Ramco re-appraisal sees net assets reduced by €104m

Ramco has said that deliverability from its Seven Heads Gas Field in the Celtic Sea is much poorer than had been predicted.

As a result of an impairment adjustment that the directors will undertake, the net assets of the group will be reduced by £70m (€104m), which will be reflected in the 2003 results, due in the first half of June 2004.

The Aberdeen-based company said an appraisal conducted in 2001 has proven to be 'erroneous'.

This in turn means that production costs at the wells will increase as further wells will be required to enable maximum reserves recovery.

This has been estimated at approximately £4m (€5.95m).

It is now believed that a series of different gas water contacts exist across the field, a phenomenon known as 'stacked pay'.

Work to develop a revised reservoir model has already begun, but could take several months to complete, Ramco said in a statement issued today.

Discussions on rescheduling of the £56.6m (€47.51m) non-recourse project loans and the £12m (€17.85) loan secured over Ramco’s oil services business had already begun with its bankers, the company said.