Venture Announces Acquisition of CH4

Venture Production plc ('Venture'), the Aberdeen based UK independent oil and gas production company, today announces that it has acquired the entire share capital of CH4 Energy Limited ('CH4'), a privately owned, UK headquartered gas production company. CH4's operations are focussed wholly on the southern North Sea gas basin and include a manned platform in the Dutch North Sea ('DNS') and an onshore operating base near Amsterdam.

The consideration paid for CH4 consisted of part-cash, part-equity and amounted to a value of €224.0 million (approximately £153.2 million) based on an effective date of 30th June 2006, a Venture share price of £7.60 and an exchange rate of £1 = €1.4618. The consideration consisted of €123.5 million in cash (approximately £84.5 million), plus 9.05 million newly issued Venture ordinary shares. The cash consideration was satisfied from Venture's existing bank facilities and included €16.5 million of working capital.

CH4's assets are concentrated around the UK/Dutch median line and are dominated by its operated interests in the producing Markham gas field (37.5% unitised interest) and the Chiswick gas field currently under development (95.0% interest).

The Markham gas field, which has been on stream since 1992, straddles the median line between the UK and Dutch sectors of the North Sea and is located in blocks 49/5a and 49/10b on the UK side and blocks J/3b and J/6 in the Dutch sector. It has two pipeline-linked fixed steel platforms, one of which is permanently manned. With the ongoing installation of a new compression tower, Markham is set to become an even more important processing and transportation hub for new gas production in the southern North Sea.

Chiswick, located in UK block 49/4a, was discovered in 1984 and has since been appraised by three further wells. FDP approval for development as a satellite to Markham was received in July 2006 and the first Chiswick development well is expected to come on stream during the first quarter of 2007. A second well is due on stream during the third quarter. Contracts for drilling rigs and all related development services are in place to cover both wells and the tie-back of the new field. Export terms have been agreed for transportation of the gas to the Den Helder terminal in the Netherlands.

In addition, CH4 has interests in the producing Windermere (20.0% interest) and J/3c fields (4.025% interest), both of which have been developed as tie-backs to the Markham facilities. Venture is also acquiring CH4's 25% interest in the ETS pipeline system in the southern North Sea, currently used by the Trent, Tyne and Tors fields.

Venture estimates of total proven and probable reserves acquired amount to approximately 184 Bcfe (30.7 MMboe) as at 30 June 2006. CH4 is currently producing approximately 22 MMcfpd (3,700 boepd) and this is expected to rise to an average of approximately 67 MMcfpd (11,200 boepd) for calendar year 2007.

CH4's balance sheet Gross Assets at 31 December 2005 were €97 million and CH4's Profit before Tax for the twelve months to 31 December 2005 was €850,000.

CH4 was owned by 3i Group plc, Trust Company of the West and management and employees. In aggregate, the selling shareholders now own approximately 6.8% of the enlarged ordinary share capital of Venture. Completion of the acquisition took place on 1st August 2006.

Commenting on the news, Mike Wagstaff, Chief Executive of Venture said:

We are delighted to have secured the opportunity to combine such a high quality business as CH4 with Venture's own gas operations. This acquisition adds a fourth operated production hub to our portfolio and materially expands the scale and 'footprint' of our southern North Sea gas business. It is another significant step in implementing our proven strategy of acquiring and developing 'stranded' hydrocarbon reserves in the North Sea.

CH4's assets will immediately increase Venture's proven and probable reserves by around 20% and, once Chiswick comes on stream, our production levels from 2007 onwards will be significantly higher. CH4 represents an outstanding fit with Venture's existing operations and our operatorship-led business model.

The CH4 team has done an excellent job in both unlocking the untapped potential in the Markham area and driving forward the Chiswick development. We welcome them to Venture and look forward to working with them to deliver the Chiswick development and the Markham compression projects over the coming months.

Graeme Sword, Partner 3i Oil, Gas and Power, the principal shareholder of CH4, commented:

3i has supported CH4 from its start up in 2002 and has provided capital and strategic support to develop CH4 into a significant business with a broad portfolio.

Coincidentally, 3i was also a founding shareholder in Venture where we were pivotal to the early development of the business until its IPO in 2002. We believe that CH4 is a compelling fit for Venture and will cement its position as the UK's leading North Sea independent."

