does anyone know why ramco has all of a sudden taken off today ....i cant find any news out but all of a sudden up nearly 11

Maybe so but even if the outlook is as bad as writing down the entire exposure I still think that all is not lost. They have just signed a farm-out agreement on the oil reserves at seven heads that will give them a share of the oil revenues with none of the exploration cost. On the remaining gas fields, exploration rights in Montenegro and Poland they still have substantial assets to play with and likely that a rival would take these on. Consider Net Asset Value of 72mm and Current Market Cap of 14.9mm. It's still a risky buy but the price hike last week might lend some clues. Worth watching the trading on Monday.

RAMCO GRANTS FARM OUT OPTION OVER
SEVEN HEADS OIL POTENTIAL

Ramco Energy plc (Ramco), the Aberdeen-based exploration and production company
announces that its wholly owned subsidiary, Ramco Oil & Gas Limited (ROG) has
granted a farm out option over its Seven Heads Oil Licensing Option (03/5) to
Island Assets Limited (IAL).

The Seven Heads Oil Licensing Option covers part blocks 48/22, 48/23, 48/24, 48/
27, 48/28, 48/29 & 48/30, the same area as the Seven Heads Gas Lease, but
relates to oil discoveries in deeper Lower Cretaceous reservoirs, below the gas
field.

Oil was initially discovered on these blocks by Esso in 1974 and tested 40
degree API oil at a rate of 1,527 barrels of oil per day (bopd). A subsequent
appraisal well, drilled by Marathon in 1990 tested 45 degree API oil at 1,619
bopd.

Under the terms of the farm out option IAL will act as technical manager and
will fund ROG's share of the current work programme earning the option to farm
in to the acreage. To exercise the option IAL must fund 100% of ROG's share of
drilling an appraisal well to test the oil accumulation. On completion of the
well IAL will have the right to acquire a 44.4% interest in the acreage, leaving
ROG with an interest of 29.6%.

The current interests in Licensing Option 03/5 are: Ramco Oil & Gas Limited
(Operator) 74%, Lundin Ireland Ltd 25% and Sunningdale Oils (Ireland) Limited
1%.

Ramco Energy plc has a 2.96% shareholding in IAL.

Seven Heads Gas Field Update

The ongoing technical review of the Seven Heads gas field is progressing and we
anticipate making a detailed update statement to the Stock Exchange during the
course of next week. This update will quantify what will be a substantial
impairment provision against the carrying value of our investment in the Seven
Heads gas field. The Company now expects to announce its preliminary results for
2003, which will reflect that impairment provision, during the early part of
June.

Have logged onto wife's moneyam and am writing this whilst in the control room of a drilling rig, (Egyptian gas/oil field, not Irish Sea) so we should have some idea what everyone is talking about. Although the loss of gas reserves is a great concern and will devalue the company it is not considered it should bring a share that is GBP 4 + (with brokers saying a value of over 600+p) all of a sudden down to 40p. Ramco have other acreage, oil and gas, and it is not believed that all the gas has suddenly dissappeared, but a reduction in reserves. Needless to say the market always panics on bad news and there is no guarantee that when the impairment figures are released there will not be more panic and a further reduction in the stock price. If this is so I shall be buying more (already bought some at the bottom & at the 1 GBP stage) Once the sensible heads gain ground over the panic merchants maybe a realistic pricing for the share will occur.

re Times article, this states water intrusion cutting back gas pressure, so the gas is there. Off Gt. Yarmouth Shell are producing gas from old fields by pumping mud down the well, the mud when brought back to the surface contains gas (like frothy coffee), this is then seperated and the mud is pumped back down the well to start the process again. So if the gas is present although,
not as much as first estimated, it can be produced although not as cheaply as under natural pressure.

rebounded today despite the Times article - they will make an announcement to the city this week...anyone know when?

check out the ROS trades so far today - all buys - moving in ahead of this week's announcement.

do you think it will be good new, (i hope) and have you read something someplace or is it just to buy s or just that gut feeling

Can anyone eplain to me about the spread on ramco. or whay on some shares its 1p and then others its up 5p and its nothing to do with the price of the shares Thanks

On this stock I think the market is braced for truly dreadful news and has already factored this into the price..4 weeks ago there was a view that this one could be ready to go belly up...if it's merely awful news or better still bad news then that's upside. From the very little I have gleaned (and this may not be reliable) they have a pretty solid survival plan to communicate, based on tight cost control and the farming out of their Irish Sea oil exploration rights (but retaining a share of future production revenues). They have got a partner to undertake 100% of all exploration costs which will ease their cashflow, enable some future growth and progress despite the impairment reserves and write-offs associated with Seven Heads. The gas interests should still be profitable although clearly less ecenomic than initially expected due to more challenging yields and lower than anticipated reserves. It feels like bad news but perhaps not quite as bad as everyone was afraid of.

up 21% so far today

Some more explanation on the farm-out deal. This looks like a creative solution to keep them solvent and continue their exploration arm in a cost effective way - critical for longer term viability...

