Providence shares fall 3.7pc as drilling at English well halted
SHARES in Providence Resources plunged as much as 8pc yesterday after the company suspended drilling at a well in southern England after encountering a series of problems with it.
The company stopped work on the X12 development well at its Singleton Field in Sussex following what it described as a "variety of equipment failures and down-hole mechanical issues".
The well would have been in addition to two already functioning on site and would have bumped up production there substantially.
However, technical problems meant engineers could not run casing down the well, despite shifting the well's location, and time constraints with the drilling rig meant the firm had to suspend further drilling for now.
Rigs are booked for a set period of time; at the end of the booked period the rigs are moved out regardless of whether the work is complete or not.
Yesterday, the company said that while operations had been suspended, the well would still be completed, probably in the last three months of this year or the first quarter of 2013.
Current production at Singleton of about 750 barrels of oil equivalent per day (BOEPD) is unaffected by the development. A financing deal with Deutsche Bank is not affected by the change.
Technical director John O'Sullivan said the well was "the most ambitious and challenging well to have been designed and drilled on the Singleton".
"Progress was not sufficient over the past few weeks, making it increasingly difficult to complete well operations within our approved planning and rig availability timelines.
"We plan to meet with our well services contractors over the coming period to investigate a number of the operational issues that plagued the X12 programme," he added.
Meanwhile, Siberia-focused Petroneft said production remained steady last year at just over 2,000 BOEPD and was "in discussions with a range of strategic investors about possible farm-outs, long-term off-take agreements and potential equity or asset investments which would strengthen the group's financial position".
The company, however, discounted any suggestion of a possible takeover bid.
The news came as the company saw losses widen to $17m (€13.4m) last year from $7m in 2010.
Petroneft is still in the exploration stage at the moment however, so analysts deem the profit and loss account to be of little concern for now.
Chief executive Dennis Francis's remuneration was flat at $426,000 per annum but his basic salary jumped to $330,000 from $246,000 a year earlier.
Circle Oil said it received a licence extension and would start a well in Tunisia in the second half of this year.
Analysts at Investec said the extension was "significant".
By the close in Dublin, Petroneft had added 6.25pc, while Providence fell 3.7pc.
Circle Oil gained 4pc in London.