Failed Well Drills Tullow Oil, Wessex, and Northern Petroleum

PUBLISHED: 05 Dec 2012 @ 00:25 | Comments (0) | More info about Kenneth G. Mondero

An unsuccessful well in the French Guiana drilled three oil players down on the London Stock Exchange today as the operator announced no commercial hydrocarbon was encountered following months of drilling.

At 10:45 AM GMT, shares of major oil player, Tullow Oil plc (LSE:TLW), and those of Wessex Exploration plc (LSE:WSX) and Northern Petroleum plc (LSE:NOP) plunged after the Zaedyus 2 was not able to replicate the success of its predecessor well, Zaedyus-1, which has encountered 72 meres of net oil play in 2011.

Tullow Oil holds 27.5% interest in the 24,100-square kilometre Guyane Maritime licence, whilst Wessex and Northern equally splits the 2.5% interest through their 50-50 joint venture.

Shares of the well operator, Shell, and Total, which hold 45% and 25% interests, respectively, did not follow the trend of their venture partners’ but were up a few pence, despite the disappointing news.

Damage Control

The Zaedyus-2 well was drilled in July 2012 to test the up-dip potential of the earlier Zaedyus-1. Whilst the well encountered 85 metres of quality reservoir sands, no oil of commercial quantity flowed, and was in fact not “in communication” with Zaedyus-1, as indicated by test results.

Tullow Oil’s Exploration Director, Angus McCross, commented “the well has provided very valuable data” for the appraisal and appraisal strategy for the oil play the venture is trying to tap and insisted the French Guiana block remains highly prospective.

Wessex’ Chairman, Malcolm Butler, and Northern’s Managing Director, Derek Musgrover, echoed Mr. McCross’ statement that the large offshore licence “still offer excellent potential for multiple exploration successes.”

Tullow share price dropped as much as 5.9%, equivalent to 81 pence, to £12.90, at a volume of over 4.5 million shares. Wessex and Northern shares dropped 22.6% and 13.4% to 4.7 pence and 55 pence, respectively, at 1:15 PM GMT.

Meanwhile, Total shares were slightly up by 0.6% to €38.88 as the company still benefited from the successful oil discovery in the Norwegian North Sea.

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