RNS Number:7667C
Venture Production PLC
09 September 2004
9th September 2004
Venture Production plc
("Venture", "the Company" or "the Group")
Interim Results for the Six Months Ended 30th June 2004
Operational Highlights
* Strong Group production performance - benefits of portfolio
diversification seen
* Three new development projects sanctioned - two as operator
* Annabel production well completed and tested at over 100 MMcfpd - on
track for first production in early 2005
* Birch successfully brought back on stream - significant increase in
production and reserves
* Audrey commercial arrangements restructured - enabling field
rejuvenation
* Three acquisitions since the beginning of 2004 -15.8 MMboe of proved and
probable reserves added
Financial Highlights
* Production up 34% to 17,969 boepd (2003 - 13,458 boepd)
* Average realised price down 17% to #12.75/boe due to gas/oil sales
mix, exchange rate changes and hedging
* Turnover up 1% to #35.2 million (2003 - #34.9 million)
* Pre-tax profit down 22% to #7.2 million (2003 - #9.2 million):
- After #3.0 million impairment charge relating to Trinidad
* Profit after tax down 11% to #4.0 million (2003 - #4.5 million)
* Total capital expenditure (including acquisitions) of #10.7 million
Commenting on the results, Bruce Dingwall, Chief Executive of Venture said:
"The first half of 2004 saw the impact on production of the acquisitions and
investment made last year. We are already seeing the effect of the increase in
scale and diversification of the Group's operations with a corresponding
reduction in risk profile. 2004 represents a transition year as Venture expands
from one to three producing hubs and, as expected, this is reflected in the
Group's financial performance. Already during 2004 we have achieved a number of
development milestones that increase Venture's confidence in the delivery of
2005 production growth.
In the North Sea, Venture is currently participating in the development of three
new oil and gas fields, Annabel, Gadwall and Saturn, which were all sanctioned
in the first half of 2004. In addition, there is field development activity
across all of the Group's production hubs. Also during 2004 we have chosen to
upgrade the recently acquired production facilities on Audrey and Kittiwake in
order to extend their effective lives.
Since the beginning of the year we have made three acquisitions of incremental
interests in fields, in which we are already a partner, to consolidate our
positions in these core assets. These acquisitions will add material reserves
and make an important contribution to increased production levels from 2005
onwards.
The Group remains on track to deliver its operational and production targets for
2004. In addition, the acquisition and development investment across our
portfolio is set to deliver a step change in the scale of Venture's business
during 2005."
John Morgan, Chairman of Venture said:
"We have also today announced that Mike Wagstaff will succeed Bruce Dingwall as
Chief Executive of the Company effective from 9th September. Simultaneously, Mr.
Dingwall will also step down from the Board. Bruce has been the founder and
driver of Venture from its creation to what is arguably the most successful
start up in the North Sea in the last decade. He is highly respected in the
industry, as evidenced by his presidency of UKOOA and his recently awarded CBE.
On behalf of the Board, I thank him for his inspiration and leadership and I
look forward to working with Mike in his position as Chief Executive."
Enquiries:
VENTURE PRODUCTION plc 01224 619 000
Bruce Dingwall, Chief Executive
Mike Wagstaff, Finance Director
BRUNSWICK GROUP 020 7404 5959
Patrick Handley
Eilis Murphy
Chris Blundell
Venture Production plc
Interim Report & Accounts
for the six months ended 30 June 2004
Contents
* Chairman's and Chief Executive's Statement 2
* Independent Review Report to Venture Production plc. 9
* Group Profit and Loss Account 10
* Group Balance Sheet 11
* Group Cashflow Statement 12
* Notes to the Interim Accounts. 13
* Glossary. 16
Chairman's and Chief Executive's Statement
2004 represents a year of transition for Venture as it expands its business from
one production hub to three, building on investments made during 2003. These
investments have led to the significant increase in production during 2004 and
to the achievement of an improved portfolio balance. Substantial investment in
the further expansion of the Group's business is taking place during 2004,
through both field development and acquisitions. This investment, across all
three production hubs, will contribute to substantial production growth in 2005
and beyond. The Company remains on track with the achievement of the key
development milestones for 2004. Accordingly, there is a high degree of
confidence that the results of this activity will be delivered next year and
thereafter.
