Ramco estimate up due to expected gas price rise

Shareholders in Ramco Energy, the Scottish energy company that operates the Seven Heads gas field off the Cork coast, could soon double their money, according to a London stockbroker.

The company, which is quoted on London’s Alternative Investment Market, closed on Friday just over the stg£3.30 mark, but broker Seymour Pierce has revised its price estimate from £5.59 to £7.64, based on expected gas price rises and supply from the Seven Heads field.

Seymour Pierce also said it increased the company’s earnings forecast for next year by 48% to 78 pence per share and that the share was trading at a 60% discount to net asset value.

Production commenced at Seven Heads on Saturday, just nine months after getting approval to develop the site.

Ramco benefited from the existing infrastructure in the area by building a sub-sea pipeline that links with the nearby Marathon-operated Kinsale field. “Bringing the field into production in such a short time frame has been a significant achievement,” said Daniel Stover, Ramco’s chief operating officer.

The company also announced over the weekend that it has added further to its Celtic Sea operations in the Celtic Sea by being awarded a licensing option for the East Kinsale area.

The new site is located to the east of Marathon’s field and south-east of another Ramco site off Midleton, which the company obtained a licence for earlier this year.

Ramco has an 86.5% interest in the Seven Heads site. Its partners in the development are Island Petroleum Developments, a subsidiary of Norwegian company DNO, which owns 12.5%, and Sunningdale Oils (Ireland), which holds the remaining 1%.

The Seven Heads site will supply up to 15% of the country’s demand for gas next year and could create up to 300 jobs.

Ramco will benefit from selling its gas at a rate higher than the prevailing market rate in Britain.

The company also conducts exploration activity in Poland, Bulgaria and Montenegro in the former Yugoslavia.