New Zealand Oil and Gas shares dropped slightly this morning after only traces of hydrocarbons were found in the first of its four-well summer drilling program.
The company (NZX: NZO), which began drilling the Albacore-1 well using the ENSCO-107 jack up rig on December 5, this morning announced the well was not commercial.
Forsyth Barr analyst Andrew Harvey-Green said he expected the share price would continue to drop, but bounce back slightly later today, but any more than a 10 cent drop would be an over reaction.
Interest in the company over the last month was due to a combination of factors, including the summer drilling programme, he said.
The well, 70km north of New Plymouth in the northern offshore Taranaki basin, will be plugged and abandoned after drilling reached a depth of 2133 metres on Sunday.
The ENSCO-107 will now return to Singapore.
New Zealand Oil and Gas (through its subsidiary, NZOG Offshore Ltd), has a 40% stake in the Albacore permit, along with operator Westech (50%) and Mighty River Power Gas Investments (10%).
Other scheduled wells include the exploration well, Hoki, and two appraisal wells near the Tui oil field.
The Kan Tan IV semi-submersible rig will drill the Tui wells and is expected to arrive in the country in late January.
Shares dropped from $1.72 to $1.66 early this morning.