Average daily production for the first half of this year has increased by 34%,
to 17,969 boepd, compared with the same period last year (first half 2003 -
13,458 boepd). However the average realised sales price of #12.75 per boe was
17% less than last year (2003 - #15.37). This decrease resulted from a higher
proportion of gas than previously, the continued strengthening of sterling
against the US dollar and the effects of the Group's hedging strategy. Turnover
for the period was 1% higher at #35.2 million (2003 - #34.9 million) and profit
before tax for the period decreased by 22% to #7.2 million (2003 - #9.2
million), after allowing for the impact of a #3.0 million impairment of the
value of our Trinidadian assets. Profit after tax decreased by 11% to #4.0
million (2003 - #4.5 million).
Operational Highlights
UKCS - 'Trees'
During the first half of 2004, 'Trees' produced at an average rate of 7,211
boepd, or 40% of Group total production. All three 'Trees' fields delivered a
strong production performance during the period, which was achieved despite a
longer than expected shut-down of the Brae platform during May. In the Birch
field, the second production well was successfully brought back on stream in
March after having been shut-in for over three years. Reinstatement of
production gave support to Venture's revised reservoir model and has led to a
substantial increase in remaining recoverable reserves from the field. Planned
well interventions for the second half of 2004 should increase production
further and add additional reserves. The Larch field continued to produce in
line with expectations and with high-pressure gas lift restored in July,
production levels have been increased since the period end. The field remains an
important contributor to the 'Trees' hub. Sycamore's production performance
continued to be stable during the period. As a result of the extensive
geological and geophysical work conducted on the Sycamore field, Venture has
developed a revised geological model for the field. This model takes account of
the disappointing results of the north Sycamore well drilled last year and has
enabled the Company to optimise its future development plans. Venture plans to
drill a water injection well, to support the central Sycamore production wells,
the drilling of which is expected to commence in late-September.
The acquisition of an additional 17.78% interest in the Birch field and Block 16
/12a was completed in January and has proved to be a valuable addition to both
production and to reserves. In August, Venture announced the acquisition of the
remaining interests in the 'Trees' fields that it does not already own together
with interests in four central and northern North Sea blocks. The total
consideration for the acquisition is $50 million in cash plus a contingent
royalty payment on two undrilled exploration prospects, Ash and Cedar, located
in Block 16/12a. This acquisition is expected to complete during the fourth
quarter.
UKCS - GKA
During the first half of 2004, the Greater Kittiwake Area ('GKA') produced at an
average rate of 1,236 boepd, or 7% of Group total production. Production from
GKA was below expectations during the first half of 2004. The reason for the
shortfall was due to the Mallard field being shut-in during the period. In July,
Venture successfully re-entered the well, utilising a specialised well
intervention vessel, and re-established production. Well performance has
subsequently been better than expected.
Two well interventions on the Kittiwake platform have improved production, which
was slightly ahead of expectations for the first half of 2004. Following the
acquisition of the Kittiwake platform in late 2003, the transfer of operatorship
from Shell to Venture was successfully completed in March 2004. Since
acquisition, the Group's level of investment in upgrading the facility has been
higher than anticipated. In reality, this is a cost associated with the
acquisition of mature fields and their infrastructure. This investment will
extend the life of the platform and ensures the continued availability of
production facilities as Venture develops the GKA hub.
As a result of the relatively high fixed cost of operating the Kittiwake
production platform and tanker loading system together with the loss of Mallard
production volumes, which represent the majority of current GKA production,
there has been a detrimental effect on the overall corporate financial
performance during the first half of 2004. The restoration of production from
Mallard is expected to have a material positive impact during the second half of
2004.
Venture's priority is to increase production volumes through the GKA hub as
rapidly as possible. After drilling the central Sycamore water injection well,
Venture is planning to complete and tie-in the suspended Gadwall discovery well
and sidetrack the existing Mallard water injection well to provide effective
pressure support to the production well. Gadwall is expected to come on stream
during early 2005 with the impact of the Mallard water injection well seen later
in 2005.
UKCS - 'A' Fields
During the first half of 2004, the 'A' Fields production hub produced at an
average rate of 8,110 boepd, or 45% of Group total production. This increase
over 2003 production levels reflects the impact of acquiring 100% of Audrey, Ann
and Alison through two separate acquisitions, which were completed late in 2003.
