Annabel is due to come on stream in early 2005 and the Company is pleased to announce that it has successfully completed the 48/10a-12 well as a production well. The well was hydraulically fractured prior to completion and tested at rates of approximately 100 million cubic feet per day ('MMcfpd'). The well is currently suspended awaiting subsea tieback to the Audrey 'B' platform, an operation that will take place later this year. First production from Saturn is anticipated in the fourth quarter of 2005.
Total net proven and probable reserves acquired as a result of this latest acquisition amount to 14.6 billion cubic feet ('Bcf') or 2.4 million barrels of oil equivalent ('MMboe') and the increased interests in the two fields are, in aggregate, expected to add net production of approximately 7 MMcfpd from 2005 onwards, compared to expectations prior to the acquisition.
In addition, Venture has 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% and 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 April 1, 2004.
Commenting on the news, Bruce Dingwall, Chief Executive said:
'Increasing our stakes in Annabel and Saturn consolidates our position in these two core assets. Both this latest acquisition and the new commercial arrangements for Audrey are consistent with our strategy of focusing on assets which are not strategic to their former owners but which offer opportunities to profitably squeeze more gas out of the ground. In addition, this transaction represents further growth in our gas business at a time when the UK natural gas market dynamics look highly attractive. The added boost of a reduction in overall production costs through the reduced tariffs we have negotiated only serves to enhance the value of our gas assets, which now represent around half of Venture's business.'
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