Shares in Falkland Oil and Gas (FOGL) dived yesterday after the firm said its Toroa exploration well had failed to find hydrocarbons and would now be plugged and abandoned.
Shares closed the day at 95.50p, down 106.25p.
It had began drilling operations on May 31 with the Diamond Offshore semi-submersible drilling rig Ocean Guardian.
Toroa was FOGL’s first well off the Falklands and the first exploration well in the East Falklands Basin.
There had been hopes it would have recoverable hydrocarbons estimated in the range of 380million to 2.9billion barrels.
FOGL has 49% of the Toroa prospect, in which operator BHP has 51%.
Further detailed evaluation of all data and information gained from the Toroa well will now be carried out.
FOGL chief executive Tim Bushell said: “While the results of the Toroa well are disappointing, it has to be remembered that this is the first well in a previously undrilled frontier basin.
“We believe that these results have helped to reduce some of the key risks of the plays in the deepwater areas of our licences.
“In that respect the well is certainly encouraging for further exploration and we look forward to continuing our exploration programme once a suitable deepwater rig has been secured.”
Gavin Farquhar, a partner in law firm McGrigors and an expert on the Falkland Islands, said: “It is obviously disappointing for FOGL, but it important to bear in mind this is the first well it has drilled and you have to be very fortunate to find oil first time out in a previously-undrilled area.
“Looking at the wider picture, the Falklands will continue to generate a lot of interest. Only last week, Argos Resources announced plans to raise money on AIM to fund a drilling campaign in the North Falklands basin – the same basin where Rockhopper made its Sea Lion discovery.
“With the Ocean Guardian now returning to the North Falklands basin to perform further work for Desire and Rockhopper, we could be in for an interesting summer.”
The British Geological Survey has estimated that waters around the Falklands could hold more than 60billion barrels of oil equivalent.
Drilling by the Ocean Guardian has stoked tensions between the UK and Argentina, which claims sovereignty over the Falklands.
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