'I am pleased to report that during 2003 the Company continued its rapid growth. Average annual production increased by 53% on 2002 to 13,310 barrels of oil equivalent per day ('boepd'), and continuing favorable commodity prices resulted in record financial performance for 2003. The Company completed five acquisitions and in doing so has expanded its asset base from one to three production hubs in the North Sea. These acquisitions have added considerably to Venture's production and reserve base as well as substantially reducing risk across the Company's portfolio.
The principal contributor to Venture's increase in production in 2003 was the Trees Block, 16/12a in the North Sea. Production from the block increased significantly with the Sycamore Field coming on stream ahead of schedule in March. Production from one of the two initial wells declined faster than anticipated but towards the end of 2003 had stabilized. The third well drilled in the northern part of the field was suspended after encountering non-productive oil bearing reservoir section. A water injection well will be drilled in the second half of 2004 to optimize recovery from the central part of the field with development options for the southern part of the field currently under review for 2005. In early 2004, Venture increased its interest in the Birch Field to 64.51% and in March the Company restarted production from the second Birch well which had been shut-in for over three years. The two Birch wells were brought back on stream at a combined gross rate of over 10,000 boepd.
In the gas basin production was up substantially as a result of new gas sales arrangements on Ann and Alison and the successful work-over of an Ann well. Late in 2003 Venture acquired the remaining interests in Ann, Alison and Audrey and in doing so, became the operator of Audrey. Since year-end, Venture has entered into new gas sales arrangements on Audrey, which will allow the Company to increase production, and to invest in and develop the surrounding satellites across the Audrey infrastructure. The first satellite, Annabel, was appraised by Venture during 2003 and tested at flow rates in excess of 50 million cubic feet per day. The jack-up drilling rig 'Julie Robertson' has recently come on contract to carry out work on Annabel prior to tie back via Audrey.
As recently announced, the Saturn development has moved rapidly towards development with an agreement on unitization resulting in Venture having a 19.56 % net interest in the field, higher than previously anticipated. The Saturn development plan is currently under review by the DTI with approval anticipated in the near future. First gas from Saturn is anticipated in the fourth quarter of 2005.
Venture completed the acquisition of the Greater Kittiwake Area ('GKA') from Shell and ExxonMobil late in 2003. This acquisition creates the third Venture operated hub in the North Sea. GKA is the Company's first operated manned platform and, as such, represents a major step forward in the Company's growth and evolution. Investment in this hub will begin soon and involves a well intervention campaign on the Mallard Field and the completion and tie back of the Gadwall accumulation across the Kittiwake platform. Further tie backs are currently being evaluated for the 2005/6 GKA work program.
During the first quarter of 2004, Group production volumes were in line with expectations at 19,357 boepd and, subject to the successful tie back of Annabel and Gadwall during the fourth quarter, the Company should see production growth towards the end of this year and into 2005, in line with plan.
The Board of Venture believes that the Company is well placed to aggressively pursue its strategy through the development of its asset inventory. The successful portfolio diversification in 2003 through the strategic acquisition of a further two operated hubs not only provides further inventory but provides the Company with a lower risk asset base from which to grow the business.'
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