The Beach Energy Ltd (ASX: BPT) share price has come under pressure on Tuesday after the release of an announcement.
In afternoon trade the energy producer's shares are down 5% to $1.77.
Why is the Beach Energy share price sinking lower?
Investors have been selling the company's shares this afternoon following the release of an update on its drilling activities at the Ironbark 1 exploration well.
The Ironbark 1 well in WA-359-P is located in the North Carnarvon Basin, off the North West coast of Australia. The well was testing the Triassic Mungaroo Formation with multiple sand objectives. The reservoir has previously been explored nearby at comparably shallower depths and includes discoveries at the Gorgon, Goodwyn, and North Rankin gas condensate fields.
However, unfortunately for Beach and its joint venture partners BP Developments Australia, Cue Energy Resources Limited (ASX: CUE), and New Zealand Oil & Gas Limited (ASX: NZO), drilling at the Ironbark 1 exploration well has been unsuccessful.
According to the release, the well was drilled to a total depth of 5,618 metres measured depth, intersecting the primary target of the Mungaroo Formation at 5,275 metres. But no significant hydrocarbon shows were encountered in the target sandstones.
As a result of this, the exploration well will be plugged and abandoned, in-line with pre-drill planning.
While this is certainly a disappointment for Beach, it still has plenty of other exploration activities to cushion the blow.
The same cannot necessarily be said for Cue Energy Resources. Unsurprisingly, the Cue Energy share price has crashed 60% lower on the news.
The company's Chief Executive, Andrew Jefferies, commented on the news: "Bugger…. a very disappointing result for us all. Ironbark was a world scale prospect in a highly prospective address, and it needed drilling. We got an answer, but it was not the one we wanted."
"While the operations are not over yet, I'd like to acknowledge the Operator BP for their safe and professional operations throughout the drilling of the well, as well as our JV partners and our shareholders for their continuing support," he concluded.
