Venoco Trims Capital Budget, Keeps Production Guidance Unchanged

Venoco has announced a further reduction to its capital expenditure plans for 2009 to $150 million dollars; however, 2009 production guidance remains at 19,000 barrels of oil equivalent per day (BOE/d). The company also announced that it has restructured its hedging arrangements to secure floors on 100% of 2009 forecast production, and floors on over 80% of 2010 anticipated production volumes.

"We have been successful in locking in new floors covering 100% of our 2009 forecast production. Our new weighted average floor prices for 2009 forecast production is $54.06 per barrel and $6.92 per Mcf," said Tim Marquez, Chairman and CEO.

"On the Hastings sale to Denbury, we were pleased with the year-end bump in prices, but are still waiting on the final reserve report to calculate the sale price," Mr. Marquez continued. "We still have the option to take a volumetric production payment, but barring any sudden changes in the commodities and financial markets, we anticipate taking a cash payment to enhance our liquidity."

The sale is scheduled to close on February 2, 2009. After the sale, Venoco will retain a 2% overriding royalty interest in the Hastings Complex and will back in to a 22.3% working interest once Denbury reaches payout from its investment in a CO2 flood of the complex. The potential net reserves to Venoco from the CO2 flood and back-in working interest are estimated to be 15 to 30 million barrels.

The sale of the Hastings Complex is expected to reduce the company's net debt by more than $150 million. "We are approaching this year with caution regarding the financial markets and are committed to managing our operating costs and capital expenditures to maintain our flexibility," said Tim Ficker, CFO. "The floors we added give us a great deal of assurance that we will have operating cash flow to sustain an active drilling program in the coming years without having to rely on the capital markets," Mr. Ficker noted.

The company's year-end 2007 reserves for Hastings were 14.4 million barrels of oil equivalent (BOE). Venoco's net production from Hastings for full-year 2008 is estimated to be 2,580 BOE/d.

The company's current debt includes $150 million of Senior Notes due in December 2011, a $500 million Term Loan due in September of 2011 (with the ability to extend the maturity to May 2014 in certain circumstances) and a Revolving Credit agreement due, unless refinanced, in March 2011.