk
-By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317;
james.herron@dowjones.com
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