Scottish exploration company Ramco yesterday indicated that the shortfall in gas production at its Seven Heads field could cost it almost €1.7 million if volumes do not recover over the next eight months.
Last week, the company lost 55 per cent of its value on London's Alternative Investment Market (AIM), when investors deserted it following revelations that the volume of production from its wells had fallen below 60 million cubic feet a-day. That is the amount it is contracted to supply to German group Innogy.
Yesterday, the company revealed that the shortfall in gas production averaged 5.5 million cubic feet.
According to a Ramco statement, an assessment of production from the Celtic Sea reservoir over a seven-day period showed that the field was producing an average of 54.5 million cubic feet.
The obligation to supply 60 million cubic feet lasts until the end of September, at which point Ramco can adjust the amount. It has been making up the shortfall by purchasing gas in the UK and supplying it to Innogy.
"Ramco has back-up transportation arrangements in place for the period ending September 30th, 2004, which cost approximately £1.15 million [sterling (€1.67 million)\] or £4,700 per day for volumes up to 6.4 million cubic feet," it said.
The company warned that it was exposed to any difference between the price at which it is buying gas and what it receives for selling it on. However, it said it realised a small profit on buying and reselling the gas over a six-day period to February 2nd.
Ramco expects that it will take several weeks before it can identify the problems that have hit production at the field. Its statement said it had begun a detailed investigation last week to establish the cause of the problem.
The company has employed specialists to advise on and review the investigation. "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 any certainty what the longer-term performance of the field will be."
Ramco's share price fell £4 to £117.50 in London yesterday.