Notwithstanding this increase, production levels were somewhat below
expectations. There are a number of factors which have contributed to this
shortfall, all of which are facilities related and work is in hand to address
these issues. A well intervention programme is underway in tandem with platform
and facilities modifications required to bring Annabel gas across the Audrey
facilities. This activity is planned to improve the integrity of the well stock
and local infrastructure and to enable increased production volumes by the end
of the year.
Commercially, Venture has made important progress during the first half of 2004.
The renegotiation of the Audrey gas sales agreement with our gas purchaser,
Centrica, has created the commercial environment that provides both the
flexibility to optimise production from the field and the incentive to invest in
field regeneration. In addition, Venture reached agreement with the LOGGS
pipeline system owners to amend the transportation and processing arrangements
for the Audrey field, consistent with the new gas sales arrangements entered
into in March this year. Overall, these new arrangements result in processing
and transportation tariffs for incremental volumes of gas production being
between 30 to 45% lower than those applying under the old gas sales
arrangements. These new arrangements provide further commercial incentive for
Venture to rejuvenate the Audrey field and are backdated to take effect from 1
April 2004.
Venture has recently completed an extensive geophysical re-mapping of the Audrey
field, which will be used to identify sidetrack and in-fill opportunities within
the field.
Major progress was made during the first half of 2004 on the development of the
Annabel field. In particular, the Annabel discovery well, 48/10a-12, was
successfully completed as a production well. The well was hydraulically
fractured prior to completion and tested at rates of approximately 100 MMcfpd,
effectively doubling well productivity. The well will be tied back to the Audrey
B platform, with gas then delivered into the LOGGS pipeline system. The field is
on track to be brought on stream in early 2005 and is expected to be a major
contributor to increased Group production levels.
Since the end of the period, Venture has agreed to acquire the remaining 11.11%
interest on Block 48/10a that contains the Annabel Field and a unitised interest
in the ConocoPhillips operated Saturn development, both major new gas fields
currently under development. Venture will own 100% of Annabel, and has raised
its interest in the Saturn unit from 19.6% to 22.0%.
The Saturn development consists of three gas accumulations, with Hyperion and
Atlas being the first to be developed. Hyperion was discovered and appraised by
ConocoPhillips between 1986 and 1990 and Atlas was discovered the following
year. ConocoPhillips successfully drilled the 48/10b-13 appraisal well on the
Atlas structure in early 2004, which accelerated the Saturn development. It is
planned to drill three development wells; two will penetrate the Atlas
structure, one of which will be a sidetrack of the appraisal well, and one will
access the Hyperion structure. Current estimates of gross proved and probable
reserves for Atlas and Hyperion combined are over 240 Bcf, 53 Bcf net to
Venture.
Since period end, the DTI has formally approved the Saturn development. First
gas is anticipated during the fourth quarter of 2005 with an initial gross rate
of 74 MMcfpd. This is expected to rise to a maximum of 170 MMcfpd within a year
of start-up. Saturn is being developed utilising a six slot, normally unmanned
platform operated by ConocoPhillips and tied directly into the LOGGS gathering
and export pipeline system via a 43 km 14 inch pipeline.
Trinidad
During the first half of 2004, all of Venture's assets in Trinidad continued to
perform in line with expectations and production averaged 1,412 boepd, or 8% of
Group total. This was achieved in spite of the failure of one of the Brighton
Marine gas compressors, which was only returned to service after the end of the
period.
During the period there has been minimal incremental development activity
pending the outcome of the ongoing fiscal reform in Trinidad, which is
anticipated to improve the economic terms of oil and gas investment. As
indicated earlier in the year, Venture continues to monitor the situation in
Trinidad and still believes that such changes remain likely, although the timing
of any such change remains uncertain. As a result of the delay in completion of
the review of the oil and gas tax regime by the Trinidadian Government, the
Board believes that it is appropriate to take a #3.0 million impairment against
the carrying value of its interests in Point Ligoure and Tabaquite.
Financial Highlights
Turnover for the period was #35.2 million, a marginal increase over that
achieved in the same period in 2003. Higher production volumes resulted in an
increase of 22% to 2.8 MMboe in the volume of hydrocarbons sold during the
period. The Group's hedging strategy, part of which was put in place 18 months
ago, coupled with the strengthening of sterling against the US dollar, resulted
in the Group not fully benefiting from current high oil prices. In addition, a
greater proportion of Venture's production was gas, which realises a lower unit
price than oil. The average effective realised price for our hydrocarbon sales
was #12.75/boe, a decrease of #2.62/boe from that realised for the same period
in 2003. On average during the first half of the year, over 75% of our oil
production was hedged using a combination of put options and swaps.
