Advance Energy PLC (AIM:ADV) told investors Carnarvon Petroleum, operator of the Buffalo project, completed wireline logging for the Buffalo-10 well.
Only residual oil was encountered in the well, the company said in a statement. Buffalo-10 will now be plugged and abandoned.
Additionally, chief executive Leslie Peterkin added it is likely both Advance and Carnarvon will relinquish the Buffalo asset.
“The results of B-10 are both disappointing and hugely surprising given the independently verified risk assessment which confirmed a highly likely commercial outcome from the well,” Peterkin said,
“Across the joint venture, we invested a significant amount of technical work into the project which underpinned our high degree of confidence that the well would unlock the significant value of the field.
“The post-well evaluation indicates that the well was drilled into the hanging wall of a fault, although uncertainty in seismic resolution also contributed to the reservoir being significantly deeper than expected at this location. It is not the case that this result means that all of the attic oil volumes certified by RISC have been negated.
“The Buffalo Joint Venture will conduct further technical analysis in the coming weeks to fully understand why the attic was not encountered as prognosed at the drilled location.”
Looking ahead, Peterkin said Advance Energy remains funded for the immediate near-term, and, has a pipeline of identified, attractive opportunities.
“We will now turn our full attention to bringing at least one of these to fruition this year. These are value accretive opportunities and include an opportunity with cash flow, which would be suitable for debt or vendor financing,” Peterkin added.
In the meantime, the company intends to significantly reduce costs while it assesses the next steps.