Upon completion of the acquisition, Venture will pay AHL a cash consideration of £6.5 million with two additional deferred contingent payments of £1.5 million on approval of the Field Development Plan and a further £2.5 million on first oil production from the field. Venture estimates that the acquisition will add 8.1 million barrels of oil equivalent ('MMboe') of net proven and probable reserves.
During 2001, a horizontal production well was drilled and completed on the Chestnut field. A successful extended well test ('EWT') was conducted on the field which produced at rates of up to 15,000 bopd for approximately four months. The completed production well is currently suspended and can be utilized as a permanent production well in a full development of the Chestnut field.
Bruce Dingwall, Chief Executive of Venture said, 'We are delighted to increase our interest in and take over operatorship of Chestnut which is consistent with our strategy of acquiring large, operated working interests in 'stranded fields'. Acquisition of the increased interest in the Chestnut field will expand our development inventory and provide investment opportunities to fuel Venture's growth in 2004 and beyond'.
Amerada Hess is undertaking this sale as part of its global portfolio review in which Chestnut was identified as a less material asset that did not match Amerada Hess's strategic requirements.
Completion of the acquisition, which is not subject to pre-emption, and assumption of operatorship by Venture is subject to partner and regulatory approvals and is expected to take place in the second quarter of 2003.
The Chestnut field which is located in UKCS Block 22/2a was originally discovered in 1986 and is approximately 230km east of Aberdeen in 120m of water. During 2001, Amerada Hess Limited acquired a 50% interest in the field and operatorship through a farm-in arrangement whereby it funded the drilling of the horizontal production well, 22/2a-11x and the EWT utilizing the Brovig floating production vessel the Crystal Ocean.
During the EWT in 2001, the field produced approximately 1.1 million barrels of oil over a four month period at production rates of 10 - 15,000 bopd, thereby significantly reducing the recoverable reserves uncertainty. In order to fully develop the Chestnut field a water injection well is required to be drilled together with a subsea tie-back to existing processing and transportation infrastructure. Upon taking over operatorship of Chestnut Venture will enter into technical and commercial discussions with the several host field operators in the area in order to identify the optimum export route, prior to finalizing a Field Development Plan for the field.
Gross remaining proven and probable reserves for the field are estimated to total 16.25 MMboe. Venture acquired its current 19.875% interest through two acquisitions; 5.0% interest from TotalFinaElf in 2001 together with an additional 14.875% interest in mid-2002 from Roc Oil.
After the acquisition is complete, partners will be Venture as operator with 69.875%; Premier Oil with 15.000; Bow Valley with 8.875% and Oranje Nassau with 6.250%.
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