Key Statistics June 2004 June 2003
#/boe #/boe
-------------------------------------------------------------------------------
Effective realised price 12.75 15.37
Lifting costs 5.48 5.10
Depreciation, depletion and amortisation 2.28 3.43
Administrative expenses 0.20 0.52
-------------------------------------------------------------------------------
Operating profit for the period was #9.7 million, #0.6 million less than in the
same period last year. This decrease reflected an exceptional item, a provision
of #3.0 million being made against the carrying value of our Trinidad assets.
The Company has been active in lobbying for tax reforms that the Trinidad
Government has indicated that it is considering introducing. The reforms have
been delayed beyond our earlier expectations and, although such changes are
likely, the Board believes that taking this impairment charge is prudent at this
time. Without this provision, operating profit would have risen to #12.7
million, an increase of 24% compared with the first half of 2003. On a unit
basis, lifting costs for the first six months of 2004 were #5.48/boe, an
increase of #0.38/boe over the comparable cost for the first half of 2003. This
increase reflected the relatively high fixed operating costs of our recently
acquired platform operations with a low production base. This increase was
exacerbated by the shut-in of the Mallard field for the whole of the reporting
period. The effective depreciation, depletion and amortisation rate decreased by
#1.15/boe or 34% to #2.28/boe reflecting the benefit of the Company's portfolio
diversification and increasing reserves' life over the past 18 months.
Net administrative expenses for the first half of 2004 totalled #0.6 million or
#0.20/boe, a reduction of 49% compared with that incurred during the previous
year. After allowing for unrealised exchange gains on our US dollar denominated
debt, the charge for the period of #1.1 million was 43% less than for the same
period last year.
Interest payable for the period totalled #2.7 million, #1.5 million more than
during the first half of 2003. This increase reflected the higher utilisation of
the bank facility that had been expanded last year to fund acquisitions and
ongoing field developments. This also includes a substantially higher FRS 12
charge relating to the accretion of discount on future decommissioning
liabilities as a result of the acquisition of the Audrey and Kittiwake fields.
Both fields have fixed production platforms with consequently higher future
decommissioning costs than sub-sea facilities.
As a result of the above, profit before taxation for the first half of 2004
decreased by #2.0 million to #7.2 million. The tax charge for the period was
#3.1 million, #1.5 million less than for 2003, reflecting an effective tax rate
for 2004 of 44%, compared with 50% for 2003. This decrease was due to the
taxation impact of the impairment provision made against the carrying values of
our Trinidad assets. It should be noted that this tax charge is all deferred as
a result of Venture's tax positions in both UK and Trinidad.
Profit after taxation for the first six months of 2004 was #4.0 million, #0.5
million lower than that for the same period last year. Consequently, the fully
diluted earnings per share decreased from 3.9p in 2003 to 3.5p in the first half
of 2004.
After adjusting for the non-cash exceptional provision, increased profitability
at the operating level was offset by a net cash outflow from changes in working
capital, generating net cashflow from operating activities for the first half of
2004 of #13.0 million (2003 - #24.3 million). During the first half of 2004
capital expenditures including asset acquisitions totalled #10.7 million
resulting in a cash inflow before the use of liquid resources and financing of
#2.9 million (2003 - cash inflow #2.5 million). This inflow allowed a net
repayment of debt totalling #4.1 million, to give a net debt balance at the end
of the period of #27.1 million.
The Group had fixed tangible assets at the balance sheet date of #188.6 million
(2003 - #143.3 million) reflecting asset acquisitions and continuing field
developments during the last 12 months. Net current assets were #9.4 million
(2003 - net current liabilities of #1.7 million) as a result of a decrease in
trade creditors and accruals, the change from a crude oil overlift to underlift
position and the balance due from an insurance claim. The undrawn balance from
the Group's available $175 million credit facilities totalled $65.2 million at
the end of August.
