RNS Number:1087D
Venture Production PLC
20 September 2004
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN OR INTO AUSTRALIA, IRELAND, CANADA, FRANCE, NEW ZEALAND, SOUTH
AFRICA, THE NETHERLANDS, SWITZERLAND AND THE UNITED STATES.
VENTURE PRODUCTION plc
("Venture", "the Company" or "the Group")
Venture Announces Placing and Open Offer to Raise #25.6 million
Highlights
* Venture to raise #25.6 million (#24.4 million net of expenses)
* The proceeds will reduce existing bank debt in the short term pending
its use in the financing of Venture's development pipeline and
potential acquisition opportunities
* The $50 million 'Trees' acquisition, to be funded from Venture's
expanded debt facilities, is expected to complete in the fourth quarter
of 2004
* The offering structure is a Placing and Open Offer (the 'Offering') at
200p per share on the basis of 2 New Shares for every 17 Existing
Shares
* All 12.79 million shares are being made available to existing
shareholders
* 4.22 million shares which certain founder shareholders have committed
not to take up have been placed
* The balance of 8.52 million shares has also been placed, subject to
clawback by existing shareholders, under the Open Offer
* The Placing and Open Offer has been arranged by Oriel Securities
Commenting on the news, Mike Wagstaff, Chief Executive said:
"In conjunction with the recent expansion of our credit facilities, the new
equity capital raised through the placing and open offer will enable Venture to
take advantage of new development and acquisition opportunities in the North
Sea. Venture is currently pursuing an aggressive development programme across
all three of its production hubs, which is anticipated to maintain our current
growth through 2006 and beyond. Of these, three projects, Annabel, central
Sycamore water injection and Gadwall, are all on schedule to come on stream in
early 2005. In conjunction with the recently announced 'Trees' acquisition,
these projects are on track to deliver a step change in Venture's production
from current levels. While execution of the current development programme
remains Venture's management team's primary focus, we continue to look for
additional 'stranded' reserve opportunities which fit our strategy."
Contact:
Venture Production plc Tel: 01224 619 000
Mike Wagstaff, Chief Executive
Oriel Securities Limited Tel: 020 7710 7600
Simon Bragg
Scott Richardson Brown
Brunswick Tel: 020 7404 5959
Patrick Handley
Eilis Murphy
This summary should be read in conjunction with the full text of this
announcement.
Oriel Securities Limited (which is regulated in the United Kingdom by the
Financial Services Authority) is acting solely for Venture Production plc in
connection with the Placing and Open Offer and is not acting for any person
other than Venture Production plc and will not be responsible for any person
other than Venture Production plc for providing the protections afforded to
clients of Oriel Securities Limited or for providing advice to any person in
connection with the matters described in this document.
This announcement does not constitute, or form any part of, an offer or an
invitation to purchase any securities.
VENTURE PRODUCTION PLC ('the Company')
Placing and Open Offer of 12,789,034 new Ordinary Shares at a price of 200 pence
per share
1. Introduction
Venture has announced today that it intends to raise approximately #25.6 million
(approximately #24.4 million net of expenses) by way of the Placing and Open
Offer. The net proceeds of the Placing and Open Offer will be applied to reduce
existing bank debt in the short term whilst enabling the Company to fund its
development pipeline and to make further acquisitions out of those bank funds as
and when opportunities arise.
On 1 September 2004 the Company announced that through its wholly owned
operating subsidiaries, it had entered into conditional agreements to acquire a
portfolio of North Sea assets from Marubeni, which includes its interests in "
Trees", the rest of which is already owned by Venture. The total consideration
for the Marubeni Assets, which is subject to adjustments for working capital and
cash flow movements, is US$50 million (approximately #27.8 million on the basis
of an exchange rate of #1: US$1.8 as at 1 September 2004), to be satisfied in
cash on Completion from existing bank facilities. These facilities were
increased on 7 September 2004 to US$255 million, providing the Company with
sufficient resources for both the Acquisition and ongoing working capital
requirements. It is expected that the Acquisition will be completed during the
fourth quarter of 2004, at which time the purchase price for the Acquisition
will be met from existing bank facilities which are to be partially paid down
out of the proceeds of the Placing and Open Offer. The Placing and Open Offer
are conditional, inter alia, upon the Placing and Open Offer Agreement becoming
unconditional and not having been terminated in accordance with its terms and
upon Admission. The Placing and the Open Offer and the Acquisition are not
interconditional.
