David Telfer, 14th January 2009
Venture Production’s boss said yesterday that the Aberdeen-based oil and gas operator was well funded to make acquisitions.
Chief executive Mike Wagstaff said Venture was aware of what had been happening at Oilexco North Sea, which went into administration last week after its lenders refused to give it additional funding.
He said: “Needless to say we look at a lot of things and Oilexco is around and about.
“It suffered an unfortunate set of events and perhaps became overstretched, but there are a lot of other opportunities around.”
Mr Wagstaff said that, in addition to cash-flow generation from existing production, Venture had a very strong balance sheet with significant capital resources available both to finance its drilling and development programme and take advantage of acquisition opportunities thrown up by current market conditions.
Venture said in a trading update for 2008 it had cash and cash equivalents of about £200million at the year-end and a £365million five-year syndicated corporate bank loan.
Mr Wagstaff said Venture had refinanced in the second half of 2007 and admitted it had been a combination of luck and good judgment to do so at that time.
He noted that about two-thirds of Venture’s production was gas and, while global oil prices fell significantly in the second half of 2008, UK gas prices remained stable with a favourable outlook.
Mr Wagstaff said: “After a challenging start to 2008, Venture delivered record production levels which, combined with high oil and gas prices, resulted in a strong financial performance.
“Overall, 2008 was a very good year across all key areas of our business: production, development, drilling and acquisitions.
“In the past four months we brought three new field developments on stream, which positions us well for 2009.
“Beyond this, our active drilling and development programme will continue to drive growth and our record acquisition activity levels have significantly strengthened our asset base for the longer term.
“Despite lower commodity prices and uncertain economic conditions now, our financial strength allows us to maintain activity and capital expenditure in 2009 at levels comparable with 2008. We are one of the few operators in the North Sea not cutting back.”
Venture has three gas exploration and appraisal wells being drilled in the southern North Sea – Kew (appraisal), Carna (exploration) and Cygnus (appraisal) – with results from all three expected towards the end of the first quarter.
Shares in Venture Production shed 14.5p to 450.5p despite its positive update.