Repsol SA and Tullow Oil Plc will plug and abandon an exploration well off Guyana after high pressure prevented drilling. Their shares dropped.
The explorers started drilling the Jaguar-1 well in the Georgetown Block in February. The well was halted at 4,876 meters (16,000 feet) “without reaching the primary objective,” London-based Tullow said today in a statement.
The entry into Guyana was intended to open a new oil frontier following Tullow’s success in French Guiana where an estimated 840 million barrels were discovered. The partners were drilling the well “close to the limits” because of high pressure and temperatures, Repsol Chairman Antonio Brufau said in May.
Repsol is the operator of the well with a 15 percent share. Tullow and YPF SA each hold 30 percent, while CGX Energy Inc. has the remaining 25 percent share. Samples of light oil were recovered from the well.
“At least we now know the basin is oily,” Oswald Clint, a London-based analyst at Sanford C. Bernstein & Co, wrote in an e-mailed report. “The implication is merely a small increase to exploration costs; and a delay to the eventual testing of the prospect,” which may hold as much as 1.2 billion barrels of oil equivalent resources, he said.
Tullow fell 2.2 percent to 1,402 pence at 2:20 p.m. local time. Repsol retreated 3.1 percent to 12.245 euros in Madrid.