Oil and gas firm Capricorn Energy (LON: CNE) has confirmed its Diadem well in the UK North Sea has come up dry.
The London-listed firm spudded the prospect, located in licence P2379, in Q2 this year, before reaching total depth in Q3 of 51 metres into the Triassic, at 3754m depth.
Reservoired hydrocarbons were not found and operations have begun to permanently plug and abandon the well, confirmed Capricorn, formerly called Cairn Energy.
Total charges of $11.6 million were incurred to June 30.
A bad run of luck
It extends a disappointing run for Capricorn, which also has a stake in the Shell Jaws well that failed to make a catch earlier this year.
The company incurred further costs of $13.5m as a result of the dud.
In total, Capricorn forked out $27.3m on exploration in the UK in the first half of 2022, the majority of which went on Jaws and Diadem.
Following an asset swap, Capricorn is partnered 50:50 with Shell on Diadem, located in the Northern North Sea, near the Shell Nelson platform.
© Supplied by ShellThe pair previously said they were targeting 30 million barrels from the prospect – similar expectations were placed upon Jaws.
Disappointing results for Capricorn
Capricorn made the announcement in its first half year results, published on Tuesday.
For the first six months of 2021, the company sank to pre-tax losses of $48.7m.
Revenue across the timeframe was $137m, a major jump from the $500,000 it posted for the same period last year.
Capricorn has also revised down its full year production guidance, from between 37,000 and 43,000 boepd, to between 33,000 to 36,000 boepd.
Ashley Kelty, a senior analyst an investment bank Panmure Gordon, said: “This is the first set of results with full production from the portfolio in Egypt, and investors will be disappointed with the results after the high hopes from last year.
“However the elephant in the room remains the terms of the takeover by Tullow Oil – suggestions from investors that the deal may be rejected due to the low premium of <5%, and this will be at the forefront of investors minds for the time being. Needless to say these results will not impress Tullow investors either.”
© BloombergTullow Oil (LON: TLW) and Capricorn set out plans earlier this year to merge into a single London-listed entity.
Under the plans Capricorn shareholders would own 47% of the company and Tullow shareholders 53%.
But there has been push back from Capricorn investors, who feel the deal favours Tullow backers.
Simon Thomson, Chief Executive, Capricorn Energy said: “Almost one year since the acquisition of the Egypt business, we continue to make good progress and have been successful in prioritising oil and liquids production growth while current commodity prices remain high.
“We were delighted to return more than US$500 million to shareholders following receipt of the India tax refund at the beginning of the year.
“The Board continues to believe that the proposed merger with Tullow can deliver significant long-term value for shareholders through creating a leading, Africa-focused energy company.
“The Board is also mindful of the impact of external factors and market conditions and is, as always, assessing all options to maximise value for shareholders. The company is exploring a number of expressions of interest relating to alternative transactions, and is engaging with those parties expressing interest to evaluate potential outcomes.”
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