Any experts around on Ramco?

Thanks Scotinvester for your comments much appreciated. I see people are now buying at 120p is there any news around?

Still on the way up now 140p

If Ramco are able to satisfy the gas volume through a sell on of another supply then it would appear to be less disastrous than broadcast. That is what they have stated.

Clearly their margins are going to be hit whilst they buy in supplies from elsewhere but they might still have small margin from doing this? Anyone know the commercials and how it all works?

They have independent reports on the amount of gas reserves with Seven Heads, that hasn't changed, so it's not like it's a "Shell" over again. It's just a gas extraction problem, a teething matter that you ought to expect for a newly established well. Couple of months from now it will all have been forgotten about :-)

Looks to me like this share has been completely oversold and heavily shorted at a bad time for the markets (Dow was shot to pieces at the same time as the press release). Once there is a bit of a reality check that its not the end of the world for Ramco there should be a decent rise in share price.

I'd say Ramco is worth a punt if you don't mind volatility.

Now 150p buyers are coming back.

Ramco might sell part of its 86 percent stake in Irish gas fields, Seven Heads, it was learned Friday.

As company shares fell, chief executive Steve Remp, said the company could reduce its liability by selling to an independent oil and gas company, the Independent reported.

Seven Heads gas production is said to have dropped to 54 million cubic feet per day from 61 million cubic feet per day in December.

A production stop would threaten bankruptcy, the newspaper reported.


http://www.oilport.net/news/article.asp?Id=594

Ramco rejects analysts bankruptcy calculation

See full story in the link below
IAN McCONNELL, Business Editor http://www.theherald.co.uk/business/9010.html

The share price fall is an absolute joke on the news received, expect this to recover some ground this coming week.

Doshmaker,

I agree, will probably spreadbet it Monday, June expiry will do I think!

Andy - I bought on Friday, feel very sorry for holders from 4 levels, don't know how the MM's can live with themselves with reactions like this, ok it is a little risky at the moment however the potential upside is huge and the downside is very minimal. In my opinion all possible bad news is already more than priced in. If you look at the 5 year chart this has been very comfortable between 3 and 5. Good luck on your spreadbet.

Doshmaker,

Thanks, and I was considering recommending Ramco to my shareclub this month too!

I do agree that the reaction was overdone, and do therefore expect some bounce in the near future, although I do recognise that soem level of risk still remains.

good luck to you too!

Any views on where this will open first thing Monday.

Interesting article below taken from THE TIMES ONLINE 1/2/04

Ramco asks for broker's apology


RAMCO Energy, the Celtic Sea gas producer, has blamed a significant proportion of the 56% nose dive in its share price last week on an erroneous report from a London broker, writes Des Crowley.
Steve Remp, Ramcos chief executive, acknowledged most of the fall was attributable to significant production problems in its Seven Heads field, 35 miles off the Cork coast, but insisted suggestions emanating from Seymour Pierce, the brokerage, of possible receivership had compounded the companys woes.



They screwed up and they must put it right, he said. The small equity note indicated that our company might be heading for receivership and even though the report never got into the market in published form as far as we know, it did get about.

Remp said he had been in contact with the brokerage and had been told reliably that it was going to be rectified. Seymour Pierce indicated broad agreement with Remps understanding of the situation.

More than 60m (88m) was wiped from the market value of the company last week after Ramco issued the statement. The shares fell 56% to close at 165p, albeit in low volumes. At the end of the week they had fallen further to 140p.

At the moment this is just one days production we are talking about so its very early days, said Remp, adding that his focus was now trying to resolve the problem rather than worrying about the share price.

This may help a few waverers
http://www.hycal.com/PDFPapers/Phase%20Behavior/02-06%20CIPC%202002-030.pdf
Have a look at figure 13 for the effect of dry vs wet gas vs flow rate. About the 20% drop we've had reported. I believe (and I'm no expert) that the problem can probably be fixed so I bought in a few days ago for 123

Al.

Hi
Any expert around to give a view on todays statement would be appreciated.

Ramco Energy PLC
06 February 2004



February 6th 2004

RAMCO SEVEN HEADS PRODUCTION UPDATE

Ramco Energy plc, the Aberdeen based exploration and production company and
Operator of the Seven Heads gas field in the Celtic Sea, announces a further
production update for the field.

