| MUMBAI: Reliance Industries fell 4% after its minority partner Hardy Oil & Gas of the UK said it was abandoning exploration at a well in the Although analysts have not factored in revenues from the block for Reliance earnings forecast, the fall was in part mirroring the crash of Hardy’s stock in the UK where it faced the worst-ever falls. Hardy crashed 37% to 345.25 pence in early London trading. RIL fell Rs 86.25 to close at Rs 2047.30 on BSE. The British explorer, which owns 10% stake in the field, said it would discontinue drilling at the KGD-A1 well, the first of a four-well programme at Block D9 in the Krishna Godavari basin, as it encountered “poor reservoir sands in the middle and lower Miocene target levels.” “The market has overreacted to the news as it was on the edge with stretched valuations,” said Amitabh Chakraborty, president of equities at Religare Capital. “For me, it seems to be an excuse for profit-booking.” Hardy in May this year had said that it estimated the prospective resources at Block D9 at 10.8 trillion cubic feet of gas and 143 million barrels of oil, almost equal to the reserves in the country’s most prolific KG-D6 block, whose monetary value is estimated to be $50 billion. It was then pulled up by the Director General of Hydrocarbon (DGH) saying it was premature to publicise the prospects of reserves. Reliance, which surrendered a third of the 45 exploration blocks to the government for unsuccessful exploration with sunk cost of Rs 1,400 crore, said on Friday it would not surrender this block, but would drill three more wells. “The data obtained from this first exploration well is significant and will be integrated with the existing geological model to improve the understanding of the geology and petroleum system within the block before drilling subsequent wells. Any rumour of RIL surrendering this block is completely baseless,” added the RIL statement. Analysts also believe that this is not the end of the road for RIL and Hardy in this block. “Exploration is a high-risk-high-reward game. Based on results of drilling one well, you cannot decide the prospects of the block. Cairn has discovered oil in Rajasthan after Royal Dutch Shell abandoned that block,” said an analyst with an international firm. Hardy is not throwing in the towel either. “We did not find a reservoir of good quality, so we have abandoned this well. We are looking at the data to plan our next drilling sequence. So far, we have drilled nothing in this block,” Hardy COO Yogeshwar Sharma told ET NOW. Early this year, RIL joined the league of global deepwater operators by putting its D-6 gas field into commercial production and doubling India’s natural gas production. RIL has started production of one oil find and two of the 18 gas discoveries in KG-D6. Its plans for nine satellite finds in the block as well as six discoveries in NEC-25 are yet to be approved by the government. |
RIL to drill more wells despite failure in KG-D9 Reliance shares fall after partner says to abandon well
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Hardy abandons exploration in one D9 well of KG basin
Article Src: Economictimes, Businessline.in