LONDON (ShareCast) - Falkland Oil and Gas lost almost had its value after drilling at its Scotia well proved unsuccessful.
The stock plunged 45.6% after the firm said it had only discovered a poor quality reservoir at the site and would now abandon it.
Wireline logs indicated that the sandstones formed fairly poor quality reservoir, although some zones had up to 20% porosity, the company reported.
Other thin hydrocarbon bearing sandstones were encountered beneath the main target in the interval 4900m to 5164m.
Subsequent evaluation of the main interval using a wireline formation testing tool did not flow hydrocarbons, indicating that the reservoir had low permeability.
However, the company tried to put a positive spin on the result.
It said drilling carried out at the site should provide vital information on the quality and maturity of source rocks and also provide a better understanding of the distribution of oil and gas within that part of the South and East Falklands basin.
A further announcement on the results of this work will be made in the first quarter of 2013.
Chief Executive Tim Bushell said the results of the Scotia well provided further endorsement of the hydrocarbon potential of the South and East Falkland Basin and had proven the presence of hydrocarbons within the mid Cretaceous Fan Play.
"During 2012 we have drilled two encouraging wells, both of which found hydrocarbons and were completed safely and within budget," he said.
"They reinforce our confidence in the potential of the basin."