The Carnarvon Petroleum Limited (ASX: CVN) share price has been the worst-performer on the All Ordinaries index by some distance on Monday.
At one stage the Western Australia-based oil and gas exploration company’s shares crashed as much as 32% lower to 38 cents.
They have since recovered slightly, but are still down 21% to 45.5 cents at the time of writing.
Why did Carnarvon Petroleum shares crash 32% lower today?
This morning the exploration company released an update on drilling activities at its Roc South-1 exploration well off the coast of Port Hedland.
As you might have guessed from the share price reaction, the results of the latest drilling were not as positive as investors had been expecting.
According to the release, an 8.5” hole has been drilled to a depth of approximately 4,508 metres Measured Depth (MD). Unfortunately, the interpretation of wireline logs indicates that there are no producible hydrocarbons across the Caley and Baxter sands.
However, management remains optimistic on the other discoveries it has made in recent times.
Carnarvon Petroleum’s managing director, Adrian Cook, said: “As we unlock this new basin on the North West Shelf we will find results that are unexpected and not as we should wish. The Roc South-1 result in the Caley and Baxter intervals is a case in point in that it will not build upon our current resource pool.”
Adding: “… we should not lose focus on the fact that we have discovered a significant volume of resources to date, we are working on plans to bring the Dorado liquids (oil and condensate) into production as soon as possible and we have ongoing intentions to make new discoveries in the future.”
Looking ahead, Mr Cook advised that the company will now “test the deeper sections in the Roc South-1 well before the rig moves to the Dorado-3 appraisal well where it will conduct a flow test from the Dorado reservoirs that proved successful in the Dorado-1 and 2 wells.”
He also stressed that development plans for Dorado will not be impacted by today’s disappointing results from the Caley and Baxter sands.
Elsewhere in the industry today, the Comet Ridge Ltd (ASX: COI) share price and the Santos Ltd (ASX: STO) share price are trading lower despite advising that their Mahalo Joint Venture has been actively working towards the submission of the Initial Development Plan and have recently reached agreement on a number of key inputs and expect to be finalising others this month.
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