Rockhopper, one of a number of companies controversially exploring for oil in the Falklands, has disappointed its followers by coming up with a dry well.
The 14/10-8 well was looking for further oil at Rockhopper's Sea Lion prospect, as well as its Casper and Kermit sites. But despite finding 123m of oil, it said the sands were waterlogged and the well would now be plugged and abandoned. Sam Moody, chief executive, put a positive spin on the situation:
[The well] has provided us with further valuable information regarding Sea Lion although its main targets proved to be water wet. We continue to make progress in refining our view of the field's full potential and the optimal ways to both finance and develop it.
So after an early slump on the news, Rockhopper shares have recovered to rise 9.25p to 179p as investors weigh up the overall prospects for the area - which is still in dispute since Argentina claims sovereignty. Analysts were also positive. Keith Morris at Evolution Securities said:
Whilst the 14/10-8 result is disappointing, [an] increase in the in-place resource in the main structure is positive for the commercial development of the field. Derisking of this development offers substantial share appreciation from current levels.
Over at Oriel Securities, Richard Rose said:
The shares are good value and pricing in overly bearish concerns over financing and commerciality. We retain our buy recommendation although the mixed update today is unlikely to act as the catalyst for a re-rating.
