PRESS RELEASE
25 MAY 2006
Litigation Update
Ramco Energy plc ("Ramco" or the Company)
Between December 2005 and February 2006 the Company announced, separately, the completion of the disposal of Ramco Oil Services Limited, the disposal of its interest in the Seven Heads Gas field and the resolution of related borrowing issues. Since February 2006, the Company has been attempting to accelerate its forward exploration programme. The first step towards this objective was securing finance for its Irish exploration portfolio through the raising of new equity by its subsidiary, Lansdowne Oil & Gas plc (“Lansdowne”), and the subsequent listing of Lansdowne on AIM, both of which were completed between February and April 2006.
The plaintiffs in the Company’s long-running Texas litigation have taken steps to enforce their judgement contemporaneously in both the Texas and Scottish courts. The original judgement is currently the subject of an appeal in the Texas Court of Appeals (the “Appeal”). As previously announced, the plaintiffs have obtained orders requiring Ramco to turn over certain assets to the Texas State court, which Ramco has duly done. At the same time, on the application of the plaintiffs to the Scottish court, arrestments and inhibitions (which are forms of interim enforcement) have severely restricted the Company’s ability to raise necessary additional working capital to enable Ramco to continue to operate its business while prosecuting the Appeal.
Yesterday, Ramco was unsuccessful in an attempt, in the Scottish court, to obtain some relief from the effect of the arrestments and inhibitions. The Company will now make an application to the Texas Court of Appeals, which heard the case in April 2005, to expedite its decision on the grounds that any further delay may result in the Company being unable to continue to trade.
As a measure designed to allow the Company to raise some working capital, Ramco may sell in an orderly manner a small proportion of the shares in Lansdowne which are held with in the Ramco group.
Ramco’s directors recognise the importance of monitoring the financial position of the Company on a continuous basis and, in the event that the measures described in this announcement prove insufficient, the directors may need to consider an application for the appointment of an administrator.
ENQUIRIES:
Ramco Energy - Aberdeen
Steven Bertram, Managing Director Tel: 01224 352 200
College Hill - London
Nick Elwes Tel: 020 7457 2020
Ramco Energy plc
62 Queen's Road
Aberdeen
AB15 4YE
United Kingdom
Tel: +44 1224 352 200
Fax: +44 1224 352 211
Background
Following a jury verdict in October 2003, the Texas State Court issued a final judgement in April 2004 against Ramco Energy plc and Ramco Oil Limited and certain other defendants in a case alleging breach of contract arising from confidentiality and non-circumvention obligations. These obligations had been undertaken while Ramco was considering investment in an oilfield development project in Kazakhstan which Ramco subsequently did not pursue.
The principal elements of the judgement issued by the trial judge in April 2004 were an award against Ramco for past and future damages of $6.4 million plus interest and legal fees of $9.8 million. The award of legal fees was made jointly and severally against Ramco and its co-defendant Halliburton. The plaintiff subsequently agreed a settlement with Halliburton which has been dismissed from the case.
The recent court orders and related proceedings arise from that judgement awarded in the Texas State Court. As reported in our interim results for 2005 issued on 30 September 2005, the appeal and the plaintiff's cross-appeal, to the Fourteenth Texas Court of Appeals were heard in Houston on 26 April 2005 and the court's decision is still awaited. This process may be followed by a further appeal by either party to the Texas Supreme Court.