Venture Production plc has reported that the first half of 2008 has been a period of strong performance with production close to record levels for a six-month period and with Venture resuming its growth path again. In addition, the Company has had good drilling results and made solid progress in the development of its new fields.
Average Group net daily production for the first six months of 2008 was approximately 45,700 barrels of oil equivalent per day, 8%* above the comparable period in 2007. During the period approximately 65% of total Group production was from Venture's southern North Sea gas assets.
The key drivers of higher production have been the two new Chiswick production wells, the first of which came on stream in September 2007 and the second in February 2008. Elsewhere, gas production has performed ahead of expectations despite an earlier than usual planned maintenance shut-down at Audrey in June, with continued strong performance from both the Annabel and Saturn fields.
Oil production from Venture’s existing fields has also been strong, with the installation of a pipeline from the Kittiwake platform to the Forties Pipeline System late last year improving overall uptime in the Greater Kittiwake Area. Strong performance from Goosander has been offset by some scaling issues on the Mallard well, which is likely to require a rig-based well intervention to restart production.
The increase in commodity prices experienced in the early part of 2008 has resulted in Venture generating more sales revenue for its oil and gas production in comparison with either the first or second half of 2007. In particular, conditions in the gas market have been much stronger during 2008 than in 2007 where pricing was particularly weak. The financial impact of higher commodity prices is partially offset by Venture's existing oil and gas price hedges and by the impact of its long-standing gas sales agreements on Markham and Audrey/Annabel ('Tranche A') where realized prices lag the effect of spot commodity prices.
Project Development and Drilling
The second half of 2008 sees an equally active drilling program. After completing the Barbarossa well, the Noble Julie Robertson ('NJR') jackup drilling rig moves to drill the Stamford development well as a Markham satellite with first gas production anticipated in the winter 2008/9 period. The NJR is then expected to conduct a workover on the Ann A4 gas well to return it to production, before moving to drill the Kew appraisal well in the Greater Markham Area. The ENSCO 92 jackup drilling rig has recently been contracted to drill the Carna exploration well in the southern North Sea, and a second Chestnut production well has been sanctioned to be drilled by the Noble Ton van Langeveld semisubmersible drilling rig later in 2008.
High levels of acquisition activity were seen during the first six months of 2008. Venture is now active for the first time in the East Irish Sea and in the Northern part of the Dutch offshore sector. In addition, through the recent acquisition of interests in a number of undeveloped discoveries within Quadrant 44 in the southern gas basin, Venture has now added a significant new undeveloped gas resource to its portfolio.
Venture is also pursuing new license interests through its active participation in the 25th Seaward Licensing Round and awards to successful applicants are expected to be made later in 2008. Venture expects to devote on average between 10 and 15% of its annual capital investment toward exploration activity in the North Sea and its latest licensing round applications cover a range of licenses containing both exploration prospects and undeveloped discoveries close to existing infrastructure.
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