2. Details of the Placing and Open Offer
The Company is proposing to raise approximately #25.6 million (approximately
#24.4 million net of expenses) by way of a placing and open offer of 12,789,034
New Shares at 200 pence per share.
All of the New Shares are being made available to Qualifying Shareholders under
the Open Offer. An irrevocable undertaking to take up an entitlement under the
Open Offer has been received from Michael Wagstaff in respect of 50,000 New
Shares, being the Firm Taken Shares.
Irrevocable undertakings not to take up entitlements under the Open Offer have
been received from certain other Directors and other Qualifying Shareholders in
respect of 4,217,147 New Ordinary Shares, being the Firm Placed Shares.
Pursuant to the Placing and Open Offer Agreement, Oriel Securities has
conditionally agreed to use its reasonable endeavours, as agent for the Company,
to procure subscribers at the Issue Price for all of the New Shares other than
the Firm Taken Shares. The Firm Placed Shares have been placed firm with
institutional and other investors by Oriel Securities as agent for the Company.
The remaining 8,521,887 Placing Shares have been placed with institutional and
other investors subject to recall to satisfy valid applications by Qualifying
Shareholders under the Open Offer.
The Placing and Open Offer have not been underwritten.
Qualifying Shareholders are being given the opportunity to apply under the Open
Offer for the New Shares at the Issue Price, free of expenses, pro rata to their
existing shareholdings on the basis of:
2 New Shares for every 17 Existing Shares
held as at the close of business on the Record Date and so in proportion for any
greater or lesser number of Existing Shares then held. The New Shares will, when
allotted and fully paid, rank pari passu in all respects with the Existing
Shares including the right to receive all dividends and other distributions
declared, made or paid on or after Admission.
Entitlements of Qualifying Shareholders will be rounded down to the nearest
whole number of New Shares and fractional entitlements will not be allocated
under the Open Offer but will be aggregated and placed for the benefit of the
Company. The maximum entitlement of each Qualifying Shareholder is indicated on
the Application Form. No application in excess of a Qualifying Shareholder's pro
rata entitlement will be met and any Qualifying Shareholder so applying will be
deemed to have applied for his or her maximum entitlement.
Application Forms are personal to Qualifying Shareholders and may not be
transferred, except to satisfy bona fide market claims. The Application Form
represents a right to apply for certain of the New Shares. Shareholders should
note that the Open Offer is not a "rights issue". The Application Form is not a
document of title and cannot be traded. Qualifying Shareholders should be aware
that, unlike a rights issue, any of the New Shares not applied for under the
Open Offer will not be sold in the market or placed for the benefit of
Qualifying Shareholders, but will be either taken up under the Placing or not
admitted to the London Stock Exchange.
Applications will be made to the UK Listing Authority and to the London Stock
Exchange for the admission of all the New Shares to (i) listing on the Official
List and (ii) trading on the London Stock Exchange's markets for listed
securities respectively. It is expected that Admission will take place, and that
dealings in the New Shares will commence, on 19 October 2004. Share certificates
in respect of New Shares to be held in certificated form are expected to be
despatched by no later than 26 October 2004. New Shares to be held in
uncertificated form are expected to be delivered in CREST no later than 19
October 2004.
The Placing and Open Offer are being carried out pursuant to existing
Shareholder authorities conferred on the Directors by resolutions passed at the
last annual general meeting of the Company which was held on 9 June 2004. The
Placing and Open Offer are conditional upon the Placing and Open Offer Agreement
becoming unconditional in all respects and not having been terminated in
accordance with its terms. The Placing and Open Offer are not conditional on
completion of the Acquisition and the Acquisition is not conditional on the
Placing and Open Offer. The Placing and Open Offer Agreement is, inter alia,
subject to Admission becoming effective no later than 19 October 2004 or such
later date as the Company and Oriel Securities may agree (being no later than 29
October 2004).
3. Information on Venture
Venture Production plc is a UK independent oil and gas production company
headquartered in Aberdeen. Venture's strategy is the acquisition and
exploitation of proven reserves and the development of discovered but
undeveloped reserves, known as stranded reserves. This strategy is pursued by
utilising a combination of modern oilfield technology and operating practices
and innovative commercial structures. Venture's two geographic areas of focus
are the UK section of the North Sea and Trinidad.
