Tullow Oil shares plunge as much as 13pc after Guiana blow
Published 18/04/2013 | 05:00
SHARES in Tullow Oil plunged as much as 13pc after bad results from a well it is involved in in South America shocked the market.
Tullow fell 12.92pc in less than an hour after its partner Northern Petroleum, which is operating the Zaedyus-1 discovery in French Guiana, said it had found "no significant hydrocarbon shows" in a well it is drilling on the site.
Those words sparked fears that the Zaedyus-1 site could be a "duster", in what would be a huge blow to Tullow. The Dublin and London-listed company has a 27.5pc stake in the discovery.
Northern's statement, which was not expected, spooked traders to such an extent that Tullow was forced to rush out its own statement to the market barely 83 minutes after Northern's announcement.
The Irish-led company said it "noted" Northern's notice.
"This release was issued without prior notice from Northern Petroleum and without the approval of the operator or the joint venture partners," the company said.
"Although the Priodontes-1 well has not thus far encountered significant hydrocarbons, Tullow believes that this is due to a trap-specific issue and has no follow-on consequences for prospectivity elsewhere in the block.
"Tullow also notes that the shows encountered in [a fan on the site], underline the presence of a working oil charge system," the company added.
Tullow along with Shell, Total and Northpet Investments are involved in Zaedyus.
The sell-off pushed Tullow's shareprice down to its lowest level in two years before mounting a partial recovery in the afternoon.
Yesterday's news was the latest problem to hit Aidan Heavey's company in recent days. Shares in the firm fell more than 5pc on Monday after it issued a lacklustre statement on its operations at a site in Ethiopia, while it has also faced numerous issues elsewhere in Africa. It missed production targets at its Jubilee oil field off the west coast of the continent last year after sand got into its wells.
By the close in London shares in the company were down 8.6pc at 988.5 pence. The stock is off almost a third in the last 12 months.