Soco International Plc, a U.K. energy explorer in Africa and Southeast Asia, plunged in London trading after saying it will plug and abandon its appraisal well off the coast of Vietnam.
The shares fell 19 percent to close at 369.4 pence in London, the biggest one-day drop in 12 years.
The Te Giac Den appraisal well, or TGD-2X, found hydrocarbons and “produced both black oil and gas,” which “flowed at sub-commercial rates,” Soco said today in a statement.
“It’s shocking for us,” Soco Chief Financial Officer Roger Cagle said today by phone. “In this particular well, it’s certainly a different result than we were expecting. We have tons of oil. The problem is that we don’t have enough gas” in the reservoir for the crude to flow to the surface, he said.
Soco fell the most in 20 months Sept. 3 after deciding to plug and abandon its first well in the Nganzi block onshore the Democratic Republic of Congo. The explorer planned to quadruple recoverable oil reserves as it targeted 700 million barrels of resources, Chief Executive Officer Ed Story said in August.
“The surprise failure of the TGD appraisal in Vietnam is likely to leave the company with few options to drive the share price in the near future,” Richard Griffith, a London-based analyst at Evolution Securities Ltd., wrote to clients today. He downgraded Soco shares to “Sell” from “Reduce.”
Soco has also completed two offshore wells in the TGD development, which will pump crude in mid-2011, the London-based company said today.
Soco is examining plans and may continue to explore and appraise the TGD area in Block 16-1, Cagle said.
PTT Exploration & Production Pcl, Thailand’s only publicly traded oil and gas explorer, and Vietnam Oil & Gas Group, the state-owned producer known as PetroVietnam, are the partners in the project.