Shares in Pantheon Resources PLC (LON:PANR) lost 34% in an early brutal session after the company said its first horizontal well in Polk County, Texas, had failed.
By going laterally, the firm hoped to improve recoveries. Instead it will revert back to drilling vertical wells.
VOBM2 targeted it the Eagle Ford horizon. The problem was the sandstone proved far more abrasive than expected, resulting in a “series of equipment failures”.
Chief executive Jay Cheatham said the “technique will not be repeated”.
He added: “This was the first horizontal well ever drilled into this formation regionally and the abrasiveness of the hard sandstone was unexpected.
“We know that the wells can be drilled quickly and cost effectively vertically, as evidenced in our VOBM1 success nearby, so it makes obvious sense to learn from experience and revert to vertical drilling.”
In the same announcement, Pantheon updated on its VOS1 well, where fracking has been completed, delivering a flow rate of around 920 barrels of oil equivalent a year, comprising 5,500 mcf of gas.
"The good news is that both the VOS1 and VOBM2 wells have encountered significant hydrocarbons in their objective horizons, exactly where we expected to find them, confirming the experience of all three of our initial wells,” said Cheatham.
“In all three cases the results are consistent with our original estimates of the likely recoverable Eagle Ford reserves and I expect all three wells to be commercial producers.
"Our priority now is to press on with the next two wells in our programme as quickly as possible, so that we can complete the delineation of what we have found in both Tyler and Polk County and move towards production at the earliest opportunity, optimising recovery rates on a field-wide basis.”
At 10.30am, the shares were down 51.5p at 98.5p, valuing the business at £211mln.
In the last year (and including Monday’s fall), the stock is up 375% on its success in the Eagle Ford, Texas, one of the most prolific oil and gas areas in North America.