The Group has built up a net proven and probable reserve base of approximately
93.7MMboe at the end of 2003. The Group has established a track record of
releasing stranded reserve potential on its assets through field rejuvenation
and development programmes which have led to increased production. In addition,
since the beginning of 2003 the Company completed six acquisitions which
together with the Acquisition, which is expected to complete in Q4 2004, and
with drilling activity, allowed it to increase proven and probable reserves to
116.2 MMboe at mid 2004. The Group's net production has risen to 13,310 boepd as
at the end of 2003, a 53 per cent. increase on the previous year and production
during the first six months of 2004 has averaged just under 18,000 boepd.
4. Background to and reasons for the Acquisition and the Placing and
Open Offer
The Acquisition principally comprises Marubeni's interest in "Trees". The
Company acquired its original interest in and operatorship of "Trees" in April
2000 and has further increased its interest through two subsequent acquisitions.
Since becoming operator of "Trees", Venture has undertaken a significant
redevelopment of "Trees" which has resulted in increased production every year
since 2000 and is expected to result in further increases in production in the
future. As a result, its controlling interest in "Trees" has become one of the
Company's most important assets. In addition, Venture is continuing to develop
the Sycamore Field and the Board believes "Trees" offers a range of exploration,
appraisal and development opportunities.
The Board believes that acquiring the remaining interest in "Trees" is an
important acquisition for the Company for a number of reasons, and is consistent
with Venture's strategy of seeking to increase its interest in its core assets
where possible. The Directors believe that the Acquisition will significantly
increase Venture's production, reserves and cashflow and will give the Company
full participation in the future growth prospects offered by "Trees".
Immediately post-Acquisition the importance of "Trees" within the Company's
portfolio will increase and the Directors estimate that "Trees" will constitute
around 50 per cent. of production. However, "Trees" constitutes only 28 per
cent. of proven and probable reserves at 30 June 2004 and its proportion of
production is expected to fall in 2005 once new developments elsewhere in
Venture's portfolio come on stream.
Gaining 100 per cent. ownership of "Trees" will enable the Company to:
accelerate the "Trees" development programme which has been ongoing
since 2000 and to make commitments for its 2005/6 work programme. (This plan
includes the development of the southern part of the Sycamore Field as well as a
water injection well in the central part of the field, subject to performance of
the first Central Sycamore water injection well which is expected to be drilled
later this year)
operate "Trees" as an integrated unit rather than individual fields
enabling Venture to optimise production operations and simplify administration
assist streamlining of and improvement of certain commercial
arrangements including the transportation and processing agreements
take a unified approach to extracting value from the exploration/
appraisal potential in a range of prospects and discoveries including the Ash
and Cedar prospects
In addition, to the interest in "Trees", as part of the Acquisition, Venture
will also acquire non-operated interests in Blocks located in the central and
northern North Sea as follows:
a 31.5% interest in Block 22/22b, Licence P.233;
a 39.2% interest in Block 211/22a, Licence P.201;
a 25.0% interest in Block 22/13a, Licence P.096; and
a 15.34% interest in Block 22/16a, Licence P.120.
These Blocks contain several "stranded" discoveries, together with a number of
exploration and appraisal opportunities.
In the second half of 2004, the Company is entering a significant phase in the
development of key assets. Excluding the consideration for the Acquisition a
total of some $130 million is expected to be spent.
For the Sycamore Field, $20 million is committed with the aim of improving
reservoir pressure and enhancing short term oil production, this programme
should be completed by the end of Q4 2004.
A further $60 million has been committed for the Annabel gas discovery
development. The production well, which has been tested for two weeks at 100
MMcfpd, is expected to begin production in the first quarter of 2005. In
addition, on the Audrey field an overhaul of existing wells, which will coincide
with the Annabel development, is expected to cost some $17 million.
The results of this investment will not be reflected in 2004 but the Directors'
estimate this will start to come through in 2005's production.
The Company is undertaking the Placing and the Open Offer as the first equity
fund raising since the Company's initial listing on 19 March 2002.
The Board believes that raising equity capital at this time is attractive for
the Company as it will allow the Company to initially reduce its drawn down bank
debt (which will increase as a result of the Acquisition), but also most
importantly to enable it, by utilising such fresh equity capital together with
the Company's enlarged debt facility, to take advantage of other acquisition
opportunities, and to follow its strategy as set out in paragraph 3 above.
5. Current Trading and Prospects
The Company announced its interim results for the half-year ended 30 June 2004
on 9 September 2004. Average production for the first half-year was 17,969
boepd, generating turnover of #35.2 million, operating profit of #9.7 million
and earnings of #4.0 million.