Enquiries

Notes to Editors

CH4 Energy Limited

Visit CH4's website: www.ch4energy.com

London and Hoofddorp (near Amsterdam) based, UK independent gas producer, focused on the UK and Dutch sectors of the North Sea.
Privately held company established in May 2002 as a southern North Sea gas business and built through five separate acquisitions.
Balanced portfolio of producing, development, processing, transport and exploration assets.
Employs 7 staff and contractors in London, 35 in Hoofddorp in the Netherlands and 32 staff and contractors offshore.

CH4 asset map

Markam

Discovered in April 1984 (49/5a-2 well) with extension across median line confirmed by exploration well in Dutch sector (J/6-1 well) in 1987.
Located in blocks 49/5a and 49/10b (UK) and blocks J/3b and J/6 (Netherlands).
170km northwest of Den Helder in 36m water depth.
Two pipeline-linked fixed steel platforms (J/6A - manned, normal crew 14; ST1- normally unmanned) plus compression module on J/6A .
Production commenced in November 1992 reaching a peak in 1995.
Potential infill target on western flank could be drilled from ST-1 platform through re-entry and sidetrack of suspended production well.
Gas currently processed from Windermere, K/4a-D, J/3C and K/1A in addition to Markham gas with Chiswick and Grove (Operator : Newfield) developments committed to tie-back to J/6a platform.
New lo-lo compression tower currently under construction with risers and reception facilities for new incoming fields.
Total processing capacity of 400 MMscfpd delivering ample capacity for additional equity gas or third party processing.
Partners and Unitised Interests : CH4 (37.5% and operatorship), EBN (29.5%), Total (22.1%), Dyas (4.4%), RWE Dea (3.4%), Euroil (3.1%).

Chiswick

Located in block 49/4a and discovered in 1984 (49/4-1 well) with three subsequent appraisal wells.
18 km northwest of Markham and 150km northeast of Bacton in 41m water depth.
FDP approval received in July 2006 to drill two initial development wells targeting two fault blocks (Alpha and Gamma 1) to be drilled in 2H 2006 and mid-2007 respectively.
Minimum facilities platform tied-back to Markham J6A with transportation via K13 extension and WGT pipelines into the Den Helder gas terminal in The Netherlands.
Expected field life of between 8 and 13 years.
Depending on the results of the first two development wells up to three further infill wells may be drilled into the reservoir.
Partners and Working Interests : CH4 (95% and operatorship), Wintershall (5%).

Windermere

Located in block 49/9b and discovered in 1989 (49/9b-2 well).
7 km west of Markham in 35m water depth.
Currently one production well producing through a minimum facilities platform tied-back to Markham ST-1.
Partners and Working Interests : CH4 (20%), RWE Dea (60% and operatorship), Noble Energy (20%).

J3c

Located in blocks J/3a and J/6 and discovered in 1995 (J6-A5 well) by well drilled from Markham J6A platform.
Partners and Unitised Interests : CH4 (4.025%), EBN (50.000%), Total (29.050%), NAM (15.200%), Dyas (1.725%).

ETS Pipeline

165km, 24 inch pipeline with 500 MMscfpd capacity (part of the EAGLES system).
Delivers dry gas and condensate from the Trent and Tyne fields to the Bacton terminal on the Norfolk coast.
Installation of additional compression at Trent field in March 2006 has extended field life and enhanced opportunities for third party business (demonstrated recently by the already producing Tors fields).

Venture Production plc

Aberdeen based, UK independent oil and gas producer, focused on the North Sea
Listed on the London Stock Exchange with a market capitalisation of approximately £960 million
Net average production guidance for 2006 of 40,000 to 42,000 boepd
Proved and Probable Reserves of 161 MMboe (at 31 December 2005)

In April 2006 Venture announced its 2005 results.

Turnover up 101% to £164.1 million (2004 - £81.5 million).
Profit After Tax £31.1 million (2004 - £5.5 million loss).
Operating cash flow up 76% to £77.1 million (2004 - £44.1 million).
Average production up 77% to 29,864 boepd (2004 - 16,832 boepd).

Venture's 2005 Annual Report and Accounts may be downloaded from www.vpc.co.uk