Venture Grows Production, Reserves During First Half 2009
Venture Production has provided an operational and trading update ahead of the announcement of its half year results which will be on August 27, 2009.
During the first half of 2009, Venture has made substantial progress through the execution of its stated strategy, growing both production and reserves, and successfully agreeing two significant transactions.
Average Group net daily production for the first six months of 2009 was approximately 52,900* barrels of oil equivalent per day, 16%* above the comparable period in 2008. During the period approximately 55% of total Group production was from the Company's southern North Sea gas assets.
The key drivers of the increase in production have been the contribution from the new Chestnut oil field which came on stream in September 2008, as well as important contributions from the Grouse oil field, and the Stamford gas field, which both came on stream in December 2008. Across all hubs we have seen good facilities uptime and reservoir performance, with a marked improvement from the Greater Kittiwake Area.
The second half of the calendar year includes normal planned summer maintenance shutdowns and the start-up of production from the new Eris and Ceres gas fields. It is anticipated that these can be brought onstream during late 2009. The solid performance achieved during the first half of the year means that production expectations for the full year remain in line with the earlier forecast of modest growth over 2008 levels.
Drilling and Project Development
Venture's 2009/10 drilling program has a greater emphasis on medium-term reserves growth rather than near-term additions to production. The initial phase of our busy and exciting drilling schedule has already delivered some important successful results with two appraisal wells on the Cygnus gas field, the exploration well on Carna and the appraisal of the Kew field.
As a result, at the end of March 2009, Venture reported a 12% increase to year end total proven and probable reserves to approximately 240 million barrels of oil equivalent ("MMboe"). This increase in Venture's reserves is supported by an independent assessment by DeGolyer and McNaughton. It reflects the positive drilling results this year and reserve additions from the recently sanctioned second phase of development at the Chiswick field.
The next 12 months will bring an equally active drilling program, with a balance of development, appraisal and potentially higher impact exploration drilling. The Noble Julie Robertson jackup drilling rig is currently drilling the Andrea exploration prospect, before moving on to drill the Annabel East extension appraisal well. The ENSCO 92 jackup drilling rig has recently started a two well program for Venture in the East Irish Sea; it has recently spudded the Marram appraisal well prior to drilling an exploration well on the Whitbeck prospect. The Noble Scott Marks, a new build heavy duty jackup drilling rig, has recently left the shipyard in China and is due to start drilling the first of two second phase development wells on the Chiswick field late in the third quarter. In the central North Sea an appraisal well on the Acorn field has been sanctioned to be drilled by the Noble Ton van Langeveld semisubmersible drilling rig later in 2009.
In terms of project development, the tie-in and topsides modification work for Eris/Ceres is on schedule to deliver first gas in the fourth quarter of 2009, and construction work is underway for the 'self-installing' platform for the F3-FA development.
Commodity prices continued the declining trend seen in the latter part of 2008 into 2009, with short term weakness and volatility. However, over the last few months we have seen a marked strengthening of oil prices on the back of improving economic sentiment. As we enter the summer gas season, short-term gas prices have weakened in line with normal seasonal trends. However, prices for winter 2009/10 and beyond remain strong reflecting market expectations of the longer-term underlying supply and demand balance. We have commodity price hedging in place which protects a significant proportion of our revenues during 2009 and 2010.
Additionally, the change in the oil and gas tax regime announced in the recent Budget, will be beneficial for the development of our portfolio of small fields below 2.75 to 3.5 million tonnes (or approximately 20 to 25 MMboe recoverable resources).
The successful conclusion of a 2008 initiative to shape the Company's southern North Sea gas assets portfolio was announced on June 18 with the partial sale and farm-out to N.V. Nuon Energy of a package of minority, non-operated interests in certain producing, development and
exploration assets. The key objectives were to manage exploration risk, release capital for reinvestment in future drilling and development and to bring in a strategically aligned gas-basin partner. The price achieved for this package reflects both the value that Venture has added to its 2006 and 2007 corporate acquisitions of CH4 Energy Limited and WHAM Energy plc and the exploration potential contained within the Morpheus and Andromeda areas.
Also in June, Venture announced the acquisition of a 1.8% interest in NOGAT B.V., a private company incorporated in the Netherlands that owns and operates the NOGAT pipeline and associated onshore gas processing terminal at Den Helder. The acquisition of this interest provides Venture with third party tariff income and a reduced export tariff for its own northern Dutch sector fields, including the F3-FA gas field currently in development.
In summary, Venture has had an excellent first half of 2009 across all areas of its business, with strong production performance and a great start to an exciting and busy drilling program. The focus for the second half of 2009 and into 2010 remains on proving up significant reserves additions. The Company has the balance sheet strength and liquidity to invest in, and capitalize on, its recent drilling success and pursue M&A opportunities. Combined with solid operational delivery and an improving external market environment, this reaffirms the Board’s confidence in the outlook for Venture's business.