Ramco Oil & Gas Limited (ROG) has granted a farmout option over its Seven Heads Oil Licensing Option (03/5) to Island Assets Limited (IAL).

The Seven Heads Oil Licensing Option covers part blocks 48/22, 48/23, 48/24, 48/27, 48/28, 48/29 & 48/30, the same area as the Seven Heads Gas Lease, but relates to oil discoveries in deeper Lower Cretaceous reservoirs, below the gas field.

Oil was initially discovered on these blocks by Esso in 1974 and tested 40 degree API oil at a rate of 1,527 barrels of oil per day (bopd). A subsequent appraisal well, drilled by Marathon in 1990 tested 45 degree API oil at 1,619 bopd.

Under the terms of the farmout option IAL will act as technical manager and will fund ROG's share of the current work programme earning the option to farm in to the acreage. To exercise the option IAL must fund 100% of ROG's share of drilling an appraisal well to test the oil accumulation. On completion of the well IAL will have the right to acquire a 44.4% interest in the acreage, leaving ROG with an interest of 29.6%.

Up 25% since start of week on oil industry rumours and I believe that there could well be more to follow when they announce the recovery plan this week - new sub oil reserves in Ireland to be explored and drilling programme in Montenegro will be fully backed. Reserves not as poor as initially feared critically gas reserves in Irish Sea. They have also won over the bankers and initial solvency fears have been allayed. This is only on the oil business grapevine where I have some network from a previous life so treat it with caution.... but knowing how hard they have worked in the last 6 weeks to get the books to balance and keep the business afloat and growing, it could be worth a punt. I should echo SueHelen's comment at the week-end, analyst sentiment is firmly in the strong sell category so proceed at your own risk as it could still go pear shaped.

They will most likely announce tomorrow although it could slip until Friday. 03 results deferred to June (post the impairment provision) which I think is a good sign. This one still has a way to go to recover to the 3-4 level but if you want a gamble then expect a significant bounce on better then expected news.

expect bad news tomorrow, why bother..

RNS Number:9291Y
Ramco Energy PLC
20 May 2004


Press Information

May 20th 2004

RAMCO SEVEN HEADS UPDATE

Ramco Energy plc (Ramco), the Aberdeen based exploration and production company,
announces an update for the Seven Heads Gas Field in the Celtic Sea, and its
related financial impact on the Group. Ramco Seven Heads Limited (RSHL), a
wholly owned subsidiary of Ramco, is Operator of the gas field.

Technical Review

An initial technical review of the geological, geophysical and recent production
data has now been concluded. It is clear from the performance of the producing
wells that deliverability from the reservoir is much poorer than had been
predicted. This lower deliverability has led to the previously reported issue of
water build up in some of the wells, which has acted to further restrict
deliverability.
The results of the 2001 appraisal well and five earlier exploration wells led to
a conclusion that a common gas water contact existed across the field. However,
the field's performance since production commenced and subsequent technical work
suggest that this key conclusion, upon which the reservoir model used for
planning the development and for reserves estimates was based, is erroneous. It
is now believed that a series of different gas water contacts exist across the
field, a phenomenon known as "stacked pay".

The existence of multiple gas water contacts suggests the reservoir is more
compartmentalised and each of the five producing wells is connected to a smaller
volume of gas bearing rock than had previously been thought. If this proves to
be the case, it is likely that further wells will be required to enable maximum
reserves recovery. It is also likely that a different well design will be
required for optimal gas recovery.

Work to develop a revised reservoir model has already commenced. This will take
several months to complete and will be an important tool for reassessing the
field's recoverable reserves and designing a future work programme.

