Ramco up 27% with gas report

SHARES in the operator of the Seven Heads gas field Ramco shot up 27% yesterday following the release of the long-awaited report on the field’s viability.

The company said it will need to drill additional holes as the gas is spread out over a larger than expected area, and to combat water in the existing wells.

Production from the field, near to the Cork coast, has plummeted as water was coming through the existing wells reducing the gas extraction rate.

The news saw Ramco’s shares plunge from a high of 400p to just 20p on the London Stock Exchange in just a few months.

They gained 27% to 30p yesterday. Aberdeen-based Ramco ordered a study of the field and was forced to import gas from Scotland to meet its agreements with customers.

It said: “The key finding of the study is the Seven Heads reservoir is significantly more compartmentalised than had been anticipated and the production wells are connected to a smaller volume of gas bearing rock than had been expected.

“Consequently each well is draining a significantly smaller reservoir area than originally interpreted.”

This means it is extracting a less gas and would need to tap other parts of the field to bring production up.

The review also found the water build-up was due to condensation of water vapour naturally contained in the gas. Ramco said the best way to deal with the problems of the field was to tap new wells, but this cannot begin before May.