Ramco Energy has effectively written off its shareholder funds and faces an uphill struggle to repay its banks and stay afloat.

That was the City verdict yesterday after the Aberdeen-based explorer announced it was taking a (pounds) 70m write-off on the Irish gasfield on which it staked its future with (pounds) 68m of loans.

Richard Rose, of Oriel Securities, commented: ''They are in a very, very tight spot, there is no getting round it. My view is that Ramco doesn't have any equity value left in it.'' Private investors were simply treating it as a ''penny stock'', he added.

Steve Remp, the group's buccaneering Texan founder, has already seen the market value of his 11% stake crash by 90% to (pounds) 1.3m, and the (pounds) 70m provision (actually (pounds) 93m before a tax rebate) almost wipe out

the (pounds) 74m of shareholder funds declared at June 30, 2003.

Ramco, which also boasts former cabinet minister Sir Malcolm Rifkind as a non-executive director, said on Thursday night it was in talks with its banks over a ''possible rescheduling'' of (pounds) 56.6m of unsecured loans, and a (pounds) 12m loan secured on its oil services business, the long-established core of the company.

It said current production from Seven Heads in Ireland's Celtic Sea off the coast of County Cork was enough to cover its costs fully and meet its gas supply agreement.

Rose commented: ''They are generating enough cash to carry on a going concern on a break-even basis, but normally when a field starts going wrong it doesn't get any better. In six to nine months time, will it be producing enough for them to be cashflow positive?'' On present rates, Rose said, there was ''no way they will be able to repay the debt on the existing asset''.

Richard Slape, analyst at Seymour Pierce, said: ''I suspect they would have made a bit of a loss in the second half so shareholder funds will be down to more or less nothing. But until they have re-worked their reservoir model, and the bankers have made a decision on how to proceed, it is really very difficult to make any estimate of fair value.''

Ramco shares hovered around 400p in January after an apparently successful start to production from Seven Heads in December, backed up by bullish comments from Remp. Institutions sold out heavily after the first warning

in late January which sent the shares to 165p. They fell 22.5p to 35.5p yesterday.