Ramco falls 55% on production ills

Aberdeen-based Ramco lost more than half of its value on London's Alternative Investment Market (AIM) yesterday after reporting production difficulties at its Seven Heads field off the coast of Cork.

The company, which has an 86.5 per cent holding in Seven Heads, said it had been unable to meet production commitments for Tuesday because of a combination of wellhead problems and weather-related pressures on gas production in the area. Shares in the exploration firm closed at £1.65 sterling (€2.40), down 55 per cent on the day.

Ramco began production at the Seven Heads field in mid-December and was committed to selling on 60 million cubic feet of gas every day to German group, Innogy, under a seven-year agreement.

Until Tuesday, the field was producing more gas than it needed to under the Innogy deal, but problems emerged when flowing wellhead pressures declined further than might have been expected under normal circumstances.

In a statement, Ramco said there were a number of possible explanations for the fall in pressure, with initial indications suggesting a build-up of water in the bores of the well. This would, the company acknowledged, make it harder to produce gas.

Ramco also pointed to the proximity of Seven Heads to Marathon's Kinsale field, where production has been stepped up during the recent cold snap.

Gas from Seven Heads, which is located 47 kilometres from the nearest land at Kinsale Head, is brought ashore via a pipeline tied back to the Marathon facility before entering the national network. This system means that any increase in activity at the Marathon field can create problems with flowing pressure for Seven Heads.

Ramco said yesterday that it would meet any shortfall in its agreed production levels by importing gas from Scotland through the interconnector.