Cobalt Falls as More Gas Than Expected Flows in Angola

Cobalt International Energy Inc. slumped the most in more than three years after the U.S. explorer said its latest discovery off the coast of Angola contained more natural gas than it expected.

The Lontra well flowed at a rate of 2,500 barrels of condensate and 39 million cubic feet of gas a day during tests, the Houston-based company said yesterday in a statement.

“The market was hoping for less gas, more liquids,” John Malone, an exploration and production analyst with Mizuho Securities USA Inc. in New York, said today in a phone interview. He has a buy rating on Cobalt shares and doesn’t own any.

Part of the region where the well was drilled runs the risk of containing high volumes of gas, Oswald Clint, a London-based analyst at Sanford C. Bernstein & Co., wrote in an e-mail today. Gas content in Angolan discoveries may offset the value of oil finds because foreign investors can’t market gas under the nation’s production-sharing agreements, Clint wrote in a report last year.

Cobalt fell 17 percent to $18.54 at the close in New York, the most since Dec. 16, 2009. The stock is down 25 percent this year.

The Lontra field’s estimated resource range is the equivalent of 700 million to 1.1 billion barrels of oil or more, Cobalt said in a slide presentation. About 35 percent to 45 percent of the resource may be condensate and oil, or liquids, according to the company.

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“Although the field contains more gas than our pre-drill estimates, it is beneficial that Lontra is offshore near Luanda, where we believe there is a potentially large emerging market for gas,” Cobalt Chairman and Chief Executive Officer Joseph Bryant said in the statement, referring to the Angolan capital.

Cobalt and partners BP Plc and Sonangol EP started talks with the government on the possible development of the field. The company has drilled three wells in the Kwanza pre-salt basin, all of which made discoveries.

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