OHM shares plummet after disappointing activity news

OFFSHORE Hydrocarbon Mapping shares plunged 40 per cent yesterday after the firm warned that first-half activity had been dramatically below expectations, writes Hamish Rutherford.

Aberdeen-based OHM uses technology developed at the University of Southampton, where electromagnetic pulses are used to search for underwater hydrocarbons.

The company said that it had been held up by a failure to get permits for a major survey in Indonesia, but also admitted take-up of its leading edge technology had been "lumpy". Shares fell 71p to 104p, a drop of 40.5 per cent.

Analysts cut forecasts for first-half losses to £5 million, compared to previous estimates of £1m, with KBC Peel Hunt predicting the company's break-even would be delayed another year to 2010.

Last July, French-US seismic exploration giant CCG Veritas paid a premium to the market price of OHM's shares to acquire a 15 per cent stake in the Scots firm. Shares soared 20 per cent on the news as analysts predicted the deal could lead to a major growth in work for the company.

Yesterday's share dive was also triggered by the news that the take-up had not yet materialised. However, Seymour Pierce retained its 300p target price on OHM's shares.