Markets may be tumbling but mid-cap oil and gas explorer Salamander Energy is tumbling more than most.
Shares in the Asia-focused business have fallen 18.4p to 261.6p - a 6.5% decline - after it decided to plug and abandon the Phu-Kheng-1 exploration well in north east Thailand. The well, in which it holds a 27.2% stake, failed to flow gas after a test on a five metre zone. Analyst Phil Corbett at RBS said:
We were including a risked 5p share in our valuations for the Phu-Kheng shallow zone, which will now be removed. However, we wouldn't be surprised if there was a greater sentiment hit given yesterday's outperformance versus the sector
This well result doesn't have a direct bearing on any of the other prospects currently scheduled to be drilled this year, in our view, but will likely highlight the general risks around drilling for gas in the Khorat Basin. Bang Nouan-1 well in Lao PDR [is] currently drilling (risked 7p/unrisked 69p) and appraisal of Dao Ruang discovery (risked 20p/unrisked 66p) [is] due to take place in the second half of 2010.
