Soco International, arguably one of the most exciting oil and gas exploration companies listed in London, disappointed investors yesterday after oil failed to flow at a new well in Vietnam.
The company's shares have soared this year on the back of series of successes from its Vietnam assets. Soco has already made discoveries at three wells at its 16-1 block in the Cuu Long Basin offshore, but yesterday it announced that a fourth well, on the "L" prospect, had not resulted in another find.
Roger Cagle, deputy chief executive and finance director, said: "This is not a dry hole. A dry hole means that you encountered no oil. We did see oil but it did not flow at commercial rates."
Later this year, the company will return to drill another well at the prospect, which lies 40 kilometres south of the nearest of the three successes it has had.
"In the exploration business, the statistics say that 80 per cent of the wells you drill will be dry. In this case, none have been," said Mr Cagle.
Soco shares dropped more than 15 per cent in early trading, before recovering somewhat later to close down 8 per cent at 1,235p. The shares doubled between March and early May. Analysts at Numis Securities said: "Today's results are disappointing. After earlier drilling success on the TGT structure, the market had become optimistic about the L prospect, which was the largest structure drilled so far and could have been worth 700p per share."
The company has declared "commerciality" at its exploration successes at another Vietnam block, 9-2, which are moving into development. At 16-1, it is between six and 12 months away from commerciality, according to Mr Cagle. Soco also has interests in Yemen, the Republic of Congo and Thailand.