Amplitude Energy Ltd (ASX: AEL) shares are having a day to forget on Tuesday.
In morning trade, the ASX 300 stock is down 27% to $2.35.
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Why is this ASX 300 stock sinking today?
Investors have been selling this energy company's shares today following the release of exploration results.
According to the release, Amplitude Energy has provided an update on drilling operations at the Elanora-1 exploration well in the Offshore Otway Basin, Victoria.
It notes that Elanora-1 is an exploration well located in permit VIC/L24 within Commonwealth waters, approximately 6km south-west from a tie-in point in the existing Casino, Henry, Netherby (CHN) pipeline.
The ASX 300 stock is the operator and a 50% interest holder in VIC/L24 with O.G. Energy holding the remaining 50% interest.
What were the results?
This morning, Amplitude Energy revealed that the Elanora-1 eight and a half-inch hole section penetrated the primary Waarre A reservoir target and reached the planned total depth (TD) of 1,857 metres TVDSS on 10 February. This was achieved safely and without material incidents.
TD was reached in 15 days from spud date, well ahead of budgeted schedule.
Unfortunately, preliminary drilling and logging data recorded no elevated gas readings in the primary target Waarre A reservoir (intersected at 1,766 metres TVDSS). As a result, the reservoir is interpreted to be water-bearing.
What now?
The ASX 300 stock revealed that Elanora-1 will now be plugged and a sidetrack into the Isabella prospect will be drilled as planned. This is expected to take approximately 14-18 further days. Isabella lies immediately adjacent to Elanora, also in the VIC/L24 permit.
It notes that in the event of success in the sidetrack, evaluation of the discovery through Logging While Drilling (LWD) will be conducted immediately to assess the gas composition and quality of the reservoir.
The sidetrack is planned to be cased and completed with a sub-sea tree upon success, incorporating a flow test, and then suspended ready for development as part of the East Coast Supply Project (ECSP).
The company's managing director and CEO, Jane Norman, commented:
While the result at Elanora is disappointing we continue the ECSP campaign with the Isabella prospect, targeting a separate reservoir to that tested by Elanora. As previously communicated, on success Isabella is intended to be a producing field for the ECSP, while evaluation of Elanora was intended to inform our longer-term Otway Basin exploration and development plans. The result at Elanora, which was targeting Waarre A sands, does not impact our view of the probability of success of Waarre C sands targets such as Isabella, Juliet or Nestor.
