--  2Q '09 vs. 2Q '08 Pro Forma Production up 12%      --  2Q '09 vs. 2Q '08 LOE/BOE Down 19% (9% Pro Forma)      --  Annual Guidance Reaffirmed      

Venoco, Inc. today reported financial and operational results for the second quarter of 2009. Highlights include the following:

 --  Production of 1.86 million barrels of oil equivalent (MMBOE) for the     second quarter or 20,434 BOE per day (BOE/d). Pro forma for the sale of the     Hastings Complex, production was 20,626 BOE/d in the first half of 2009, up     12% from 18,337 BOE/d in the first half of 2008.      --  Lease operating expenses (LOE) of $12.46 per BOE for the second     quarter -- down 19% from $15.40 per BOE in the second quarter 2008. First     half 2009 LOE was $12.12 per BOE, down 19% from $15.04 per BOE in the first     half of 2008.      

The company reported a net loss of $59 million for the quarter on oil and gas revenues of $62 million and realized commodity derivative gains of $16 million. Adjusted EBITDA was $44 million in the second quarter of 2009, down 17% from $53 million in the first quarter of 2009 and down 47% from $83 million in the second quarter of 2008. Adjusted EBITDA includes $8 million in the first half of 2009 of realized gains resulting from the restructuring of derivative instruments.

Adjusted Earnings were $0.5 million, down from $7 million for the first quarter of 2009 and down from $22 million in the second quarter of 2008. Adjusted Earnings adjusts the net loss of $59 million in the second quarter of 2009, the net income of $25 million in first quarter of 2009 and the net loss of $173 million in the second quarter of 2008 for, among other things, the effects of unrealized commodity and interest derivatives gains / losses in the quarters. Please see the end of this release for definitions of Adjusted Earnings and Adjusted EBITDA and a reconciliation of those measures to net income (loss).

"Our production continues to be steady and expenses continue to remain well below 2008 levels," said Tim Marquez, Venoco's Chairman and CEO. "Stable oil prices, along with our robust hedging program, have given us solid cash flows to support our $150 million capex program that is forecast to increase our production 6% this year."

"We are reaffirming 2009 annual production guidance of 20,250 BOE per day as well as the expense metrics, including lower LOE, we announced on June 10th," Mr. Marquez explained.

Production

Production in the second quarter of 2009, as previously forecast, was down from first quarter of 2009. Excluding production from the Hastings Complex, which was sold to Denbury Resources in February, and the effect of lost production due to a PG&E pipeline repair in the Sacramento Basin, production would have been flat quarter to quarter. Those pipeline constraints in the Sacramento Basin, as well as the acquisition of properties from Aspen Exploration and related sellers, were factored into the company's revised annual guidance. Excluding production from Hastings, production in the second quarter of 2009 increased 12% over the second quarter of 2008.

The following table details the company's daily production by region (BOE/d):

                                    Quarter Ended                               -----------------------                                                       Full-year                                                         2009 Region                        6/30/08 3/31/09 6/30/09 Guidance                               ------- ------- ------- --------- Sacramento Basin                9,159  10,208   9,988 Southern California             7,597   8,865   8,676 Texas (and other)               4,277   2,655   1,770                               ------- ------- -------    Total                       21,033  21,728  20,434    20,250                               ======= ======= ======= =========    Total excluding Hastings    18,289  20,818  20,434                               ======= ======= ======= 

Capital Investment

Total capital costs incurred for the company's E&P operations were $74 million for the second quarter, including $33 million for drilling and rework activities, $7 million for facilities, $19 million for acquisitions and $15 million for seismic, leasehold, capitalized G&A costs and asset retirement obligations.

The company spent $27 million or 53% of its development and other capital expenditures in the Sacramento Basin. Drilling in the Basin consisted of a three-rig program during the quarter. The company spud 21 wells and completed 56 workovers / recompletions in the Basin in the second quarter.

"Our drilling and workover programs are getting more and more efficient as we focus on optimizing our capital expenditures. Our activity in the Sac Basin this year is front-end loaded, so we will be paring back activity in the second half," Mr. Marquez said. "We've focused almost 100% on 20-acre infill wells this year and are pleased to see a success rate of 78% as well as solid economics at the current NYMEX strip."

