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Shares of Red Emperor Resources NL (LSE:RMP) and Range Resources Limited (LSE:RRL) sunk deep at the start of week’s trading in London today, after disclosing today there were no “traces of oil” at the Shabeel North well following an open hole drill stem test (DST) announced last Wednesday, 18th July.
According to the statement last week, the DST was to be performed after reaching the depth of 1,967 metres, which penetrated a 50-metre section that had “oil shows”.
“The test recovered fresh water… without any traces of oil,” was today’s statement issued by both parties, who each has 20% working interest in two licences covering 36,000 square kilometres. Horn Petroleum Corporation (TSX:HRN) hold 60% stake and operates the joint venture.
At 12:00 PM GMT, Red Emperor lost 47.7% of its market value, equivalent to 10.25 pence, to 11.25 pence a share with a turnover of more than 26 million shares, becoming the top loser on the London board.
Range Resources slightly recovered the earlier loss but still down 17% to 5.5 pence a share, with more than 34 million shares changing hands.
Still to Drill Ahead
As stated last week, the operation will continue to drill head to the originally planned depth of 2,400 metres, “at which point the entire section will be evaluated by electrical logging to determine if further testing is warranted”.
The Shabeel North well is the second of the two-well programme of the Production Sharing Agreement (PSA) signed in 2007.
The second well was hoped to target the same Upper Cretaceous Jesomma Formation that Shabeel 1, the first well, encountered with about 8 metres of significant hydrocarbon pay zone, as announced on 17th May 2012.
Shabeel 1 was the first well drilled in Somalia in 20 years in the self-declared autonomous state of Puntland, North Somalia, where initial data indicated the area is connected with the oil-rich basins across the Gulf of Aden in Yemen.
According to Red Emperor, some 19.9 billion barrels of oil is said to be contained in the said area, as assessed independently.
Company Spotlight
Red Emperor Resources NL is an oil and gas exploration company founded in 2007 and quoted on both the Alternative Investment Market (AIM) of the London Stock Exchange and the Australian Stock Exchange (ASX) under the symbol “RMP”.
Aside from Somalia, the company also has 20% interest in two blocks in the Republic of Georgia, where Range Resources holds 40% stake.
Range Resources Limited is also a dually listed company, with shares trading on both the AIM and ASX under the tickers “RRL” and “RRS”, respectively.