Summary of Proven and Probable Reserves
---------------------------------------------------------------------------------------------
Total Group UKCS Trindad
---------------------------------------------------------------------------------------------
Oil Equivalent Oil Gas Oil Gas Oil Gas
(MMboe) (MMbbls) (Bcf) (MMbbls) (Bcf) (MMbbls) (Bcf)
---------------------------------------------------------------------------------------------
As at 1 January 2004 93.7 52.8 245.2 46.5 245.2 6.3 -
Acquisitions 1.5 1.1 2.4 1.1 2.4 - -
Revisions 10.0 7.2 17.2 4.7 17.2 2.5 -
Production (3.3) (1.5) (10.8) (1.2) (10.8) (0.3) -
---------------------------------------------------------------------------------------------
As at 30 June 2004 101.9 59.6 254.0 51.1 254.0 8.5 -
---------------------------------------------------------------------------------------------
Pro forma:
Acquisitions 14.3 8.1 37.0 8.1 37.0 - -
---------------------------------------------------------------------------------------------
As at 30 June 2004 116.2 67.7 291.0 59.2 291.0 8.5
---------------------------------------------------------------------------------------------
Once again, the increase in reserves during the first half of 2004 came from
both upgrades of existing assets and from acquisitions. The principal upgrade
resulted from increased estimates of reserves in Birch, following the successful
re-start of production from the field. Acquisitions comprised the additional
equity interest in 'Trees' that was completed during the period. The pro forma
increase relates to the acquisition of the interest in 'Trees', as announced
recently, that the Company did not previously own, together with the additional
interests in the Annabel and Saturn fields, the acquisitions of which have not
yet been completed.
Corporate Development
Despite the challenging acquisition market in the North Sea, since the beginning
of 2004, Venture has made three acquisitions of additional interests in fields
in which Venture is already a partner. These acquisitions, which are discussed
previously, consolidate our ownership in a number of core assets.
In aggregate, these acquisitions will add a total of 15.8 MMboe in proved and
probable reserves for a total consideration of #29.0 million, or $3/boe at
current exchange rates. These additional interests will materially increase
production from 2005 onwards.
In June, Oriel Securities (Venture's broker) successfully completed the placing
of 14 million shares on behalf of four of the Group's founding/early venture
capital investors. As a result of the placing, which was oversubscribed, the
trading liquidity in Venture's shares has increased and the shareholder base has
been broadened with over 20 new institutional investors. Following the reduction
in Lime Rock Partners' ownership of the Company, Jonathan Farber has resigned
from the Board of Venture. On behalf of the Board, we would like to express our
thanks and appreciation for Jonathan's contribution over the last four and a
half years.
Current Trading and Outlook
Production levels across the Group remain in line with expectations and average
production for the second half of the year is anticipated to be slightly higher
than for the first half. Overall production for 2004 is expected to be in line
with our targets. As a result of the ongoing development activity across all of
Venture's assets we are expecting to see a significant increase in production
during 2005 principally as a result of the Annabel, Gadwall and central Sycamore
water injection projects, all of which are on track to come on stream in early
2005.
The recently announced acquisition of the remaining interest in the 'Trees'
fields will also make a major contribution to production, revenues and cash flow
post completion, which is expected to take place in the fourth quarter of 2004.
As a result of the timing of development activity and the acquisitions in 2004,
the vast majority of Venture's 2004 capital expenditures will be incurred during
the second half of the year. In the most recent Trees acquisition announcement,
the Company stated that it was actively reviewing its longer term financing
requirements and capital structure. We have recently expanded Venture's credit
facilities from $175 to $255 million with our existing syndicate of banks. In
addition and subject to market conditions, the Company intends to raise a modest
level of additional equity finance in order to enhance its financial flexibility
to pursue additional acquisitions and development opportunities.
A major constraint in the timing of development activity has been the
availability of drilling equipment. In order to safeguard delivery of its 2005
central North Sea development programme, Venture has recently secured a 12 month
extension to its contract with Transocean for the hire of the 704
semi-submersible drilling rig.
Due to the commodity price hedging entered into during late 2003 and early 2004,
Venture has effectively fixed the net price received for a proportion of its oil
and gas production up to the end of 2006, at prices well below current spot
price levels. As a result, we will not benefit fully from the historically
extremely high current commodity price levels.
