ROS .. the gamblers anonymous thread !!!

been on the golf course most of the day ...not sure if this has been mentioned....from oilbarrel.com

22.12.2005
Ramco Energy Sells Oil Services Business And Strives To Draw A Line Under Seven Heads Debacle
Ramco Energy has sold its successful oil services division, which provides tubulars and pipeline services and turns over £14 million a year, in a move that could well draw a line under its troubled investment in the Seven Heads gas project offshore Ireland.

The oil services business has been sold in a competitive tender for £14.1 million to a management buy-out team led by current MD Stewart Cummings. The proceeds will be used to pay down the £12 million recourse loan that part-funded the Seven Heads development and was secured against the oil services business.

The sale was initiated earlier this year as part of a waiver agreement with Ramco's lenders. The company is also looking for a buyer for its 86.5 per cent stake in the Seven Heads gas field. A sale of the entire company was aborted earlier this year.

These disposals strip the company of its most valuable asset (namely the oil services business, which controls 80 per cent of the North Sea tubulars market) but also removes the ongoing liabilities associated with the troubled Seven Heads project.

The Aberdeen-based company ran into financial difficulties when the gas field failed to perform as expected when it came onstream in late 2003. It soon became clear that all was not well when initial production volumes flagged and water built up in the well bores. Production peaked at 76 million cubic feet of gas per day at the end of 2003, slipped to 54 million cf/d in January and then continued to decline. This year it has been producing around 4 million cf/d.

It was not only the production shortfalls that proved costly - Ramco also had to pay for extra gas to make good its obligations to gas buyer RWE Ireland (it has since renegotiated its contract terms) and outlay for costly well intervention work to try to understand why the field was performing so poorly.

A comprehensive technical review did not make for reassuring reading - there had been a fundamental misunderstanding of the field's geological make-up - and confirmed the company was right to write off its interest in the field through a near £100 million impairment provision that overshadowed its 2003 accounts.

Those dark times are now receding. The company is taking steps to satisfy its creditors and is looking to focus on the other opportunities in its portfolio. These include exploration properties elsewhere in Ireland (including a frontier licence offshore Donegal, where a well is planned next year), a large exploration licence in Bulgaria and three blocks in the Adriatic Sea offshore Montenegro. Ramco's risk and cost expsoure to these projects is limited but the possible upside, particularly in the Donegal Basin and Montenegro, could prove very interesting.
< back
ps...nice to see oilbarrel and Ramco back on talking terms....things are moving forward already...