A combination of new field development activity and incremental investment in our producing fields led to a 77% increase in average production from 16,832 boepd in 2004 to 29,864 boepd in 2005. The successful start up of three new fields (Annabel, Gadwall and Saturn) plus completion of nine 'in-field' investment delivered this step change in production performance.

Venture's operations are concentrated into three separate production hubs - 'A' Fields, 'Trees' and GKA plus a number of other assets; a review of each hub is provided below.

'A' Fields

Venture's 'A' Fields production hub is located in the southern North Sea and comprises five producing gas fields and a number of additional discoveries and exploration prospects. The five producing fields, Audrey, Ann, Alison, Annabel and Saturn collectively produced 16,476 boepd (net) average for 2005 (2004 - 6,195 boepd) generating approximately 55% of Group production and representing 166% growth.

The Company's gas business has been developed over several years and during 2005 we saw two new fields come on production. In April, the Annabel field delivered first gas and in September, the ConocoPhillips operated Saturn field started production. This increase in gas production has coincided with a tightening of supply and increase in demand which has driven commodity prices upwards. Venture's development programme continues to focus on the exploitation of gas reserves in what we believe will be a period of tight supply during 2006-8 and possibly beyond. This will be supported by a two year drilling contract commencing in the second quarter of 2006.

Annabel

One of the highlights for Venture in 2005 was the start-up of the Annabel field (Venture - 100%) in April; the field started production only 20 months after the discovery well was drilled by Venture in 2003. Average production for the year was 9,850 boepd following completion of the second well, which was a fast track development allowing access to strong winter commodity prices. The second Annabel well came on stream in December 2005.

Production from Annabel continues to exceed expectations and we expect the field to continue its strong performance with no further capital investment required.

Audrey

The main focus of activity in the Audrey field (Venture - 100%) was the dilling of an in-fill well. Venture drilled the B-5 well during the second quarter which unfortunately encountered low pressure reservoir. Post well analysis also indicated the possibility of some well bore formation damage and a chemical intervention is planned for 2006 to attempt to resume production from this well.

A review of the field has resulted in the potential for several engineering solutions to improving production efficiency. These include desanding/dewatering to extend well lifecycle' and the benefits of a compression facility on the platform. Further subsurface work has identified a possible in-fill opportunity in the north-east part of the field.

Ann/Alison

During the year the Ann/Alison fields (Venture - 100%) continued to produce in line with expectations. A focus of 2005 activity was to finalise the location of an in-fill well in the Ann Field to develop additional reserves. This opportunity was highlighted following a subsurface re-evaluation of the field in late 2004. The well, Ann A-4, was completed in early 2006 and tested at 35 MMscfd and the well came on stream in the second quarter following completion of commissioning activities. No further work on either Ann or Alison is planned for 2006.

Saturn

The Saturn development, operated by ConocoPhillips (Venture - 22%), comprises the currently producing Atlas (Other OTC: ATLR.PK - news) accumulation, the proven Hyperion accumulation and the Rhea prospect. The Saturn development includes a normally unmanned production facility located towards the northern part of the Atlas accumulation. Two wells into Atlas and a dual-lateral well into Hyperion will access proven reserves. Plans are in place to drill the Rhea prospect from the platform during 2006. Average production for 2005 was 1,585 boepd (net) following the start-up of the field in September 2005; current production is better than planned and we anticipate growth in production once the currently drilling Hyperion well is brought on stream in 2006. Venture has a 22% equity position in the entire Saturn including Rhea, and we expect to drill the Rhea prospect in mid 2006 as an extended reach well from the Saturn platform. This strategy will enable Rhea to commence production during the high demand winter period in the event of a successful well.

Mimas

Mimas is a proven gas discovery in block 48/9 in which Venture has a 15% interest. The operator, ConocoPhillips, is currently developing the Mimas field with first gas planned for late 2006. Mimas is being developed as a normally unmanned platform with one producer tied back to the Saturn facility.

Amanda/Agatha

Following the Venture operated discovery well 49/11a-9 drilled in 2003, plans were in place to side-track the Amanda discovery well (Venture - 100%) to improve productivity from the Rotliegend reservoir. During the well planning phase the sea-bed survey highlighted the presence of a biogenic reef at the preferred well location; this has resulted in the need for further environmental analysis and further approvals to drill which in turn has delayed drilling Amanda until late 2006.

The original development concept, to include drilling the Agatha prospect (Venture - 100%) and develop jointly through the Alison subsea manifold, is still the plan with first gas targeted for Q4 2007 when we still anticipate a favourable gas market. Key (NYSE: KEY - news) long lead material contracts have been placed to support this timescale.