Venture's hedging strategy remains focused on providing commodity price
'insurance' to underpin the Group's ability to invest throughout the commodity
price cycle. Consequently, while the Board maintains a careful review of the
developing risk structure of the business, it is likely that Venture will
continue to hedge a proportion of its oil and gas production.
Venture also announced today that Mike Wagstaff will succeed Bruce Dingwall as
Chief Executive of the Company effective from 9th September. Simultaneously, Mr.
Dingwall will also step down from the Board.
Bruce has been the founder and driver of Venture from its creation to what is
arguably the most successful start up in the North Sea in the last decade. He is
highly respected in the industry, as evidenced by his presidency of UKOOA and
his recently awarded CBE. The Board would like to thank him for his inspiration
and leadership. Mike has been an integral part of building Venture and remains
committed to its core strategy - the acquisition and exploitation of 'stranded
reserves' in mature basins. Mike will be an excellent Chief Executive and the
Board is confident that both he and the outstanding team we have created at
Venture will continue to flourish.
Summary
The first half of 2004 represented another period of substantial growth for
Venture delivering considerably higher production than the corresponding period
in 2003. We are already seeing the impact of the increase in scale and
diversification of Venture's operations with a corresponding reduction in risk
profile. 2004 is a transition year and our acquisition and development activity
will further increase the scale of our business, although its impact will not be
seen until 2005.
John Morgan Bruce Dingwall
Chairman Chief Executive
9th September 2004
Independent Review Report to Venture Production plc
For the six month period ended 30 June 2004
Introduction
We have been instructed by the Company to review the financial information,
which comprises the Group profit and loss account, statement of Group total
recognised gains and losses, Group balance sheet, Group cashflow statement,
comparative figures and associated notes. We have read the other information
contained in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of Group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly we do not express
an audit opinion on the financial information. This report, including the
conclusion, has been prepared for and only for the Company for the purpose of
the Listing Rules of the Financial Services Authority 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.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2004.
PricewaterhouseCoopers LLP
Chartered Accountants
Aberdeen
9th September 2004
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 interim report since it was initially
presented on the website.
(b) Legislation in the United Kingdom governing the preparation and
dissemination of financial information may differ from legislation in
other jurisdictions.
Group Profit and Loss Account
For the six months ended 30 June 2004
---------------------------------------------------------------------------------------------------
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 December
30 June 2004 30 June 2003 2003
Note #'000 #'000 #'000
---------------------------------------------------------------------------------------------------
Turnover 2 35,190 34,932 71,030
Cost of sales before exceptional item (24,974) (23,334) (45,723)
Exceptional item 3 (3,037) - -
Cost of sales (28,011) (23,334) (45,723)
---------------------------------------------------------------------------------------------------
Gross profit 4 7,179 11,598 25,307
Administrative expenses (647) (1,261) 334
Other operating income/(expenses) 5 3,153 (56) 44
---------------------------------------------------------------------------------------------------
Operating profit 9,685 10,281 25,685
Interest receivable and similar income 186 45 182
Interest payable and similar charges (2,713) (1,166) (2,420)
---------------------------------------------------------------------------------------------------
Profit on ordinary activities before taxation 7,158 9,160 23,447
Tax on profit on ordinary activities 6 (3,114) (4,634) (9,750)
---------------------------------------------------------------------------------------------------
Profit on ordinary activities after taxation 4,044 4,526 13,697
---------------------------------------------------------------------------------------------------
Earnings per Ordinary Share
Basic Earnings per Share 7 3.8p 4.2p 12.7p
Diluted Earnings per Share 7 3.5p 3.9p 11.9p
---------------------------------------------------------------------------------------------------
All items dealt with in arriving at the profit for the period relate to
continuing activities. There is no difference between the profit on ordinary
activities before taxation and the retained profit for the period and their
historical equivalents.
