Australian oil and gas producer Strike Energy lost almost a third of its value at one point on Tuesday as the company’s shares plunged due to problems at a key gas well.
The South Erregulla-3 well unexpectedly failed to flow and was observed to be substantially overbalanced, Strike said in an exchange filing. There was probably a gas-water contact in the well and it will start production testing at another well in the next five days, the company said.
The Adelaide-based producer’s shares tumbled as much as 31% shortly after the open on Tuesday and were down 23% as of 2 p.m. in Sydney.
Strike Energy has secured gas sales agreements for around 42 petajoules from the South Erregulla gas field with AGL Energy and South32 for a period of up to five years, it said in its latest quarterly report.
“Further analysis and data collection is ongoing and Strike is reviewing the potential to return to the well,” CEO Stuart Nicholls in the filing. “Looking forward, Strike will be drilling the Walyering-7 and Erregulla Deep-1 wells in this half.”