Ensign

Following two separate transactions Venture acquired 100% of the Ensign discovery located in southern North Sea blocks 48/14 and 48/15a immediately west of the A fields area.

The Ensign discovery if one of the largest undeveloped gas accumulations in the southern North Sea with an estimated gas volume in place of between 300 and 400 Bcf. The vast majority of the recoverable volumes are believed to lie within Block 48/14 with the remainder in Block 48/15a. Ensign was discovered in 1986 by well 48/14-2 which tested at 15 MMscfd. Using the Noble Julie Robertson rig the Company plans to drill and hydraulically fracture an appraisal well during 2006 to test reservoir deliverability rates, ahead of committing to a development programme. Assuming a successful appraisal well, production from the discovery could be brought onto production during 2007 or 2008.

Channon

As a result of two transactions, Venture secured operatorship and a 54% average equity holding in blocks 47/3h and 47/8c containing the Channon prospect.

Subsurface work has been completed and an exploration well will be drilled in the second quarter 2006 as the first to be drilled in the 2006 Southern (Hamburg: SOT.HM - news) basin programme. Development engineering work is ongoing to allow a fast-track development, following a successful well, to deliver first gas in 2007.

'Trees' (Block 16/12a)

The Trees area continues to provide an important part of Group production; the three currently producing fields, Birch, Larch and Sycamore, produced an average rate of 8,034 boepd (net) for 2005 (2004: 7,473 boepd), the highest level since taking over operatorship in 2000. This represents 28% of total Group production.

The 'Trees' fields are located in the Central North Sea with production from Birch, Larch and Central Sycamore tied back to the Marathon operated Brae A platform and from there forwarded into the Forties Pipeline System. Production from South Sycamore is from the CNR operated Tiffany platform, this production also is exported via the Forties Pipeline System.

Birch

Rejuvenation activity of the Birch field continued in 2005 with a successful workover on the Z3 well which added incremental production of over 2,000 boepd; coupled with cyclical production from the Z5 well, Birch continues to perform ahead of expectations. Venture is currently evaluating an in-fill well on Birch to access unswept oil.

Larch

Production from the Larch field was impacted early in the year through intermittent availability of high pressure gas lift, however a successful workover of the Larch production well Z6, designed to improve gas lift efficiency at lower injection pressures, yielded incremental production of 1,000 boepd.

Sycamore

The focus of 'Trees' activity in 2005 was the Sycamore field. In November the water injection well SW2 was completed; this well was drilled to support production from Central Sycamore producer SP2 and water injection was started in January 2006. It will take several months to repressurise the reservoir and SP2 is expected to be restarted during the second quarter.

Venture drilled a sidetrack well SW1 as a potential water injection well to support production from Central Sycamore producer SP3. The well found the reservoir section to be depleted as a result of production from SP3 but the reservoir characteristics were insufficient to support completion of the well as an injector. The decision was taken not to immediately sidetrack the well due to demands for the drilling rig in support of the Goosander development.

Following the success of commercial negotiations with CNR, the operator of the Tiffany platform located immediately south of the 'Trees' fields, the South Sycamore production well SP4 was successfully drilled and completed as an oil producer towards the end of 2005. Drilling SP4 from the Tiffany platform enabled production start-up immediately upon completion of the well. Following encouraging production performance the feasibility of drilling a water injection support well for South Sycamore from the Tiffany platform is currently being evaluated.

Ash

Following commercial agreement with CNR, Venture plans to drill the significant Ash exploration well from the Tiffany platform during the second half of 2006. As with the South Sycamore development, a successful Ash well would be brought on stream immediately following drilling representing a considerable saving of both cost and time over a more conventional sub-sea tie-back.

Greater Kittiwake Area ('GKA')

Production from the GKA hub located in the central North Sea averaged 4,266 boepd (net) for 2005 (2004 - 1,946 boepd) representing 15% of Group total. The 'GKA' fields include the producing Kittiwake, Mallard, Gadwall fields and the Goosander field currently under development.

The Kittiwake platform represents the central processing and export facility with Mallard and Gadwall production tied-back to the Kittiwake platform. Oil is then exported via the recently installed single anchor loading system ("SAL") and a shuttle tanker. Gas is exported into the Shell (LSE: RDSB.L - news) operated Fulmar gas line.

The GKA area is a joint venture with Dana each party owning a 50% working interest in the fields and facilities operated by Venture.

