SEA.L Regulatory News (SEA)

28 Apr 2005 15:44

Ramco Energy PLC28 April 2005 28 April 2005 Ramco Energy plc ("Ramco") (or "the Company") Further Information on Ramco's Current Position and Board Changes The Board of Ramco announced on 22 April 2005 that, following an approach to theCompany, which it announced on 21 February 2005, discussions with a prospectiveofferor had terminated. The preparation of the annual report and financial statements for 2004 wasdelayed in anticipation of the announcement of a possible offer for the entireissued share capital of the Company. The Board considers it appropriate to issuethis announcement in order to provide shareholders with updated information onthe current state of affairs of the Company in advance of the preliminaryresults for 2004 which it expects to announce in June. Seven HeadsAs announced on 14 January 2005, production from the Seven Heads gas field isbeing profiled to allow greater volumes of gas to be produced and sold duringthe winter months, when gas prices are generally at their peak. This profilingworked successfully over the winter and, as planned, production has now beenreduced to 4 mmscfd. Options for funding a further work programme on the fieldin order to access additional gas reserves and improve production rates continueto be investigated. The Board continues to be in discussion with its bankers in relation to itsrepayment obligations and covenants under the Seven Heads credit facilities, andthe banks have issued short term waivers to allow these discussions to beconcluded. Whilst the majority of the £68.6m project loans are non-recourse andsecured only against our interest in the gas field, a £12 million tranche of thefacilities is guaranteed by Ramco Oil Services Limited ("ROSL") and secured by apledge of the share capital of that company. Meanwhile, ROSL and itssubsidiaries continue to perform satisfactorily and trade profitably. In addition, a sum of £1,550,000 is currently due and payable by a Ramcosubsidiary to Schlumberger Offshore Services Limited in relation to servicesprovided on the Seven Heads gas field, with such payment obligation beingguaranteed by Ramco Energy plc. Constructive discussions are continuing withSchlumberger regarding a deferral of such payment but there is currently nowaiver in place. Irish Gas Exploration InterestsAt the end of January 2005, Ramco announced the award of a Frontier ExplorationLicence (1/05) offshore Donegal, covering 408 sq km (101,000 acres). Ramco willbe carried through the drilling and testing costs of an exploration well to testthe large, four way dip closed Triassic Inishbeg prospect. Upon completion Ramcowill retain a 19.25% interest in the licence which also contains a number ofother prospective structures. As part of the recent discussions with the prospective offeror, Ramco appointedappropriately qualified independent consultants Scott Pickford to complete avaluation of its exploration interests in the Donegal Basin. This reportconfirms Ramco's estimates that the two largest structures contain unrisked gasinitially in place (GIIP) of 1535 bcf and 791 bcf respectively. Ramco's 19.25%interest in these two structures totals 448 bcf GIIP. During 2003 additional prospective acreage in the Cretaceous Gas Fairway of theNorth Celtic Sea was added to the Ramco portfolio. Interests in three licensingoptions over Rosscarbery, Midleton and East Kinsale were obtained. Unlike SevenHeads where the Cretaceous Wealden (B Sand) is the reservoir, these blockstarget the Greensand (A Sand), the main producing interval in the Kinsale Fieldand the sole producing reservoir in the Ballycotton Field. Good qualityGreensand reservoirs have already been proven in wells drilled in theRosscarbery (48/18-1) and Midleton (49/11-1, 49/11-2) blocks and are interpretedto extend from the Kinsale Field into the East Kinsale area. The overall strategic objective is to identify gas prospects that, ifsuccessful, could be produced through a tie-back into the Seven Heads or Kinsaleinfrastructure. The proximity of the existing infrastructure means that even amodest gas discovery in the area could be commercially produced. The licensing options over Rosscarbery and Midleton have expired butapplications for extension have been filed and discussions are continuing withthe Petroleum Affairs Division with a view to agreeing forward work programmes. Other Exploration InterestsThe Company also continues to hold substantially carried interests, inexploration