FALKLAND Oil and Gas, which is engaged in a roller coaster ride to find oil in the disputed South Atlantic islands, lost almost half of its value yesterday when it announced the abandonment of a well following disappointing results.
The statement wiped 49 per cent off Falkland’s volatile stock, sending its shares to an historic low of 32p, giving it a market value of £103m.
The stock price had hit a high of 267p in July 2010.
Falkland Oil and Gas, which is partnered with US firm Noble Energy and Italian utility Edison on the project, said a reservoir at its Scotia exploration well appeared to be of poor quality, with low permeability.
The collapse in the shares, however, came despite an insistence from the firm that it remained upbeat on its campaign, with further tests set to determine whether there was a higher quality reservoir elsewhere in the region.
The firm now intends to plug and abandon the Scotia well.
“The results of the Scotia well provide further endorsement of the hydrocarbon potential of the South and East Falkland Basin and have proven the presence of hydrocarbons within the mid Cretaceous Fan Play,” chief executive Tim Bushell said.
City A.M. Reporter