Statement of total group recognised gains and losses
---------------------------------------------------------------------------------------------------
Profit on ordinary activities after taxation 4,044 4,526 13,697
---------------------------------------------------------------------------------------------------
Total gains recognised since last annual report 4,044 4,526 13,697
---------------------------------------------------------------------------------------------------
Group Balance Sheet
As at 30 June 2004
---------------------------------------------------------------------------------------------------
Unaudited Unaudited Audited
30 June 30 June 31 December
2004 2003 2003
#'000 #'000 #'000
---------------------------------------------------------------------------------------------------
Fixed assets
Tangible assets 188,553 143,327 178,609
---------------------------------------------------------------------------------------------------
Current assets
Stocks 3,811 1,098 899
Debtors 15,912 12,449 18,025
Cash in hand and at bank 4,199 4,929 3,939
---------------------------------------------------------------------------------------------------
23,922 18,476 22,863
Creditors - amounts falling due within one year (14,483) (20,170) (19,107)
---------------------------------------------------------------------------------------------------
Net current assets/(liabilities) 9,439 (1,694) 3,756
Total assets less current liabilities 197,992 141,633 182,365
Creditors - amounts falling due after more than one year (38,650) (29,762) (42,737)
Provisions for liabilities and charges (57,088) (24,505) (42,869)
---------------------------------------------------------------------------------------------------
Net Assets 102,254 87,366 96,259
---------------------------------------------------------------------------------------------------
Capital and reserves
Called up share capital 433 431 431
Share premium 78,770 77,302 77,428
Profit and loss account 23,051 9,633 18,900
---------------------------------------------------------------------------------------------------
Total shareholders' funds 102,254 87,366 96,759
---------------------------------------------------------------------------------------------------
Group Cashflow Statement
For the six months ended 30 June 2004
-------------------------------------------------------------------------------------------------
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended 31 December
30 June 2004 30 June 2003 2003
#'000 #'000 #'000
-------------------------------------------------------------------------------------------------
Operating profit 9,685 10,281 25,685
Depreciation charge 7,448 8,355 16,254
Exceptional item 3,037 - -
Increase in stock (2,912) (322) (123)
Increase in debtors 409 (836) (3,648)
(Decrease)/increase in creditors (4,624) 6,801 5,839
-------------------------------------------------------------------------------------------------
Net cashflow from operating activities 13,043 24,279 44,007
Returns on investment and servicing of finance (1,133) (590) (1,140)
Taxation 1,704 5 201
Capital expenditure and financial investment (10,718) (21,166) (54,281)
-------------------------------------------------------------------------------------------------
Net cash inflow/(outflow) before use of liquid
resources and financing 2,896 2,528 (11,213)
Issue of new shares 1,063 - -
(Decrease)/increase in loan facility (4,087) (496) 12,034
Exercise of share options held by ESOP 348 121 343
Receipts of expenses of prior share issue 40 - -
-------------------------------------------------------------------------------------------------
Increase in cash 260 2,153 1,164
Cash flow from decrease/(increase) in debt 4,087 496 (12,034)
Net debt at 1 January (31,420) (20,550) (20,550)
-------------------------------------------------------------------------------------------------
Net debt at end of period (27,073) (17,901) (31,420)
-------------------------------------------------------------------------------------------------
Analysis of net debt
Analysis of net debt
Cash in hand and at bank 4,199 4,929 3,939
Debt due after 1 year (31,272) (22,830) (35,359)
-------------------------------------------------------------------------------------------------
Total (27,073) (17,901) (31,420)
-------------------------------------------------------------------------------------------------
Notes to the Interim Accounts
1 Basis of preparation of interim financial information
The results for the six months to 30 June 2004 and the comparative results
for the six months to 30 June 2003 are unaudited. The Interim Accounts have
been prepared on a basis consistent with the accounting policies set out in
the statutory accounts for the year ended 31 December 2003. The comparative
figures for the year ended 31 December 2003 do not constitute statutory
accounts for the purpose of Section 240 of the Companies Act 1985 and have
been extracted from the Company's published accounts, a copy of which has
been delivered to the Registrar of Companies. The report of the auditors on
these accounts was unqualified and did not contain a statement under either
Section 237(2) or Section 237(3) of the Companies Act 1985.
2 Segmental reporting
In the opinion of the directors the operations of the Group comprise one
class of business, the production and sale of hydrocarbons in the following
geographical locations:
(1) Turnover represents the invoiced amount of goods sold during the
period stated net of associated sales tax and is analysed as follows:
-------------------------------------------------------------------------
Turnover 6 months 6 months Year ended
ended ended 31 December
30 June 2004 30 June 2003 2003
#'000 #'000 #'000
-------------------------------------------------------------------------
United Kingdom 32,207 31,627 63,937
Trinidad 2,983 3,305 7,093
-------------------------------------------------------------------------
35,190 34,932 71,030
-------------------------------------------------------------------------
There is no material difference between sales by destination and origin.
