The troubled Scottish exploration company Ramco has released its oil interests in the Seven Heads field off the Cork coast to a group of investors.
The oil assets have been passed to an Irish-based group called Island Assets Limited. Among the shareholders are long-time exploration investor and former Bula director Mr Vivian Caston, stockbroker Mr Brian Davy, and Mr Paul Griffiths, who was associated with the Helvick field near Waterford. Several British investment companies are also listed as shareholders.
Ramco's gas interests at Seven Heads are not part of the transfer. These assets are expected to be written down this week after production problems at the field.
In March, Aberdeen-based Ramco shed 60 per cent of its value on London's Alternative Investment Market after raising doubts over the level of gas reserves within the Seven Heads field.
Island Assets said yesterday the rising oil price was a significant factor in its decision to take over the oil interests. While the company does not expect oil to remain at current highs above $40 a barrel, the company said long-term trends indicated the price would settle at about $28-$30.
One Island Assets director, Mr Griffiths, said he expected many of the exploration fields in Irish waters to become attractive because of oil price trends.
He said the oil at Seven Heads was likely to be "waxy oil", but applying heat to it would make it flow faster and make the economics of drilling it more encouraging. He said he could not say much more until a well had been drilled and he noted that internationally only one in seven oil wells produced an accumulation that was economical.
Under the deal, Island Assets will fund the appraisal programme on the oil interests at Seven Heads. Once exploratory drilling is completed, Island Assets will be given a 44.4 per cent stake in the Seven Heads oil acreage, leaving Ramco with 26.9 per cent. Other exploration interests will hold the remaining shares.
Island Assets stressed that the potential oil discoveries were in lower cretaceous reservoirs, below the gas field.
Last week Ramco said a technical review at the Seven Heads gas field was progressing. The company expects to announce its results for 2003 early next month. The production problems at Seven Heads severely dented the company's share price but it has since recovered some ground due to rising oil prices.
The company revealed at the end of March that gas production from Seven Heads had fallen to less than 7,000 barrels of oil equivalent per day. An operation to remove water from the field's wells had only led to a temporary improvement in wellhead pressures and production rates.
