Ramco Receives Approval to Develop Seven Heads Field

Ramco Energy has cleared several important milestones in connection with the goal of producing gas from the Seven Heads Gas field, located in the Celtic Sea offshore Ireland, by the end of 2003.

Ireland's Minister of Communications, Marine and Natural Resources has granted a Petroleum Lease to the Seven Heads Partners. Minister of State for Communications, Marine and Natural Resources, Mr. John Browne T.D, Ramco's Chief Operating Officer Dan Stover and representatives of the other Seven Heads Partners signed the Petroleum Lease in a ceremony in Dublin yesterday. The Seven Heads Partners (Ramco (Operator) 86.5%, Island Petroleum Developments Limited 12.5% and Sunningdale Oils (Ireland) Limited 1.0%), will now submit a Plan of Development for the gas field to the Minister for his consideration and approval.

Ramco has also concluded a gas sales agreement with Innogy, the integrated UK energy company, for Ramco's entire share of the Seven Heads gas production. Under the agreement Innogy will buy up to 80mmscf, (800,000 therms) a day of gas from Ramco. The agreement with Innogy is for an initial period of seven years and may be extended to "life of field" at the option of Innogy and covers the whole of Ramco's 86.5% share of the production from Seven Heads. The price to be paid by Innogy is close to, and will vary with, the UK national balancing point price for gas.

Innogy will take delivery of gas at the existing Inch Terminal, County Cork, which forms part of the Republic of Ireland's gas network. Deliveries of gas are expected to start before the end of 2003 at around 50 mmscf (500,000 therms) per day and rise to 80 mmscf (800,000 therms) per day, depending on field performance. Each of the Seven Heads Partners has responsibility for selling its share of any gas production from the field.

The award of the Petroleum Lease and the signing of the gas sales agreement have allowed Ramco to agree the principal terms of a £60 million project finance facility with Bank of Scotland Corporate Banking to assist with the development expenditure on the Seven Heads project. Ramco and the Bank of Scotland are now working to finalise the legal documentation necessary to facilitate draw down when required early in 2003. Subject to approval of the Plan of Development by the Minister, the Seven Heads Partners plan to re-complete well 48/24-5A and drill five additional production wells, commencing in April next year. The wells will be linked to a sub-sea manifold and connected to the nearby Marathon operated Kinsale Head facilities by sub-sea pipeline. The agreements permitting additions to and use of Marathon's existing Kinsale offshore facilities and pipeline to the Inch Terminal were concluded earlier in the year. Under those agreements Marathon and the Seven Heads Partners will share in the operating costs of Marathon's facilities. The effect of these arrangements will be to significantly extend the working life of their Kinsale facilities.