An RNS this morning from Range Resources and Red Emperor Resources (and operated by Horn Petroleum) who are jointly drilling a well in Puntland, Somalia has delivered investors some disappointing news.
After announcing last week that a 50 metre section of the Shabeel North Well had evidence of hydrocarbon shows, an open hole Drill Stem Test (DST) was conducted gross between 1,910m – 1,960 metres, but unfortunately the test has recovered fresh water without any traces of oil. Desire Petroleum mark 2 anyone?
The drilling partners plan to continue drilling to the planned depth of approximately 2,400 metres which will penetrate the remaining section of Jesomma sands.
I am starting to get very cynical about these “potential oil shows” RNS releases which tend to produce a spike in the share price (see Red Emperors chart on Thursday), and with my conspiracy theory hat on, gives an opportunity for “interested parties” to offload before the real news a few days later. Why Red Emperor and Range couldn’t have waited a few more days is beyond me, but it smacks of the Desire Petroleum oil then water debacle in the North Falklands basin last year… The FSA should look very closely at these situations.
I think there is plenty of reasons on AIM these days to treat news flow from wild cat wells with plenty of suspicion. Maybe, just maybe, directors aren’t always playing with private investors interests entirely at heart! Red Emperor is currently down 44% at 12p and Range Resources is down 18% at 5.45p. Ouch!
We wary, and keep your eyes open to the apparent facts at hand. Plus take profits!!!
Contrarian investor uk