(2) Group operating profit is analysed as follows:
-------------------------------------------------------------------------
Operating profit/(loss) 6 months 6 months Year ended
ended ended 31 December
30 June 2004 30 June 2003 2003
#'000 #'000 #'000
-------------------------------------------------------------------------
United Kingdom 10,051 10,669 25,780
Trinidad (366) (388) (95)
-------------------------------------------------------------------------
9,685 10,281 25,685
-------------------------------------------------------------------------
Notes to the Interim Accounts (continued)
2 Segmental reporting (continued)
Group net assets are analysed as follows:
-------------------------------------------------------------------------
Net assets/(liabilities) 6 months 6 months Year ended
ended ended 31 December
30 June 2004 30 June 2003 2003
#'000 #'000 #'000
-------------------------------------------------------------------------
United Kingdom 108,292 93,768 103,723
Trinidad (5,970) (6,131) (6,789)
-------------------------------------------------------------------------
102,322 87,637 96,934
-------------------------------------------------------------------------
3 Exceptional item
The exceptional item relates to an impairment write down of Trinidad
assets.
4 Group gross profit
Group gross profit is stated after charging:
-------------------------------------------------------------------------
6 months 6 months Year ended
ended ended 31 December
30 June 2004 30 June 2003 2003
#'000 #'000 #'000
-------------------------------------------------------------------------
Crude oil (under)/overlift (3,403) 2,191 649
Operating expenses 16,004 8,172 18,161
Well workover expenses 532 3,109 4,720
Depreciation, depletion and 7,448 8,355 16,254
amortisation
-------------------------------------------------------------------------
5 Other operating income
Included in other operating income is a provision of #3.1 million for an
insurance claim relating to the Mallard shutdown.
Notes to the Interim Accounts (continued)
6 Taxation
In respect of the group's UK operations, tax has been calculated based on a
rate of 30% plus the supplementary tax of 10% (2003: 30% plus 10%
supplementary). The Trinidad tax rate remains at 55% (2003: 55%). The
effective tax rate for 2004 was 44% compared with 50% in 2003, reflecting
the taxation impact of the impairment provision made against the carrying
values of our Trinidad assets. It should be noted that this tax charge is
all deferred as a result of Venture's tax positions in both UK and
Trinidad.
7 Earnings per ordinary share
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average number of
ordinary shares in issue during the year. For fully diluted earnings per
share the weighted average number of ordinary shares in issue during the
year is adjusted to reflect the potential exercise of share options by
directors or employees.
The calculation of earnings per ordinary share shown is based upon the
following:
-------------------------------------------------------------------------
6 months 6 months Year ended
ended ended 31 December
30 June 2004 30 June 2003 2003
-------------------------------------------------------------------------
#'000 #'000 #'000
Profit for the period 4,044 4,526 13,697
-------------------------------------------------------------------------
Weighted average number of ordinary
shares for the period - Basic 107,774 107,768 107,768
- Fully Diluted 115,433 116,025 114,792
-------------------------------------------------------------------------
Earnings per share - Basic 3.8p 4.2p 12.7p
- Fully Diluted 3.5p 3.9p 11.9p
-------------------------------------------------------------------------
8 Implementation of International Financial Reporting Standards (IFRS)
In accordance with legislation the Company will be adopting International
Accounting Standards as from 1 January 2005. Venture is currently in the
progress of assessing the impact these will have on its financial
statements and is working closely with its auditors and participating in
training courses to enable these changes to be implemented within reporting
deadlines.
Glossary
Bcf billions of cubic feet
boe barrels of oil equivalent
boepd barrels of oil equivalent per day
bopd barrels of oil per day
km kilometres
Mboe thousands of barrels of oil equivalent per day
MMcfpd millions of cubic feet per day
MMbo millions of barrels of oil
MMboe millions of barrels of oil equivalent
Note: 6 Bcf = 1 MMboe
Venture Production plc Kings Close
62 Huntly Street
Aberdeen
AB10 1RS
Telephone +(44) 1224 619 000
Fax +(44) 1224 658 151
Website www.vpc.co.uk
Email enquiries@vpc.co.uk
Registered Office 34 Albyn Place
Aberdeen
AB10 1FW
Registered Number 169182 (Scotland)
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SSWFAASLSEEU
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