Shares of Taipan Resources (CVE:TPN)(OTCQX:TAIPF), which have lost almost half their value in the past year, took a turn for the worse Monday after saying its Badada-1 onshore well in Kenya will be plugged and abandoned as a dry hole.
The stock was down at 3 cents as of 1:10pm ET, falling 70 percent.
The oil and gas junior, in an update released late Sunday, said the well, which is operated by Taipan’s Kenyan subsidiary, was drilled to a total depth of 3,500 metres. It took a total of 46 days, and was completed within the prescribed budget of $25.8 million.
The decision to abandon the well, which is located on Block-2B, was taken following the completion of logging operations. Block-2B is held 30 percent by Taipan, while 55 percent is owned by Premier Oil and Tower holds a 15 percent working interest.
“The well encountered a thick and previously untested Neogene age succession in the Anza Basin, of similar age to that encountered in the Lokichar and Albertine Basins, confirming the pre-drill geological model for this basin,” Taipan said in a statement.
“Although the well has failed to find commercial hydrocarbons, minor gas shows and traces of heavier gas molecules indicate the presence of a thermogenic source rock in this previously untested basin.”
Chief executive officer Maxwell Birley acknowledged that the results from the Badada well were not what shareholders had hoped for, but reminded investors that Block 2B stretches across 5,458 square km, with several drill prospects still present.
“We will further evaluate results from the Badada well, and discuss next steps with our partners prior to making a decision with respect to future exploration activities in the Block,” he added.
The Africa-focused oil explorer has interests in Block 1 and Block 2B onshore Kenya through its subsidiary, Lion Petroleum Corp. It holds a 20 percent working interest in Block 1, which is operated by East Africa Exploration Ltd, a subsidiary of Afren plc.