acreage, onshore Bulgaria and in the Seven Heads oil potential whichunderlies the gas field and an option to re-join acreage offshore Montenegro ifa successful well is drilled. US LitigationAs previously announced, following a jury verdict in October 2003, the TexasState Court issued a final judgement against Ramco Energy plc, Ramco Oil Limitedand certain other non-Ramco defendants in a case brought by Anglo-Dutch (Tenge)L.L.C. and Anglo-Dutch Petroleum International, Inc., alleging breach ofcontract arising from confidentiality and non-circumvention obligations. Ramco has been advised that it has strong substantive grounds for appeal. Thatappeal and the plaintiffs' cross-appeal, to the Fourteenth Texas Court ofAppeals were heard in Houston on 26 April 2005 and the court's decision isawaited. This process may be followed by a further appeal by either party to theTexas Supreme Court. On 16 November 2004 the plaintiffs served on Ramco Energy plc and Ramco OilLimited a summons in a separate action in the Court of Session, Edinburgh, witha view to enforcing their Texas judgement in Scotland. Ramco filed a motion inthe Texas State Court seeking leave to tender a monetary bond the acceptance ofwhich by the Texas court will suspend the enforceability of the judgement andconsequently suspend the plaintiffs' right to pursue proceedings in Scotland.The next hearing relative to this motion is scheduled for 29 April 2005. Board ChangesFollowing the ending of discussions with the prospective offeror Ramco'snon-executive directors Peter Everett (aged 73), Sir Malcolm Rifkind (aged 58)and Vikram Lall (aged 58) have resigned from the board effective 28 April 2005. Ramco is pleased to announce the appointment to the board of Dennis Paterson asa non-executive director with effect from 28 April 2005. Dennis (aged 53) has 30 years experience in the oil and gas industry. He startedhis career as a geologist with Gulf Oil and since then his positions haveincluded principal negotiator with British Gas PLC, Managing Director BritishGas (Malaysia) Ltd, Country General Manager BG plc Indonesia and Executive VicePresident Genting Oil & Gas Ltd. Currently, Dennis is an independent oil and gasconsultant, educated at the University of British Columbia and Imperial College,London; he holds no shares in Ramco. An additional prospective non-executive director has been identified and it ishoped that his appointment to the board can be confirmed in the near future. StrategyIn light of the Seven Heads position, and to maximise shareholder value, theBoard has defined a new strategy for the company that aims to capitalise on thestrong exploration portfolio that the company holds. In future Ramco seeks toadd value as a non-operating participant in high potential exploration andappraisal prospects. The Board of Ramco have initiated discussions with a view to securing additionalfinancing to help support the Group through the ongoing discussions with itsbankers and Schlumberger and to enable the creation of value from its interestsin its' exploration properties, but the Board cannot give any assurance thatsuch financing will be secured. Chairman's RemarksRamco's chairman Steve Remp comments:"Although the failure of the recent discussions with the prospective offeror wasdisappointing, I am encouraged by the independent review of our Donegal acreageand the recently completed farm outs over that acreage and our acreage inBulgaria and Montenegro. Notwithstanding the problems we have encountered withSeven Heads we continue to be positive about an Irish gas strategy." "The non-executive directors who are leaving us now have been a huge source ofsupport over many years in both good times and more recently the difficult timesfollowing the disappointment of the Seven Heads gas project. I would like totake this opportunity to thank Peter, Malcolm and Vikram for their hard work andvalued advice." ENQUIRIES: Ramco Energy - AberdeenSteve Remp Executive Chairman 01224 352 200 College Hill - LondonNick Elwes 020 7457 2020Fleishman-Hillard Saunders - DublinMichael Parker 00353 1 618 8450 Notes: List of Directorships Currently Held and Other Directorships Held in thePrevious 5 Years Dennis Paterson Current DirectorshipsNone Dennis Paterson Past Directorships Held Within Last 5 YearsNone. There are no other matters to be disclosed in relation to Schedule 2 paragraph fof the AIM Rules. This information is provided by RNS The company news service from the London Stock Exchange