The Seven Heads gas field is adjacent to Ireland's largest producing gas field,
the Marathon operated Kinsale field, in the Celtic Sea. Seven Heads gas is being
produced from five sub-sea wells via a pipeline system tied back to the Kinsale
facilities.

On January 28th we reported that pressure declines from the field since it
commenced production in December 2003, had been greater than expected. Since
then a detailed technical review of the Seven Heads reservoir has commenced in
order to identify the cause of the pressure drop and to consider any potential
remedial action. Ramco has employed the services of respected independent
specialists in petroleum and production engineering to advise on, and critically
review, all aspects of the investigative work. It is already clear that data
monitoring over a period of a number of weeks at least, will be required before
we are able to say with certainty what the longer term performance of the field
will be.

Over the period from Wednesday January 28th to Thursday February 5th excluding
February 3rd, gas production from the Seven Heads field averaged 54.5 mmscf/d,
(Ramco 86.5% - 47.1 mmscf/d). This production level is slightly short of that
required to meet Ramco's obligations under its Gas Sales Agreement (GSA). Ramco
has covered its average shortfall over this period, of 2.7 mmscf/d, by
purchasing gas in the UK and transporting it to Ireland.

Production data for February 3rd has been excluded from the above figures as
normal production from the field was deliberately interrupted on that day to
allow the acquisition of additional individual well pressure and production data
to assist the ongoing technical work.

The current GSA volumes apply until the end of September 2004; thereafter Ramco
can adjust nominations for the next gas year, to match the field's expected
performance. Ramco has back up transportation arrangements in place for the
period ending September 30th 2004, which cost approximately 1.15 million or
4,700 per day for volumes of up to 6.4 mmscf/d. If Ramco's shortfall volume
were to increase above 6.4 mmscf/d additional backup transportation would
require to be arranged.

Ramco is also exposed to any difference in the gas price, receiving its GSA
price from its buyer and paying the UK price for the shortfall gas. From past
experience we expect to be able to manage our gas purchases such that we incur
little or no net cost. Over the six day period to February 2nd, UK prices for
gas were lower than Ramco's GSA price and a small profit was realised to
partially offset the transportation costs.

The Company anticipates making a further statement on this issue when the
results of the data monitoring are available or if there is a material change in
the situation.

The Seven Heads partners are Ramco (Operator) 86.5%, Island Petroleum
Developments 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

So, quick summary is:

1 The Seven heads gas field estimated reserves remains the same
2 They have sold a guaranteed supply of gas under a GSA
3 Gas extraction targets are about 3mmscf/d down on what they predicted (5% or so)
4 Shortfall is being met by importing gas from the UK which is currently cheaper than the agreed sell on price under the GSA
5 They will incur transportation costs of 4,700 per day transporting the mainland gas making up the current shortfall.
6 The GSA can be re-worked in Sept. 04 to align with lower extraction volume
7 There is legal action over something very different that involves Ramco.

The risks over the next 8 months then are:

1 UK gas prices rising above their GSA agreed price (they can hedge this so risk is limited. Currently it is cheaper to buy UK gas so they can probably cover most of the hedging costs)
2 If the gas extraction rate falls further (this is the most serious risk and the one to focus on)
3 Transportation costs spiral if point 2 means extra gas from UK to make up the increased shortfall (it's incremental costs and plenty of capacity by sound of things)
4 They spend lots of cash trying to get to the root of the problem and never do
5 They spend lots of cash trying to solve the problem and never do
6 They end up sinking another bore and opening up a 6th sub-sea well which costs a lot of cash
7 That a 6th weel fails to deliver the shortfall

Legal action will not resolve itself in that timeframe so impact is considered negligible at this stage.

Doomsday stuff out the way they may actually solve their production problem which would be very interesting for the share price.

According to share mag the Seven Heads gas field is worth 3 quid a share. If the gas extraction volume remains relatively stable between now and September then it would seem that investors who bought in at the 3-4 quid mark have been punished. If gas extraction deteriorates significantly (let's say it becomes 25% shortfall of the GSA) then the price has a lot further to drop and it would be bail out time.

On balance, it seems an attractive share to have in a recovery portfolio but be prepared for the downside.

Ramco up 14% today

Happy to watch your prediction has come to fruition. Lets all hope for good news in May when price might recover. Good call HTW