Falkland Oil and Gas shares down as exploration draws blank
SHARES in Falklands Oil and Gas slid by almost two thirds after its efforts at the Toroa exploration well drew a blank.
The AIM-listed explorer confirmed that the Toroa F61/5-1 well will now be plugged and abandoned after it was drilled to a total depth of 2476 metres but failed to encounter any reservoired hydrocarbons.
It had begun drilling back on 31 May and had high hopes for the well in the previously undrilled frontier basin located around 90 miles south of Stanley.
It believes the Toroa prospect, in which it has a 49 per cent interest, has around 1.7bn barrels of recoverable oil.
Further detailed evaluation of all data and information gained from this well will now be carried out. An update will be provided once this work has been completed.
Tim Bushell, chief executive of Falkland Oil & Gas, commented: “Whilst the results of the Toroa well are disappointing, it has to be remembered that this is the first well in a previously undrilled frontier basin. We believe that these results have helped to reduce some of the key risks of the plays in the deepwater areas of our licences.
“In that respect the well is certainly encouraging for further exploration and we look forward to continuing our exploration programme once a suitable deepwater rig has been secured.”
The backlash from disgruntled investors sent shares plunging to as low as 70p before they recovered slightly to 115.25p.
Shares in Falkand Island Holdings, which has an eight per cent stake in Falklands Oil & Gas, were also hit.
The Falkland Islands have become a hotbed of drilling activity for smaller UK-listed explorers.
Last month Rockhopper Exploration said it was looking to raise £48.5m after striking larger-than-expected reserves of oil off the Falkland Islands last month. Meanwhile in May Borders & Southern Petroleum, said it was set to launch its first drilling campaign in the area by the start of next year after raising $184m.
In March, British oil explorer Desire Petroleum said it had found poor quality oil in the first well to be drilled in the Falkland Islands for a decade.