Venture Acquires 6 Gas Discoveries in the North Sea from Tullow

Venture Production has agreed to acquire a package of interests in six proven but undeveloped gas discoveries close to existing infrastructure in the Caister Murdoch System, one of the most important gas export hubs in the southern North Sea. Estimated recoverable resources net to Venture total 266 billion cubic feet (Bcf) and two of the fields to be acquired are anticipated to have Field Development Plans (FDPs) submitted during 2008. The package of assets is being acquired from Tullow Oil plc for a consideration of 35 million pounds in cash at completion.

Cygnus (Blocks 44/12a and 44/11a, Venture 35%)

The largest asset in the package is Cygnus, a large multi fault block accumulation discovered in 1988 by the 44/12-1 exploration well which found gas bearing Leman reservoir. An appraisal well drilled in 1989 (44/11-2) confirmed the presence of both Leman and Carboniferous reservoir in a separate fault block and a 2006 appraisal well (44/12-2) in the original discovery fault block confirmed gas bearing reservoir in both the primary Leman and secondary Carboniferous intervals. With an estimated 1,000 Bcf of gas in place (gross P50) from the Leman reservoir alone, Cygnus is one of the largest undeveloped discoveries in the southern North Sea and Venture believes there to be significant appraisal potential to the north of the structure.

The intention in the first phase of the development is to drill a production well into the discovery fault block ('FB1') and to drill two further appraisal wells to confirm recoverable volumes in additional fault blocks. First gas from Cygnus FB1 is anticipated by the end of 2010 and subsequent development phases would see these second and third fault blocks brought into production. With the potential development of up to five additional fault blocks providing significant upside potential, it is possible that the field could stay in production for around 20 years.

Venture is acquiring a 35% non-operated interest in Cygnus and from the first two planned phases of development alone estimates there to be net recoverable resources of around 186 Bcf. It is anticipated that an FDP submission will be made during 2008 and a development well drilled later this year or in 2009, subject to the availability of a suitable rig. Two export route options exist, one of which is the ETS pipeline system 17 km from Cygnus in which Venture acquired an interest as part of its acquisition of CH4 in 2006. The two appraisal wells are scheduled to be drilled in either late 2008 or early 2009.

Humphrey (Blocks 44/16a and 44/11a, Venture 17.5%)

The second asset that is close to FDP submission is the Humphrey discovery in blocks 44/16a and 44/17a. Humphrey was discovered in 2006 and is a stratigraphic trap on trend with the producing Munro field, which is seen as a close reservoir analog. Venture will acquire a 35% interest in block 44/16a which contains around 50% of the accumulation. Estimated gross recoverable resources are 35 - 40 Bcf developed through a single horizontal subsea well tied back to nearby infrastructure. Development option screening is underway with a development decision expected by the end of 2008 with the potential for first gas by end 2009.

In addition to the development of the existing Humphrey discovery, the block in which Venture will acquire its interest contains the 100 Bcf gas in place Humphrey NW prospect which, if proven, could be developed via a single subsea well tied back to Humphrey infrastructure.

Copernicus and Kepler (Blocks 44/16b and 44/16c, Venture 35%)

Copernicus is a Carboniferous discovery in block 44/16b. It was discovered in 1991 by well 44/16-1 which tested gas at up to 30 million cubic feet per day ('MMcfpd'). An appraisal well is required in the southern part of the accumulation to confirm the extent of the reservoir but, if successful, gross recoverable resources are estimated to be around 190 Bcf from a two well development including offshore CO2 removal. The upside case from a three well development is around 280 Bcf gross recoverable resources.

The Kepler discovery was tested at 47 MMcfpd from two Carboniferous intervals by well 43/20b-2 in 1988. Approximately 42% of the 47 Bcf gross recoverable resources are estimated to lie in block 44/16c in which Venture will acquire a 35% interest. An FDP for Kepler as a tie-back to the nearby Cavendish platform was submitted in 2004 but the development did not proceed due to CO2 handling constraints. However, a joint development with Copernicus is under consideration and it is envisaged that this could be brought onstream by 2011 assuming a successful appraisal programme in 2008/9.

Garnet (Block 44/27a, Venture 31.66%)

Garnet was discovered in 1987 by the 44/27-1 well which tested gas from Carboniferous sands. Venture will acquire a 31.66% interest in block 44/27a which is estimated to contain around 84% of the 40 Bcf gross recoverable resources. The original Garnet discovery well was tested at a low rate but it is believed that this was due to formation damage rather than any reservoir effect. There are a number of development concepts under consideration but the base case at this stage is a single horizontal well tied back to the nearby Schooner platform. Synergies may exist with the potential development of the Topaz discovery to the south.

Opal (Block 43/25a, Venture 46.15%)

Opal is a 20 to 25 Bcf gross recoverable resource discovery lying to the west of the producing Boulton B field. It was discovered by well 43/25a-2x in 2005 which encountered a 120 foot gas column. Although there are a number of development options under consideration, the base case development assumes an unmanned platform tied back via the Rita field which is currently being developed as a tie back to the Murdoch platform. Venture will acquire a 46.15% interest in the Opal discovery as well as a 30% interest in the non-Opal area.

Boulton X and Y (Block 44/21e, Venture 100%)

Another development route for Opal could be opened up following exploration success in block 44/21e which contains the Boulton X and Y exploration prospects. These are stratigraphic plays similar to that seen in the producing Boulton B field to the east and carry geological chances of success of 46% and 20% respectively with combined P50 resources of 23 Bcf. In the event of drilling success, a joint development with Opal is possible. The block was awarded to Tullow in April 2007 in the 24th Licensing Round and Venture will acquire its 100% interest in the acreage.

As part of this transaction, Venture is also acquiring Tullow's position in blocks 48/3a and 48/4 which together contain the Morpheus exploration prospect. A well is scheduled to be drilled on Morpheus toward the end of 2008. Combined with its existing part carried interest, following acquisition of Tullow's farmed-in interest Venture will be paying 41.335% of the well cost in return for 41% interest in the license.

Completion of the acquisition remains subject to customary partner and regulatory approval.

Commenting on the news, Mike Wagstaff, Chief Executive, said: "This substantial asset package represents a major step forward in the development of Venture's southern North Sea gas position. As our latest 2008 acquisition it takes us into the Caister Murdoch System area, an important region within the gas basin where, to date, we have not been represented. With the forward curve for UK gas remaining firm we believe the base case development of Cygnus to be a very solid proposition. In addition, the access to up to 1 Tcf of recoverable resources and a range of other development opportunities makes this a highly material acquisition. We are also excited by the opportunity to increase our position in the Morpheus well which we acquired through the WHAM acquisition last year."