In February this year the Sedco 704 drilling rig was in the process of moving from the Gadwall water injection well to the 'Trees' area; during this routine move one of the anchors caught the Mallard - Kittiwake pipeline. Production was shut-in whilst an assessment of the damage was made. Importantly the pipeline was not ruptured and therefore there was no leakage of hydrocarbon. Damage was however sustained to the line at the Gadwall tie-in point. Temporary repair to the main Mallard - Kittiwake line has been completed and production from Mallard resumed. Permanent repairs that include reinstatement of Gadwall production are planned for June. It is important to recognise that without our subsea construction contract with Subsea 7 these repairs would not have been possible in the time frame they were achieved and we have averted the possibility of longer delays to reinstatement of production.

Kittiwake

In 2005 the Kittiwake field continued to produce in line with expectation. The principal value of the Kittiwake field is the manned platform and facilities that provides the central hub over which current and future production is and will be processed. A comprehensive maintenance and upgrade programme started in 2005 and this is expected to result in improved efficiency and capacity as we look to develop additional reserves and extend the life of currently producing fields.

Mallard

The Mallard field continued to produce above expectation and provided economic justification for the drilling of a water injection well, which was successfully completed during 2005. This is providing pressure support to the production well, which is delivering production rates above expectation.

The successful drilling of this well was a major achievement given the challenges of drilling through a high pressure section into a depleted reservoir.

Venture plan to sidetrack the original water injector located in the northern part of the field to provide additional support to the current producer. This well is planned for the second half of this year.

Gadwall

The Gadwall field was successfully brought on stream in April 2005 following a sub-sea tie-back of the production well into the existing Mallard production pipeline. Production exceeded expectation to such an extent that a water injection well was drilled and completed in January 2006 and production from this field is planned to recommence in 2Q 2006 once pressure support has been established.

Goosander

In January 2006 Venture obtained approval to develop the Goosander field. The discovery well, 21/12-3, was drilled and tested in 1998 at rates of 8,200 bopd. The well was suspended for subsequent re-completion as a producer and this is scheduled to take place in mid 2006. Goosander will be developed as a sub-sea tie-back to the Kittiwake platform via a pipeline bundle currently under construction. The bundle has been engineered to accommodate water injection into Goosander subject to production performance. First production is scheduled for third quarter 2006.

Grouse

It is anticipated that the Grouse discovery will be appraised in 2007 and as part of the Goosander development Venture is creating the provision for additional tie-back options to the Kittiwake facility. The potential Grouse development would tie-in directly into the manifold at the base of the Goosander riser benefiting in terms of both cost and timing over a stand-alone development. In the event of success first oil would be achieved in 2009.

Christian and Bligh

Through several commercial agreements Venture acquired a substantial working interests in Blocks 21/20a and 21/20b in the central North Sea immediately west of the Venture operated GKA area. These blocks contain the Christian and Bligh discoveries, two 'stranded' assets that add mid term development opportunities to Venture's portfolio.

The Christian discovery lies 7km to the east of the producing Venture operated Mallard field and was discovered in 1990 by well 21/20b-4st2 which tested at a rate of 6,364 bopd. Venture believes that a sub-sea tie-back to the existing Mallard sub-sea facilities is a feasible development option.

The Bligh gas condensate discovery lies to the south-east of Christian in Block 21/20b and was discovered in 1995 by the 21/20a-5 well and tested at rates of 2,750 bopd and 15.4 MMscfd. Similar to Christian, a subsea tie-back to nearby infrastructure is the most likely development solution.

As anticipated under the unit area operating agreements, Dana has exercised its option to acquire 50% of the interest in Christian and Bligh that Venture acquired in mid 2005.

GKA Export

Perhaps the most innovative activity in the 'GKA' area was the installation of a Single Anchor Loading (SAL) oil export system. Venture had identified the need to replace the Kittiwake Loading Buoy (KLB) to improve efficiency of the oil export system; the opportunity to acquire and install existing equipment was recognised. The offshore construction partnership with Subsea 7 enabled Venture to install the SAL system significantly faster and with considerable cost savings and has resulted in an increase in the uptime of oil export availability from the 'GKA' area. This uptime increase results in a short pay-back period for the project.

Venture is currently reviewing longer term export solutions for GKA which include a fixed export pipeline to the Forties system as well as a replacement tanker based solution.