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. These production levels combined with current
favourable commodity prices lead the Directors' to believe that the prospects
for the Group during the current trading year are positive. Overall production
for 2004 is expected to be in line with company targets. As a result of the
ongoing development activity across all of Venture's assets it is 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 Acquisition of the remaining interest in "Trees" is also expected to make a
significant contribution to production, revenues and cash flow post Completion,
which is expected to take place in the fourth quarter of 2004.
Average production for the Group for the full year 2004 is expected to be
approximately 19,000 boepd. The Company's pro forma estimate of its proven and
probable reserves as at 30 June 2004 is approximately 116.2 MMboe (including the
reserves attributable to the Acquisition).
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, the Group 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.
The Acquisition will have an impact on current trading and is expected to be
reflected in the Group's accounts from Completion. The Directors believe the
portfolio review and asset divestment programmes of the major oil and gas
companies, in the North Sea, to continue to offer opportunities for the Company
to acquire assets on terms which have the potential to add value for
Shareholders and contribute to the further development of the Enlarged Group.
6. General
A copy of the Prospectus in respect of the Placing and Open Offer will be posted
to Shareholders shortly.
7. Expected Timetable of Principal Events
Record Date for the Open Offer 16 September 2004
Latest time and date for splitting
Application Forms 3.00p.m. on 12 October 2004
(to satisfy bona fide market claims only)
Latest time and date for receipt of Application
Forms and payment in full under the Open Offer 3.00p.m. on 14 October 2004
Date of Admission 19 October 2004
Date of delivery in CREST of New Shares to be held in 19 October 2004
uncertificated form
Definitive share certificates in respect of New Shares to be 26 October 2004
held in certificated form to be despatched by
The dates set out above and throughout this document may be adjusted, in which
event details of the new dates will be further notified.
Contact:
Venture Production plc Tel: 01224 619 000
Mike Wagstaff, Chief Executive
Oriel Securities Limited Tel: 020 7710 7600
Simon Bragg
Scott Richardson Brown
Brunswick Tel: 020 7404 5959
Patrick Handley
Eilis Murphy
This announcement does not constitute, or form any part of, an offer or an
invitation to purchase any securities.
APPENDIX
DEFINITIONS
The following definitions apply throughout this announcement:
"Acquisition" proposed acquisition from Marubeni Oil & Gas (U.K.) Limited of all the Marubeni Assets
pursuant to the Acquisition Agreement
"Acquisition Agreement" conditional agreement dated 31 August 2004 between (1) Marubeni, (2) Venture Production
Company (North Sea) and (3) Venture Production NSD, further details of which are set out
in paragraph 9 of Part VI of this document
"Act" the Companies Act 1985 (as amended)
"Admission" admission of the New Shares to (i) listing on the Official List; and (ii) trading on the
London Stock Exchange's markets for listed securities
"Annabel" the gas field known as Annabel located in Block 48/10a
"Application Form" application form relating to the Open Offer being sent to Qualifying Shareholders with
the prospectus
"Articles" articles of association of the Company
"Ash" Undrilled exploration prospect known as Ash located in Block 16/12a on the UKCS
"Audrey" the gas field known as Audrey located in Block 48/15a and 4911
"Birch Field" Birch oil field located in Block 16/12a on the UKCS
"Block" a licence block on the map of the UKCS maintained by the DTI
"Business Day" a day (other than a Saturday or Sunday) on which banks are generally open in London for
the transaction of normal business
"Cedar" undrilled exploration prospect known as Cedar located in Block 16/12a on the UKCS
"Completion" completion of the Acquisition
"CREST" the relevant system (as defined in the Uncertificated Securities Regulations 2001 (SI
2001 No. 3755)) in respect of which CRESTCo Limited is the Operator (as defined in such
regulations)
"Directors" or "Board" directors of Venture
"DTI" UK Department of Trade and Industry
"Effective Date" 1 July 2004, the effective date of the Acquisition for economic purposes
"Enlarged Group" Company and its subsidiaries and assets following Completion
"Existing Shares" existing 108,706,788 Ordinary Shares in issue as at the date of this document
"Firm Placed Shares" 4,217,147 of the New Shares which certain Qualifying Shareholders have irrevocably
undertaken not to take up under the Open Offer and which have been placed firm with