Current Production and Trading

Data acquisition is paramount in determining the field's future deliverability
and recoverable reserves. In order to enhance data acquisition, the Seven Heads
partners elected to restrict the field's production. With effect from the start
of April, daily production from the field has been set and maintained at 25
mmscf/d. This has allowed a sequence of single wells to be shut in for periodic
acquisition of reservoir performance information without requiring a full field
shut in. This production rate management decision has also enabled the removal
of any water that has built up in the weaker wells when the wells are returned
to production after being shut in.

The daily production rate of the field is affected both by the pressure at which
the onshore pipeline system is being operated and by the production and capacity
re-profiling activities of Marathon's Kinsale facility. The decision to produce
the field at below its maximum capability has enabled the Seven Heads partners
to manage the field in a more efficient manner by reducing the exposure to
fluctuations from outside sources. This both facilitates the cost effective
management of gas transportation capacity requirements and ensures that revenue
per mmscf/d is maximised.

Ramco's 86.5% share of production at the 25 mmscf/d level is generating
sufficient revenue to fully cover operating costs, loan interest and the cost of
the back up transportation needed to ensure that its full nomination under the
Gas Sales Agreement (GSA) is delivered to RWE. Following discussions to clarify
the application of transportation system rules it has become clear that the
previous estimates of the cost of this facility were overstated. It is now
estimated that the total cost to Ramco for the capacity required to support
field production at the current level of 25 mmscf/d is #4m. Over the first three
months of the year Ramco has recorded a small profit on its substitute gas
transactions. As confirmed in previous announcements, gas sales nominations
under the GSA can be reset from October 1st 2004.

Banking

The lower than anticipated production from the field, coupled with the
unforeseen costs of the technical studies and the back up transportation system
mean that RSHL is generating much less cash from the field than had been
expected. Discussions have commenced with our bankers over the possible
rescheduling of the #56.6m non-recourse project loans and the #12m loan secured
over Ramco's oil services business. To the extent that the final technical
review recommends further work, such as the acquisition of 3D seismic, the
reworking of existing wells, the drilling of new wells or the provision of
compression, it is likely that significant additional funds will be required.
RSHL has commenced preliminary discussions with its bankers and a number of
third parties as to how this additional investment might be structured.

Impairment Provision and Impact on Net Assets of the Group

As indicated earlier it will take several months more to complete the technical
work required to support a revised reserves report on the field. As a result the
Directors believe that the right course of action is to base an impairment
review of the carrying value of the Group's interest in the Seven Heads Gas
Field on the proved reserves that can be directly attributed to the five
producing wells. This prudent approach gives rise to an impairment provision of
#93m. In addition a provision for tax of #23m, in respect of a held-over gain,
is now no longer expected to crystallise and has been released. The impairment
adjustment together with the release of tax will reduce the net assets of the
Group by #70m and will be reflected in the 2003 results which are now expected
to be announced in the first half of June 2004.

The Seven Heads partners are RSHL (Operator) 82.5%, Northern Exploration Limited
(a wholly owned subsidiary of Ramco) 4%, Lundin Ireland Limited 12.5% and
Sunningdale Oils (Ireland) Limited 1.0%.

ENQUIRIES:

Ramco Energy - Aberdeen
Steven Bertram Group Financial Director 01224 352 200

Fleishman-Hillard Saunders - Dublin
Michael Parker 00353 1 618 8450

College Hill - London
James Henderson 020 7457 2020



This information is provided by RNS
The company news service from the London Stock Exchange

END

Thats good news folks !

Certainly better than was predicted by many though less specific on plans for the other reserves which I would have anticipated. Still a lot of unknowns.

but I agree keepitup there is an important section in here that bears reitrating given the viability fears:-

Ramco's 86.5% share of production at the 25 mmscf/d level is generating
sufficient revenue to fully cover operating costs, loan interest and the cost of
the back up transportation needed to ensure that its full nomination under the
Gas Sales Agreement (GSA) is delivered to RWE. Following discussions to clarify
the application of transportation system rules it has become clear that the
previous estimates of the cost of this facility were overstated. It is now
estimated that the total cost to Ramco for the capacity required to support
field production at the current level of 25 mmscf/d is 4m. Over the first three
months of the year Ramco has recorded a small profit on its substitute gas
transactions.

i.e. not only solvent but profitable - previous cost estimates overstated...

gone down far too much!!! mms tryin to buy our shares.... the crafty gits..

Well oversold and panicky negative sentiment -expect a bounce back today and this week.