Venoco Inc (VQ)

[Kristallweizen]

NEWS - Venoco, Inc. Closes Hastings Sale

- $201 Million ~ approximately $80K/daily barrel

- Resets Balance Sheet with Proceeds

DENVER, Feb. 2 /PRNewswire-FirstCall/ -- Venoco, Inc. (NYSE: VQ) announced today that it has completed the sale of its Hastings Complex to Denbury Resources (NYSE: DNR) for aggregate proceeds of $201 million.

"We are quite pleased to complete this sale and the opportunity it affords us to reset our balance sheet," said Tim Marquez, Chairman and CEO. "Completion of this transaction will allow us to reduce our net debt by $200 million to approximately $600 million."

The aggregate purchase price of $201 million includes approximately $4.9 million for the sale of certain surface land, oilfield equipment and other assets, scheduled to close later. Venoco retains a 2% override and a reversionary interest of approximately 25% following payout, as defined in the option agreement. Production from the Hastings Complex averaged approximately 2,500 barrels of oil equivalent per day (BOE/d) during 2008, net to the interest sold, with conventional proven reserves of approximately 7.7 million barrels of oil equivalent (MMBOE) using year-end 2008 SEC prices. The company's year-end 2007 reserves for the Hastings Complex were 14.4 MMBOE. Under terms of the option agreement, Denbury is obligated to take certain actions to complete a carbon dioxide (CO2) flood of the Hastings Complex. However, Denbury has indicated that it does not plan to commence the CO2 flood until 2011, after completion of its Green (CO2) pipeline currently under construction. Venoco does not currently have any reserves booked to the CO2 flood or its reversionary interest.

The company's net debt after the sale consists of a $495 million Second Lien Term Loan facility (due September 2011), $150 million of 8 3/4% bonds (due December 2011), $15 million in deferred derivative premiums and cash of approximately $50 million. In connection with the sale of the Hastings Complex, Venoco requested a re-determination of the borrowing base under its Revolving Credit facility. As a result, the borrowing base under the company's Revolving Credit facility was reduced to $125 million and the company will have nothing drawn on the facility.

"As a result of the sale of the Hastings Complex, we are well positioned from a liquidity perspective to face the challenging credit environment. Our resulting liquidity, along with our robust 2009 hedging program, which covers 100% of our production guidance, should allow us to fund our 2009 capital expenditures without having to draw down on the revolver," explained Tim Ficker, Venoco's CFO.

The company also announced that due to low commodity prices at year-end 2008, it expects to record a non-cash "ceiling test" write down of at least $500 million. The ultimate amount of the write down will not be known until the completion of the company's year-end 2008 reserve report.

Venoco is an independent energy company primarily engaged in the acquisition, exploitation and development of oil and natural gas properties in California and Texas. Venoco operates three offshore platforms in the Santa Barbara Channel, has non-operated interests in three other platforms, operates four onshore properties in Southern California, has extensive operations in Northern California's Sacramento Basin and operates fifteen fields in Texas.

Forward-looking Statements

Statements made in this news release relating to Venoco's future liquidity and need to borrow amounts under its revolving credit, the anticipated "ceiling test" write down, and all other statements except statements of historical fact, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management's assumptions and the company's future performance are both subject to a wide range of business risks and uncertainties and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, the timing and extent of changes in oil and gas prices, the timing and results of drilling and other development activities, the availability and cost of obtaining drilling equipment and technical personnel, risks associated with the availability of acceptable transportation arrangements and the possibility of unanticipated operational problems, delays in completing production, treatment and transportation facilities, higher than expected production costs and other expenses, and pipeline curtailments by third parties. All forward-looking statements are made only as of the date hereof and the company undertakes no obligation to update any such statement. Further information on risks and uncertainties that may affect the Company's operations and financial performance, and the forward-looking statements made herein, is available in the company's filings with the Securities and Exchange Commission, which are incorporated by this reference as though fully set forth herein.

http://www.venocoinc.com

SOURCE Venoco, Inc.

CONTACT: Mike Edwards, Vice President of Venoco, Inc., [phone]
[e-mail]
/Web Site: http://www.venocoinc.com