Venture Production to acquire North Sea gas field

Venture Production has reached agreement with Eni UK Ltd. to acquire its 11.11% interest in block 48/10a located in the southern North Sea.

Venture Production has reached agreement with Eni UK Ltd. to acquire its 11.11% interest in block 48/10a located in the southern North Sea.

Block 48/10a contains the Venture-operated Annabel discovery and a unitized interest in the ConocoPhillips-led Saturn development, both major new gas fields currently being brought into production.

Venture will own 100% of Annabel and has raised its unitized interest in Saturn from 19.56% to 22.00%. The total consideration payable will be £3.3 million, subject to adjustment to take account of cash flows since the effective date of Jan. 1, 2004. Completion of the acquisition is subject to regulatory and other customary approvals and is expected to take place during the third quarter.

Annabel is due to come on stream in early 2005. Meanwhile, Venture has completed the 48/10a-12 as a production well. The well was hydraulically fractured prior to completion and tested at rates of approximately 100 MMcf/d. It is suspended awaiting subsea tieback to the Audrey B platform, an operation that will take place later this year. First production from Saturn is anticipated in the Q4 2005.

Total net proven and probable reserves acquired as a result of this latest acquisition amount to 14.6 bcf or 2.4 MMboe and the increased interests in the two fields are expected, in aggregate, to add net production of 7 MMcf/d from 2005.

In addition, Venture has reached agreement with the Loggs pipeline system owners to amend the transportation and processing arrangements for the Audrey field, consistent with the new gas sales arrangements entered into in March.

The new arrangements result in processing and transportation tariffs for incremental volumes of gas production between 30% and 45% lower than those applying under the old gas sales arrangements. The new arrangements provide further commercial incentive for Venture to rejuvenate the Audrey field and are backdated to take effect from April 1.

07-26-04

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