Oil and Gas Eye Q4 2013

Fallers in Q4 suffered disappointing drilling results and problems with deal execution

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59% of companies in the AIM oil and gas universe registered a fall in share price in Q4, reflecting unsuccessful exploration wells and problems completing proposed deals.

Wessex Exploration’s share price fell 52%. In November, it announced that GM-ES-5, the final well of the 2012-2013 four well exploration programme in the Guyane Maritime Permit offshore French Guiana, had not found hydrocarbons, and will be plugged and abandoned.

Wessex currently owns an effective 1.2% equity interest in the Guyane Maritime Permit through its 48% holding in Northpet Investments Limited, a joint venture with Northern Petroleum. Northern Petroleum’s share price fell 3% over Q4.

In December, Serica Energy announced that the FD-1 wildcat exploration well in the Foum Draa licence offshore Morocco had not yielded commercial hydrocarbons, and its share price ended Q4 down 38%. San Leon Energy, which holds a larger 14.17% interest in the same block, saw a 10% fall in share price.

Range Resources’ share price fell 37%. In October, it said it was involved in discussions with International Petroleum on a range of corporate alternatives to their original merger proposal, which may or may not include a merger of the two companies, albeit on terms to be renegotiated.

Range Resources said the discussions were the result of clarity on the sale of International Petroleum’s assets in Kazakhstan, the likely proceeds from this sale, and International Petroleum’s associated shift in focus to its African assets.

In November, Trap Oil said it would not proceed with the proposed farm-in to the Trent East Terrace Area in the North Sea as certain conditions had not been met. The previous month, it said it had been informed by Noreco that it no longer intended to drill the Crazy Horse well, which was scheduled for 2014, and the licence has now expired. Trap Oil’s share price fell 13% in Q4.

Three companies exited the index at the end of Q4: Bowleven; Circle Oil; and Iofina.

Performance of Oil and Gas Eye index and FTSE 350 Oil and Gas Producers index since 2008

EY - Performance of Oil and Gas Eye index and FTSE 350 Oil and Gas Producers index since 2008

Source: EY, Thomson Datastream