OIL explorer Desire Petroleum said a closely-watched sidetrack well on its prospect in the Falkland Islands was unable to reach target depth, meaning a further delay before the firm can produce oil.
The company said last month that the original Rachel well near the islands did not find oil but that it was going to drill a sidetrack well as it had identified a more prospective zone nearby.
Rockhopper, another Falkland Islands-focused explorer listed in London, owns a 7.5 per cent stake in the licence covering the Rachel wells, with Desire owning the rest.
Rockhopper completed a £206.3m rights issue last month in order to fund its own exploration in the region.
The sidetrack well was unable to reach target depth due to wellbore stability issues, said Desire, the operator of the well.
Shares in Desire, which last week rose as much as 78 per cent in a single day on speculation the sidetrack well had found oil, opened down 12.1 per cent before recovering to close down 5.2 per cent at 92p.
Shares in Rockhopper closed down 3.8 per cent at 306.25p.