"We continue to put an emphasis on recompletions and workovers this year as the economics are even better than drilling," Mr. Marquez said.

The company closed the acquisition of assets from Aspen Exploration and other sellers on June 30th for $21.4 million. Net production at closing from the acquired assets was approximately 500 BOE per day (3 MMCF per day) with year-end 2008 reserves on the assets of over 3 million BOE (18 BCF). The acquired assets include approximately 28,600 gross acres.

"This acquisition fills in our substantial acreage position in the greater Grimes area. Our operating teams are already preparing workovers and recompletions projects and our geologists are identifying infill drilling locations," said Mr. Marquez.

The company spent $17 million or 34% of its second quarter 2009 capital expenditures in Southern California, focused on further infill development drilling in the West Montalvo field and substantial facility upgrades to improve offshore processing and operating efficiency. On Platform Gail in the Sockeye field, the company completed drilling activity that began late in the first quarter on a dual completion well. That well is now producing from an interval in the Monterey shale and injecting water into the Upper Topanga formation to enhance the sweep of the waterflood.

"We accelerated the drilling of our dual completion well into the second quarter which was about 3 months earlier than originally planned. While we are waiting on response from the new waterflood area, initial production from the Monterey shale interval is better than we anticipated," said Mr. Marquez.

In Texas, the company had minimal capital expenditures again this quarter.

Costs and Expenses

Venoco's second quarter 2009 lease operating expenses of $12.46 per BOE remained substantially lower than 2008, down 19% from $15.40 per BOE in the second quarter of 2008, and up slightly from $11.78 per BOE in the first quarter of 2009. Unit operating costs have been lower compared to 2008 due to the sale of the Hastings Complex (which was one of the company's highest operating cost fields), increased proportionate production from the Sacramento Basin (which has lower operating costs), and realized cost savings from vendors and service providers. In the second quarter of 2009, LOE was down 9% to $12.46 per BOE from the second quarter of 2008 LOE pro forma for the sale of Hastings, which was $13.66 per BOE.

                                                                   Full Year                             Quarter Ended       Six Months Ended    2009                         ----------------------- ----------------- UNAUDITED (per BOE)     6/30/08 3/31/09 6/30/09 6/30/08  6/30/09  Guidance                         ------- ------- ------- -------  -------- --------- Lease Operating  Expenses               $ 15.40 $ 11.78 $ 12.46 $  15.04 $  12.12 $   13.50 Production/Property  Taxes                     1.91    1.88    1.27     1.98     1.58      1.90 DD&A Expense              15.61   11.60   11.08    15.97    11.35     12.00 G&A Expense (1)            4.72    3.87    4.36     4.55     4.11      4.50 Interest Expense (2)       9.07    8.10    8.41     8.72     8.26      9.20                         ------- ------- ------- -------- -------- ---------    Total                $ 46.71 $ 37.23 $ 37.58 $  46.26 $  37.42 $   41.10                         ======= ======= ======= ======== ======== =========       (1) Net of amounts capitalized and excluding stock-based compensation           and MLP write off costs. See the end of this release for a GAAP           reconciliation of G&A per BOE.       (2) Includes interest expense, realized (gain) loss on interest rate           swap and amortization of deferred loan costs. 

"What is important in the current economic environment is that we had another solid quarter. Though we have scaled back cap-ex from 2008 dramatically, production levels are strong and we have been able to greatly reduce expenses," Mr. Marquez explained.

Derivative Transactions

In June 2009, the company entered into a series of transactions to extend the term of its interest rate swap on $500.0 million of variable rate debt to September 2011 and to reduce the rate from 5.32% to 4.035%. As a result, amounts borrowed up to $500.0 million will effectively bear interest at a fixed rate of approximately 8.0% until September 2011. Only amounts borrowed in excess of $500.0 million are, therefore, subject to interest rate risk until that date.

"The net effect of the 'blend and extend' transaction on our overall debt was to lower interest by about one percentage point. As a result, we will realize annual savings of approximately $6.4 million," explained Tim Ficker, CFO.