Shares slumped more than ten per cent following the announcement about the Ernest well, before paring some losses to close down one per cent at 302.3p.
The Aim-listed company said it will turn its focus to the nearby Sea Lion well, which struck around 242m barrels of recoverable oil in May.
“The result of Ernest is disappointing, but the well was always designed to investigate an entirely different geological play type from Sea Lion,” said managing director Sam Moody.
Executive chairman Dr Pierre Jungels added:?“The group has been transformed by the discovery on the Sea Lion prospect and is now working through the steps required to ensure that shareholders get the best possible value from it.”
The nearby Liz gas discovery, which is operated by Dana Petroleum and part-owned by Rockhopper, was abandoned in April after it was found to contain only poor quality fuel.
The company has also had to endure fierce criticism from Argentina, which claims the rights to the waters around the Falklands.
The firm said its full-year losses had widened to $7.7m (£4.9m), from a shortfall of $5.1m in 2009. Over $640,000 of this year’s loss was due to exploration costs that had to be written off. Around $120m is set aside for further explorations, funded by several share placings in the past year.
The firm said it is considering whether to move to the main London stock exchange, but said it is “a decision we will take when it is right for the group”.