Venture and Dana Increase Stakes in Kittiwake Field

Venture Production together with Dana Petroleum have entered into agreements in principle to acquire the producing Kittiwake and Mallard fields and neighboring development acreage on Blocks 21/12 and 21/13a, 21/17a, 21/18a and 21/19 in the central North Sea. Together these assets are known as the Greater Kittiwake Area ('GKA'). Venture and Dana will also acquire the associated infrastructure for oil storage and offloading via tanker.

The GKA assets, which are at present operated by Shell UK Limited with Esso Exploration and Production UK Limited as an equal co-venturers, form a self-contained business unit centered on the Kittiwake platform. With current estimated Proved and Probable ('2P') gross reserves of 29 million barrels of oil the acquisition will add a third major 'hub' to Venture's growing North Sea activities. The acreage to be acquired also includes a significant portfolio of development opportunities.

As a result of the acquisition, Venture's current net production is expected to rise by around 2,500 barrels of oil equivalent per day ('boepd') to an average of 22,500 boepd. The total net Proved and Probable ('2P') reserves to be acquired by Venture are estimated to be 11 million barrels of oil of which 4 million barrels of oil are already developed and producing.

Venture and Dana will each equally acquire from Shell and Esso (the 'Vendors') their interests in a number of licenses that include the Kittiwake and Mallard fields, the Gadwall, Grouse and Goosander discovered but undeveloped satellite fields, and several un-drilled prospects. In addition, through a separate transaction, Venture and Dana will equalize their equity holdings across the entire Greater Kittiwake Area. Prior to this transaction Venture held a 23.76% interest in the Mallard field and Dana held a 37.37% interest in the Goosander discovery with Shell and Esso holding the remaining interests equally between them. Venture will become operator of all of the GKA assets, including the Kittiwake platform and associated infrastructure. Venture and Dana will each own 50% interests in the GKA fields, license interests and associated oil storage and tanker offloading infrastructure.

At completion, Venture will receive a net total of £2.7M in cash, with an adjustment for net cash flow from the GKA assets in the period since the effective date of 1st January 2003. This 'negative consideration' reflects the transfer of abandonment liability from the Vendors together with adjustments that take account of the Vendors' differential ownership positions in the acquired oil storage and tanker offloading infrastructure.

The Kittiwake and Mallard fields are located approximately 100 miles (162km) east of Aberdeen in 85m water depth. The Kittiwake platform is a small, late generation fixed steel structure that houses a fully functioning drilling unit. It was first brought on stream in 1990 and an experienced team of Shell staff and contractors currently mans the facilities. The intention is to offer the majority of offshore personnel the opportunity to remain on the platform after Venture, as the new operator, takes control.

Commenting on the news, Bruce Dingwall, Venture's Chief Executive, said: "Acquisition of these interests in the Kittiwake Area is an innovative 'win-win' solution for all parties. Today's deal recognizes the difference in materiality thresholds between the majors, such as Shell and ExxonMobil, and the smaller independents, such as Venture and Dana and is entirely in keeping with the new behaviors required to maximize the remaining potential of the North Sea. An efficient transfer of ownership will facilitate the aggressive development of the reserves in the Kittiwake Area and also keep a strong team of people working together on the asset. Venture will continue the high HSE standards maintained by Shell as operator on Kittiwake, thus ensuring we continue to provide a safe and high quality, working environment on the platform.

'Assuming operatorship of Kittiwake is another milestone in Venture's expansion. It is an area we have been involved with for over two years through our existing interest in Mallard and, given the experience base of our in-house operations staff, taking over a modern fixed platform is a natural next step in the Company's evolution. It follows on from our three successful years as a North Sea production operator.

'The Kittiwake area will create a third 'hub' for Venture in the UK North Sea and Venture is committed to working with Dana to develop the GKA assets to their full potential. The Venture team is excited about bringing our operating experience to a new area.'

Completion of the acquisition and transfer of operatorship is subject to finalization of both legal documentation and commercial and operational arrangements for oil and gas export. It is also subject to DTI and other regulatory approvals and is expected to take place in the fourth quarter of 2003.