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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