18th Aug 2014 07:27
LONDON (Alliance News) - Kea Petroleum PLC saw its shares drop to the bottom of AIM Monday after the company reported that its Puka-3 well is being plugged and abandoned.
Shares in the company plummeted to 1.25 pence per share in early trading Monday morning, down 63.09%.
The New Zealand-focused oil and gas company said that the Puka-3 well reached a depth of 2,200 metres measured depth below rotary table.
Kea said the wireline logging encountered a thicker than expected Mount Messenger reservoir section of 30 metres measured depth, however the sands were predominantly water wet. An oil water contact was interpreted in the upper part of the sands, which was significantly shallower than prognosed, it said.
"The quality of the sands above the contact was deemed not to be commercial and the well will not be completed as a producer," said Kea.
Puka-3 was a component of Phase I of the farm-in between Kea and MEO Australia Ltd, and was drilled as a deviated well approximately 1,475 metres to the north of the surface location and approximately 500 metres from the producing Puka-2 well.
Under the terms of the farm-in agreement, MEO is entitled to 30% of Puka production following the completion of Puka-3, and has up to six months in which to evaluate the data before making a decision on Phase II of the farm-in agreement, said Kea.
"We are disappointed with the result of the Puka-3 well, however the data we have recovered will be used to plan development of the Puka field and allow us to devise a suitable program moving forward," said Kea Chairman Ian Gowrie-Smith.
At the end of July Kea Petroleum said drilling of the Puka-3 well on the PEP51153 licence, located onshore in Taranaki, New Zealand was progressing on budget, and that oil production at the Puka-1 and 2 wells has improved.
At the time, the company was confident for the well's prospects and said that it expected to reach total depth of 1,580 metres at the Puka-3 well by mid-August, as Gowrie-Smith added, "The importance of success at Puka-3 cannot be over emphasised in terms of improved production volumes and economics, but more importantly because we are confident that it will give us a better idea of the reserves and reservoir configuration."
By Alice Attwood; [email protected]; @AliceAtAlliance
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