The Scottish energy company Ramco expects to suffer a £93 million sterling (€138 million) write-down on the value of its Seven Heads gas field off the Cork coast.

The move prompted a collapse in the company's share price in London yesterday, where it fell by over 38 per cent, from 58p to 35.5p.

The company said a review of the field indicated that "deliverability from the reservoir is much poorer than had been expected". The wells have been suffering from a build-up of water, making gas production difficult, said a statement.

It added that earlier conclusions about the well were now "erroneous".

Ramco's shares have plunged since the problems emerged in January, just six weeks into production at Seven Heads. The group said it had now begun work on a revised reservoir model.

"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."

The cost of the review, combined with the fact that gas production is lower than expected, has forced Ramco into talks with its bankers on rescheduling its £68 million debts.

The company said "significant additional funds will be required".

The statement said the company had started "preliminary discussions with its bankers and a number of third parties" about how this additional investment might be structured.

Ramco said the new technical work would take several more months to complete. The company will publish results in June.

Last week, it was reported that Ramco had transferred the oil interests in the Seven Heads field to a group of Irish investors. This group has formed a company, Island Assets Ltd, and they hope high oil prices will improve the chances of any discovery being economical.