Ramco shares plummet by 55%

RAMCO Energy shares plunged by more than 55% yesterday after the company announced it is experiencing severe production difficulties at the Seven Heads gas field off Cork.

In a surprise move, the Aberdeen-based exploration and production company and operator of the Seven Heads gas field said problems have arisen with the gas production from five sub-sea wells via a pipeline tied back to the Kinsale facilities.

The Department of the Marine and Natural resources, who granted Ramco the gas production licence, said they are not commenting on the situation as they do not usually comment on the affairs of private companies.

The decline in production has forced the company to import gas from Scotland through the interconnector to meet the needs of Ramco's Irish customer, Innogy Ireland Ltd.

Yesterday, shares in Ramco Energy, which is listed on the London Stock Exchange's AIM market, fell £2.075 from an opening price of £3.72 to £1.645, a fall of 55.77% on the day.

The €20m Seven Heads field investment was expected to produce at least 10% of Ireland's natural gas needs over the next 10 years.

"A decline in flowing wellhead pressures was generally expected once production had commenced, but the pressure declines observed to date have been greater than anticipated.

"There are a number of possible explanations for the drop in pressure and plans are being implemented to acquire additional information to assist in diagnosis and identification of solutions.

"Initial indications, from water samples recovered at the platform, suggest that the field is producing a small amount of formation water which is building up in the well bores making it more difficult to produce the gas," the company said.

Ramco said the impact of recent cold weather on the gas production system pressures has exacerbated the declining flowing pressures.

"As a result, the Seven Heads partners were unable to produce their full nominations for gas supply on January 27.

"The Seven Heads partners have available back-up arrangements, which rely on importing gas from Scotland through the interconnector to Ireland, to meet any shortfall," the company added.

The Seven Heads partners are Ramco (Operator) 86.5%, Island Petroleum Developments Limited (a subsidiary of DNO ASA) 12.5% and Sunningdale Oils (Ireland) Limited 1.0%.