Investors punished Venture Production following news of the latest in a series of production setbacks which chief executive Mike Wagstaff said left the management team facing a battle to restore its credibility.

Investors punished Venture Production following news of the latest in a series of production setbacks which chief executive Mike Wagstaff said left the management team facing a battle to restore its credibility.

Shares in the oil and gas independent fell 64p to 601p after Venture said the start of production from the Chestnut field would be delayed from the second quarter until the third.

Venture said it still hoped that annual production in 2008 would be in line with previous guidance. However, coming after Venture confirmed that output fell 7.7% in 2007 following problems involving Chestnut and other fields, the latest bad news on the production front may have raised fresh questions about the firm's ability to deliver complex projects.

Venture, which specialises in developing North Sea assets in which the majors do not want to invest, downgraded forecasts for average production for 2007 three times in the course of the year. The shortfall was offset by strong prices for oil and gas which Wagstaff noted helped Venture to deliver the strongest underlying financial performance in its financial history in the second half.

None the less, he appeared to be resigned to the fact that some investors could focus on the production issue. As the most public face of Venture, he could be in for a tough time as a result.

"When you miss targets of any sort it clearly has issues related to management credibility," said Wagstaff, whose predecessor, Bruce Dingwall, departed in 2004 following repeated production set-backs in 2003.

"Clearly it reflects on me more than anyone else."

In a note Richard Rose, analyst at joint house broker Oriel Securities, said the share price indicated that the market was taking a "show-me" attitude to production forecasts that could weigh on sentiment until the company derisks them.

However, Wagstaff insisted that Venture was well placed after a year in which it had made solid underlying progress across the business.

Venture said it had reached important milestones on a number of key projects which had "substantially de-risked" a number of core assets.

Directors have proposed a 20% increase in the annual dividend to 12p, in a sign of confidence in firm's prospects.

After raising £600m long- term debt ahead of the credit crunch, and £151m funding from private equity investors, Wagstaff said Venture was well-placed to participate in the wave of consolidation expected to affect independents operating in the North Sea.

In the year to December 31, Venture made underlying operating profits of £179.5m, down 3.4% on 2006. Turnover slipped from £360.3m to £358.3m.