Falkland Oil & Gas Ltd., the explorer focused on the namesake South Atlantic islands, slumped to a record in London trading after results from its Scotia well showed a poor quality reservoir.
Falkland Oil plunged 48 percent to 32.75 pence, the lowest since the shares first began trading in October 2004.
The well was drilled to 5,555 meters (18,225 feet), the company said in a statement today in London. While the well encountered some gas and hydrocarbon-bearing stones, the oil or gas wouldn’t flow to the surface. It will now be plugged and abandoned, the company said.
Falkland Oil and its partners Noble Energy Inc. and Edison SpA targeted about 1 billion barrels of oil at Scotia. The company made the second gas discovery this year at its Loligo project after Borders & Southern Petroleum Plc said in July that it found gas, including some liquids, south of the islands Margaret Thatcher went to war to keep British in 1982.
Borders & Southern dropped 11 percent to 16.75 pence, the lowest since August.
“During 2012 we have drilled two encouraging wells, both of which found hydrocarbons and were completed safely and within budget,” Falkland Oil Chief Executive Officer Tim Bushell said in the statement. “They reinforce our confidence in the potential of the basin.”
Falkland Oil will start a new program of seismic work which, combined with the results from Scotia, may help identify a better quality reservoir in the block.
The London-based company will have about $220 million in cash after its 2012 drilling campaign, it said.
Rockhopper Exploration Plc made the first commercial discovery off the Falklands with Sea Lion, which Premier Oil Plc agreed to help develop with a $1 billion investment.