More bad news from the exploration industry, this time from Hardy Oil and Gas.
A second exploratory well at the D9 licence on the east coast of India - 10% owned by Hardy and operated by Reliance Industries - has been plugged and abandoned after finding few traces of gas. Chief executive Yogeshwar Sharma said:
Although this exploration well result is disappointing, the presence of thick reservoir quality sands and the potential presence of a petroleum system are encouraging. We will now work with our partner to incorporate the data gathered to update the geological model.
The company may find this encouraging, the market less so. Hardy's shares have dropped 36.5p to 180p, and analyst Nick Copeman at Oriel Securities said:
The B3 well in the D9 block in India has been plugged and abandoned after the well encountered modest gas shows in two thick sands. Shares are clearly going to underperform on the back of this news as the D9 block was seen as offering the most substantial exploration upside in Hardy's portfolio and the potential in the block will need to be reassessed given the first two wells have been unsuccessful, which is likely to delay further drilling in the block. Our risked net asset value stands at 63p a share with a further 113p a share of risked exploration upside (most of which is in the D9 block).
