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Today is not one of those days for some oil and gas players as a number of listed firms announced unfortunate results of their drilling campaigns in search for hydrocarbon.
Falcon Oil & Gas (LSE:FOG)
The statement saying “the well then penetrating an alternating sequence of sandstones, siltstones and shales over a gross interval of 320 metres to TD, with gas shows throughout” is hardly comforting the way I see it as it merely connotes a carefully written pronouncement. I’d have to commend whoever wrote the document though, for a very crafty piece of literature.
Truth is, no one will ever withhold good news, even more so a great one for that matter, otherwise a firm misses the opportunity to lift its equity during the trading that follows.
Falcon’s statement referred to first of its three-well programme in Hungary, which will now have to be postponed until tentatively until the fourth quarter after a “further technical evaluation is undertaken” in the first well.
Premier Oil (LSE:PMO)
Even big player Premier Oil wasn’t spared with a “not-so-good” news today as its wildcat exploration east of Vietnam encountered “water wet” gas shows. Drilling 3,750 metres (sea depth not included), the well encountered source rocks that include coal but were shown to be wet gas bearing.
Nonetheless, Chief Executive Simon Lockett said in a statement that a frontier exploration well such as this is at the least “encouraging” as it did prove an “active petroleum charge” in these parts of the seas.
Rightly so, as the search for new petroleum sources has ever been more difficult whilst previous sources have been depleted or rendered impossible to extract hydrocarbon from.
Wessex Exploration (LSE:WSX)
Take the case of Wessex Exploration’s well in French Guiana. The rig had to drill some 6,292 metres only to find out that “no evidence of hydrocarbons is seen from the drilling or wireline log data” and the well had to be subsequently plugged and abandoned.
Not good news at all. The only comfort Wessex has is the fact that it only has 1.25% interest in the said campaign; whereas, the operator Shell bears 45% interest, Tullow Oil holds 27.5%, and Total at 25%. The other bearer of the 1.25% interest is Northern Petroleum plc, which is Wessex partner in Northpet Investment Limited, the holder of the 2.5% interest in the said licence.
But, like every other disappointing drilling results, the data gathered will be incorporated, in the words of Wessex’ Chairman Malcolm Butler, “help the partnership understand and minimise the risks of new leads and prospects being developed”.
There’s nothing to do with it than simply that anyway since it was a wildcat exploration, as stated by Tullow Oil’s Exploration Director Angus McCoss.
Tullow Oil (LSE:TLW)
Speaking of Tullow, aside from the one just mentioned, the firm also announced another discovery of a gas bearing reservoir off the coast of Mozambique. However, said gas find was not of commercial value “on a standalone basis”. It does, nonetheless, prove a working petroleum system, according to Tullow, but will have to wait for further exploration. In the mean time, the well was plugged and abandoned.
Shortly after London opened for trading, Tullow Oil lost 75 pence, or 6.7% to 1,041 pence; Premier Oil shed off 2.10 pence to 364 pence; and Wessex Exploration plummeted 34.7% to 0.80 pence.
These firms, nonetheless, can find comfort with the fact that because of these disappointing drilling results, the price of hydrocarbon products will continue to be at a premium.
Now had all these companies used Vialogy’s(VIY) QRD software they could have highly likely avoided the expense of drilling in the wrong spot!!
Chevron are using it and CGG Veritas have recently signed a collaboration agreement with VIY.
The tech does, apparently, work.