Shares in the Edinburgh-based BowLeven plummeted by almost 45 per cent to 165p yesterday as the group's latest exploration project failed to find gas in Cameroon.
BowLeven listed in December 2004 with its shares priced at 363p. Its share price surged to a peak of 845p last year as optimism of finding gas in Block MLHP-7 in the Cameroon rose.
Operations have now been suspended subject to further evaluation of the project. A similar situation occurred last October, when its shares dropped after BowLeven said its Biafra Sands exploration in west Africa had not found oil.
Its chief executive Philip Rhind said there was only a one in four chance of success in any well. He said he was obviously disappointed but added: "The results from this will have nevertheless provided important geotechnical data to help us further evaluate what is still, we believe, a highly prospective block."
The company has a four-well drilling programme planned for later this year with cash resources of £48m.
BowLeven has also been served with a claim by Addax Petroleum seeking a non-refundable deposit of $3m. The directors intend to defend the claim.
Tim Heley at the stockbroker Panmure Gordon said BowLeven's track record "continues to disappoint". This latest well was a deep target and took more than eight weeks but has failed to prove commercial due to the structure of the reservoir.
The brokerage said it brings into question "the whole basin as well as BowLeven's ability to develop the previously proven oil and gas assets". Panmure has changed its recommendation from buy to sell with a shares target for the group of 200p.Reuse content