Re: MEO - Methanol Australia
MEO $0.230 $-0.275 (-54.455%) @ Mon 13 Dec 2010 2:35 PM
http://wotnews.com.au/view/5997319/
Setback for Petrobras as MEO declares 'no gas' at Artemis-1 UPDATED
Ross Kelly From: Dow Jones Newswires December 13, 2010 1:25PM
MEO Australia said today a key exploration well offshore Western Australia didn't find any gas, sending its shares down nearly 65 per cent.
MEO said the Artemis-1 exploration well near the established Pluto and Wheatstone gas fields didn't find hydrocarbons in its target zone after reaching a full depth of 3500 meters.
Brazilian oil giant Petrobras will be disappointed, having bought 50 per cent of the related permit in April in its first ever Australian foray.
There were hopes that MEO, Petrobras and smaller joint venture partners Cue Energy Resources and Moby Oil & Gas would find enough molecules to support a large gas export plant but an MEO spokesman said the well always had about a 32 per cent chance of success.
"We believe that all the preparation, the seismic (data) was appropriate for the prospect. It was assessed and approved by the technical team of one of the world's major oil and gas companies," he said.
While Australia's natural gas industry is booming with close to a dozen export plants slated for its coastline, MEO and Petrobras's experience is a reminder that deepwater exploration is fraught with risk.
Artemis-1 was a wildcat well, meaning that it wasn't drilled in a known gas field.
AWE drilled a number of unsuccessful wildcats this year, cutting its share price in half.
Thankfully for MEO, Petrobras in April agreed to fund 100 per cent of Artemis-1 to a cap of $US41 million ($42m). But it only agreed to fund two follow-up wells in the event of a successful discovery.
While MEO's spokesman said it's too early to tell if any more wells will be drilled, he added that MEO has other projects it can pursue.
These include developing the Heron gas discovery in the Timor Sea made in 2008, for which MEO is still talking to possible farm-in partners to help it commence appraisal drilling next year, he said. The company also wants to build a methanol processing plant in the Northern Territory by 2012.
MEO, which owns 25 per cent of the Artemis prospect, has more than $100m of uncommitted funding in the bank, having received $US39m from Petrobras in October.
Shares in the unsuccessful well's smaller joint venture partners, Cue Energy and Moby Oil & Gas, had fallen 20 per cent and 65 per cent, respectively, by early afternoon.
MEO fell as much as 64.7 per cent to 18 cents in early trading today and by late afternoon was down 53 per cent at 23.5c. The benchmark S&P/ASX 200 index was 0.6 per cent higher.
Artemis-1 encountered an over-pressured gas zone above the primary objective last week, raising hopes of a large discovery.