Bad weather and equipment problems have delayed initial gas production from Granby Oil & Gas's Tristan development.

First gas from the North Sea development is a month behind schedule and Granby's share of the costs will rise by £3.5 million. Shares fell 5p, or 7.3% in early trade to 63.5 pence.

The UK-based oil and gas producer said the problems had delayed well drilling. First gas is expected to be produced in April 2008 - a delay from March - but Granby said that any start up depended on good weather conditions.

Granby maintained that the project is economically sound given the recent rise in UK gas prices. The net present value of Granby's 54% interest in the project is estimated to be around £13.4 million.