Prior to the upgrade, it was estimated that the €20 million investment in the field would supply 10% of Ireland’s natural gas needs over the next 10 years.
Yesterday, the Aberdeen-based exploration and production company issued a preliminary upgrade to the proven and probable reserves in the Seven Heads Field.
The company also reported confirmation of gas sales nominations for the first year of production and the completion of the drilling programme on the field.
Shares in Ramco Energy failed to move on the day, remaining at £3.90, but this is well up on the £3.12 they traded at in June, when Davy Stockbrokers analyst Job Langbroek said he believed they were seriously undervalued.
At the time, Mr Langebroek estimated a net asset value of £4.74 per share for Ramco. This estimate is expected to be upgraded significantly in the coming weeks.
Mr Langebroek said that increasing the 304 BCF reserve to 400 BCF would add another 75p to the valuation. The latest figures from Ramco suggest a BCF of between 375 and 425, and this is expected to be certified by Ramco’s independent reserves auditors, Exploration Consultants Limited (ECL), in mid-September.
Commenting on the release, Ramco’s executive chairman Steve Remp said: “The Seven Heads development is a major project both for Ramco and Ireland. We are delighted with the increase in recoverable reserves of up to 40%, and very pleased with the excellent progress made since receiving formal approval for the development just five months ago.”
One of the six new wells drilled this summer yielded no gas, but Ramco said this was on the western extremity of the field and was drilled to test potential at least 4km from the other wells.
Ramco also disclosed yesterday that all the Seven Heads field partners have independently sold their gas to Innogy Ireland Ltd.
“Having concluded separate negotiations with Innogy, the field partners have now jointly nominated gas production for the first contract year (October 1, 2003 to September 30, 2004) at a gross field rate of 60 million standard cubic feet per day,” Ramco said.
An independent report commissioned by Ramco indicates that up to 209 jobs could be created at the development by year-end. The report, entitled “Economic Impact of the Seven Heads Gas Field on Ireland”, was written by economist Paul Sweeney, who estimates the economic impact of the field at €408m over 15 years.
The Seven Heads partners are Ramco Energy plc, the operator (86.5%), Island Petroleum Developments Ltd (12.5%), and Sunningdale Oils (Ireland) Ltd (1%).