Oil explorer Borders & Southern said today it had suffered a “disappointing result” in the Falklands after failing to find a commercial discovery in its latest exploration well in the region.
The firm, which is exploring south of the islands 300 miles off Argentina, said its Stebbing well encountered gas shows, but that it was not commercially viable.
It was also unable to reach deeper targets due to technical issues, including pressure in the well.
Shares in the firm plunged nearly 70% yesterday to a three-year low of 19.75p.
The well will now be plugged and abandoned and the rig, the Leiv Eiriksson, will be transferred to Falkland Oil & Gas, which is planning to drill two wells also off the south coast.
The firm said: “It is very disappointing not to have reached all the potential reservoir targets in this well.”
Borders & Southern’s disappointment follows the company’s initial success when its first well, also drilled south of the islands, found gas condensate, a liquid which often trades at a premium to crude oil.
The Falklands look poised to be transformed into a new oil producing region following an oil discovery made by another British firm, Rockhopper Exploration, two years ago off the north coast of the islands.
Rockhopper signed last week a £646million deal with Premier Oil on Thursday to help fund the development of the oil field.
The British-governed Falklands has seen increasing tension from Argentina, which claims sovereignty over the islands it calls Las Malvinas.
Argentina recently threatened companies involved in oil in the Falklands with legal action.