British oil and gas company Venture Production Plc (VPC.L, VTPRF.PK), Wednesday, said it made an excellent start to fiscal 2009 across all business areas, along with strong production performance, and added that based upon its financial resources strength, the Board remains confident in its business outlook.
Issuing an Interim Management Statement for the period covering January 1 to April 1, 2009, the Aberdeen-headquartered company reported that average production for the group as of April 1 amounted to around 51,300 barrels of oil equivalent per day, or boepd. This is about 15% higher than reported production for the same period last year.
According to the company, the "key contributors" to the double-digit growth in production are the Chestnut, Grouse, and Stamford oil fields, which were brought into production in the second half of 2008.
The company further noted that group production has averaged about 60,000 boepd following the recent start-up of stabilized production from its second Chestnut production well, "highlighting the company's strong well stock to deliver year on year production growth, as previously indicated."
Regarding its financial position, Venture Production noted that there has been no significant change to its position since March 17, 2009, when it released its results for the full year 2008. Its current cash and cash equivalents balance stands at about US$275 million with an undrawn fully committed GBP 365 million, five-year syndicated corporate bank facility.
The company also outlined its drilling development for the first quarter of 2009, and said it is aiming to prove up significant reserves additions during 2009 and the first half of 2010.
Venture reported that a successful first appraisal well on fault block two of the Cygnus gas field has confirmed the presence of gas in both the primary Leman and secondary Carboniferous reservoir intervals. The likely gross incremental reserves in the secondary section alone are estimated to be "in excess" of 100 billion cubic feet, or Bcf.
The company reported good progress in the drilling of a second Cygnus appraisal well, and added that the second Chestnut production well has been connected to the subsea infrastructure, resulting in an on-field production increase of nearly 12,000 boepd. The success of the Carna exploration gas discovery brings expectations of estimated net gas in place ranging from 95 to 185 Bcf.
Following the outperformance of the Chiswick oil field, the company noted that the second phase of the field development has been sanctioned and that two additional wells would be drilled during late 2009 and 2010.
According to Venture, all these drilling activity have already raised its proved and probable reserves to about 240 million barrels of oil equivalent, or MMboe, at first-quarter end, compared to 214 MMboe at 2008 year end.
Looking ahead, Venture said that although short-term gas prices have weakened to some extent on the onset of the summer season, prices for winter 2009-2010 and beyond continues to be strong.
The company pointed out, "Venture is continuing to benefit from the cash flow generation from its growing production base, underpinned by a commodity hedging position that protects a material proportion of the near-term production."
The company concluded, "With strong financial resources the Board remains confident in the outlook for Venture's business."
For the full year 2008, the company had reported an 82% surge in its pre-tax profit, helped by higher production and sales volumes along with a 30% rise in realized prices. Profit before tax jumped to GBP 184.2 million from GBP 101.2 million in the prior year.
Revenue for fiscal 2008 climbed 38% to GBP 494.9 million from GBP 358.3 million, reflecting higher production volumes and higher realized prices during the year. The company had also anticipated a modest production growth in the coming year, over 2008 levels.
VPC.L is currently trading on the LSE at 812.50, up 13.50 pence, or 1.69%, with a volume 84,036 shares.
VTPRF.PK last traded on Thursday, to close at $11.70.
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