institutional and other investors pursuant to the Placing and Open Offer Agreement
"Firm Taken Shares" 50,000 of the New Shares which Michael Wagstaff has have irrevocably undertaken to take
up under the Open Offer
"Issue Price" 200 pence per New Share
"Larch Field" Larch oil field located in Block 16/12a on the UKCS
"Licences" UKCS petroleum production licences P.212 relating to part of Block 16/12a (containing the
"Trees" Hub), P.233 relating to part of Block 22/22b (containing the Selkirk Discovery),
P.201 relating to part of Block 211/22a, P.096 relating to Block 22/13a and P.120
relating to Block 22/16a
"Listing Rules" rules and regulations made by the UKLA under the Financial Services and Markets Act 2000
as amended from time to time
"London Stock Exchange" London Stock Exchange plc
"Marubeni" Marubeni Oil and Gas (UK) Limited
"Marubeni Assets" legal and beneficial interest of Marubeni in each of the Licences
"New Shares" 12,789,034 new Ordinary Shares to be issued pursuant to the Placing and Open Offer
"Oak Discovery" oil and gas discovery located in Block 16/12a on the UKCS
"Official List" Official List of the UKLA
"Open Offer" conditional invitation made by Oriel Securities, acting as agent for the Company, to
Qualifying Shareholders to subscribe for the New Shares at the Issue Price on the terms
and conditions set out in the prospectus and in the Application Form
"Optionholders" holders of options and awards under the Share Schemes
"Ordinary Shares" ordinary shares of 0.4 pence each in the capital of Venture
"Oriel Securities" Oriel Securities Limited (Company number 04373759, whose registered office is at 4 Wood
Street London, EC2V 7JB), Sponsor, Financial Adviser and Stockbroker to the Company
"Overseas Shareholders" persons who are resident in countries other than the UK
"Placing" placing by Oriel Securities of the Placing Shares at the Issue Price pursuant to the
Placing and Open Offer Agreement, subject to the right of Qualifying Shareholders to
apply for such shares under the Open Offer
"Placing and Open Offer" the Placing and the Open Offer as described in the prospectus
"Placing and Open Offer conditional agreement dated 21 September 2004 between Oriel Securities and the Company,
Agreement" further details of which are set out in paragraph 9 of Part VI of the prospectus
"Placing Shares" New Shares other than the Firm Taken Shares
"Prospectus" the prospectus expected to be issued on 21 September 2004 setting out full details of
the placing and open offer
"Qualifying Shareholders" holders of Existing Shares on the Company's register of members on the Record Date
(except for certain Overseas Shareholders to whom the Open Offer has not been extended,
as described in Part II of this document)
"Record Date" close of business on 16 September 2004
"Selkirk Discovery" the Selkirk oil discovery located in Block 22/22b
"Shareholders" holders of Existing Shares
"Share Schemes" Venture Production Company Limited Unapproved Share Option Plan, the Venture Production
plc 2002 Employee Share Option Scheme, the Venture Production plc Share Incentive Plan
and the Long Term Incentive plan for key management, each as described in Part VI of the
Prospectus
"Sycamore Field" Sycamore oil field located in Block 16/12a on the UKCS
"Trees" Trees Hub
"Trees Hub" the oil and gas fields, prospects and discoveries located in Blocks 16/12a on the UKCS
including the Sycamore Field, Larch Field and the Birch Field
"UKLA" or "UK Listing Financial Services Authority acting in its capacity as the competent authority for the
Authority" purposes of Part VI of the Financial Services and Markets Act 2000
"uncertificated" or "being recorded on the relevant register of the uncertificated share concerned in CREST, the
held in uncertificated form" title to which, by virtue of the Uncertificated Securities Regulations 2001
(SI 2001 No. 3755) may be transferred by means of CREST
"$" or "US$" United States dollars
"United Kingdom" or "UK" United Kingdom of Great Britain and Northern Ireland
"UKCS" United Kingdom Continental Shelf
"United States" or "US" United States of America, its territories and possessions (including the District of
Columbia)
"US Person" any person resident in the United States or otherwise a US person within the meaning of
Regulation S under the United States Securities Act of 1933, as amended
"Venture" or the "Company" Venture Production plc
"Venture Production Venture Production Company (North Sea) Limited, a wholly owned subsidiary of Venture
Company (North Sea)"
"Venture Production (NSD)" Venture Production (North Sea Developments) Limited, a wholly owned subsidiary of
Venture
"Venture Group" or "Group" Venture and its subsidiaries
"Willow Discovery" oil discovery located in Block 16/12a on the UKCS
This information is provided by RNS
The company news service from the London Stock Exchange
END
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