Venture sees shares soar after £153m CH4 takeover

VENTURE Production, the Aberdeen oil and gas firm, secured the biggest acquisition in its history yesterday as it snapped up North Sea exploration firm CH4 for £153 million - sending its shares up 7.6 per cent.

The company emerged victorious after a three-month auction process, during which it trumped one serious private equity offer as well as bids from a string of sector rivals. The agreed cash-and-shares price represents a lucrative exit for CH4's leading shareholder 3i, as well as co-founders Philip Kirk and Mark Routh, who will take home the lion's share of 46m.

CH4 was backed as a start-up company by 3i in 2002, and will be considered the latest success story for the group's operation in Aberdeen.

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The company is expected to follow the deal up with another sale today, although this one will come from the group's more dominant services sector. The group earned five times its original investment from the November flotation of Aberdeen oil services group Petrofac, which listed at a value of 550m.

3i investment director Colin Burnett - who was celebrating the CH4 deal on a boat at Cowes - said of the sale: "3i backed a strong management team that shared our vision. We are proud of what the CH4 team has achieved in a short period."

CH4 holds valuable stakes in two gas fields in the southern part of the North Sea, covering both the UK and Dutch sectors. It owns 37.5 per cent of the already producing Markham field, and more significantly 95 per cent of Chiswick - set to come on stream in the first quarter of 2007.

Venture chief executive Mike Wagstaff said that the deal would boost the company's reserves and production by 20 per cent, adding around 10-15,000 barrels of oil equivalent per day to the group's current outlay of 43,500.

"This is an important strategic deal," he said. "It is our biggest acquisition by quite some margin, and is different as it is a company rather than an asset. Our focus is now on executing the deal and integrating the people - there's a lot of hard work ahead."

He added that Kirk and Routh would be staying with the company for about six months - time to see the Chiswick field through to production. The rest of the staff are understood to be staying long term, and Wagstaff was in Hoofddorp, near Amsterdam, last night to address the group's 35 Dutch employees.

He reaffirmed Venture's commitment to the North Sea, despite continued pressure from high rig hire costs and other pricing pressures. "We are still focused on the North Sea," he said. "This extends our reach south into the Dutch sector."

On the group's shares - which closed up 7.6 per cent, or 59.5p, at 837p - he added: "Its nice to get the thumbs-up from the market."