OTHER OIL

Chestnut

The Chestnut field is located in Block 22/2a and Venture operates with an equity interest of 69.875%. In November 2005 Venture obtained Government approval to develop Chestnut. The field will be developed from two sub-sea wells tied-back to the Sevan Marine SSP-300 floating production facility. The 22/2-11x well, drilled in 2001 will be re-used along with a new water injection well to be drilled during the second half of 2006. The production facility is currently under construction and is scheduled to be installed in summer 2007 and production will start shortly after installation. Utilisation of the SSP-300 offers a solution that minimises capital outlay and provides a re-usable, flexible and low-cost option that will enable the economic development of other stranded oil fields in the North Sea.

Venture have formed a strategic alliance with Sevan Marine (Berlin: 4SM.BE - news) , the owners of the SSP-300, as an 'anchor tenant' for deployment of the first unit in the North Sea. Venture have taken a 20% interest in the ownership of the Chestnut SSP-300. We also have secured a fixed and favourable day rate for use of the vessel in a follow on project.

Pilot and 28/2

The Pilot field is located in Block 21/27a and b and Venture operates the area with a 47.5% equity holding. Venture also has 100% equity holding in block 21/27c.

Pilot is a shallow heavy-oil accumulation defined by four exploration and appraisal wells, including one extended well test, technical work by Venture has led to agreement to drill a further appraisal well to establish and better define recoverable economic reserves. A geotechnical drill ship, the Bucentaur, has been contracted to drill this well in the second half 2006. This low cost solution enables Venture to obtain a full understanding of the potential commerciality of the field for minimum capital outlay.

Following a successful Pilot well, the Bucentaur will drill an appraisal of the 28/2-1 discovery well immediately south of the Pilot field. This block was awarded 100% to Venture in September 2005 as part of the 23^rd licence round and the Company has moved quickly to assess the potential of this heavy oil discovery well drilled in 1993 by using the contracted drill ship.

Selkirk

Located in Block 22/22a Venture has a 31.5% non-operated interest in the Selkirk field. The operator (Nexen (KSE: 005720.KS - news) ) plans to drill an appraisal well in the fourth quarter 2006 to assess development options for the field. This accumulation may be a suitable candidate for development using the SSP-300 production vessel.

Acorn and Beechnut

Venture acquired majority interests and operatorship in the Acorn and Beechnut fields through several transactions in 2005. Acorn was discovered in 1983 and Beechnut in 1985 and both fields tested oil from their respective discovery wells. Several development options exist for these fields including conventional sub-sea tie-backs or a floating solution and Venture is looking at a joint development of these fields with production by 2010.

Halley and Appleton

Venture is currently reviewing the Halley and Appleton fields to assess the future potential as sub-sea tie-backs to nearby infrastructure or as candidates for a floating production solution.

Exploration Activity

Through 2005 Venture has made progress with the evaluation of several exploration opportunities in the existing portfolio close to our infrastructure. Of particular note we have identified a potential Audrey satellite, Adele, located to the north-east of the Audrey field. Detailed well planning will commence in the first half of 2006 to support potential drilling in 2007.

In addition, Block 48/15b, awarded during the 22^nd Licence round, is the subject of seismic reprocessing, with a plan in place to define drillable prospects in 2006 for inclusion in Venture's 2007 drilling programme.

CONTRACTS

There was steady growth in the demand for resources required to develop oil and gas fields in 2005. During the year Venture created a number of strategic contracts and set up a contract management process to help maximise value and agility in delivering successful projects.

Access to drilling rigs is an essential requirement and during 2005 Venture secured contracts with Noble (NYSE: NE - news) and Transocean (NYSE: RIG - news) for drilling units for both our southern North Sea and central North Sea activity. Looking ahead Venture has secured the Noble Ton van Langeveld semi-submersible drilling rig and the Noble Julie Robertson jack-up drilling rig into 2008. This has removed a high level of uncertainty and has enabled the Company to plan for longer-term growth.

Access to vessels for diving, remote control vehicles, pipe-lay, tugs and the like is now provided under a preferred contractor framework agreement with Subsea 7. Subsea 7 has elevated Venture to a preferred client basis to ensure we can deliver our projects and provide rapid response to inspection, repair and maintenance activities. This has been extremely successful through 2005 and continues to provide real value as we move into 2006.

Access to steel for line pipe and tubulars is achieved by having a framework agreement and excellent relationships with Marubeni Itochu Tubulars Europe. The steel market is extremely tight on a global scale and the Company requires access both to steel quotas and steel mills for delivery of pipe that is competitively priced and aggressive in terms of deliver dates.

These major strategic contractors along with our other strategic framework agreements are being managed using an integrated project management approach. This has proved to be successful over the last 12 months in project delivery, Venture continues to work to further enhance value through driving further improvements in the relationships, people and processes to ensure sustainability of project delivery in the longer term.