RIL misses bull's eye in neighbouring KG-D9 well ( Humpty-Dumpty Hardy’s Fall)
--Hardy Oil: Found no hydrocarbon in D9 Block exploration well
--Hardy Oil: To abandon exploration well in KG Basin D9 Block
--Reliance Ind owns 90% in D9 Block, Hardy Oil 10%
--Hardy Oil: Found no hydrocarbon in D9 Block exploration well
--Hardy Oil: To abandon exploration well in KG Basin D9 Block
--Reliance Ind owns 90% in D9 Block, Hardy Oil 10%
Hardy’s stock in the UK where it faced the worst-ever falls. Hardy crashed 37%
Hardy in May this year had said that it estimated the prospective resources at Block D9 at 10.8 trillion cubic feet of gas and 143 million barrels of oil, almost equal to the reserves in the country’s most prolific KG-D6 block, whose monetary value is estimated to be $50 billion. It was then pulled up by the Director General of Hydrocarbon (DGH) saying it was premature to publicize the prospects of reserves. Reliance, which surrendered a third of the 45 exploration blocks to the government for unsuccessful exploration with sunk cost of Rs 1,400 crore, said on Friday it would not surrender this block, but would drill three more wells.
It may not be an auspicious start for Reliance Industries Ltd as it digs deep in the Krishna-Godavari Basin's D9 Block in its quest for more oil and gas. RIL's partner in D9 Block, Hardy Oil and Gas Plc, today told the London Stock Exchange that they would have to abandon the first exploration well in the block after encountering "poor reservoir sands." Simply put, RIL-Hardy Oil combine has so far not found any sizeable traces of hydrocarbons in the block.
The announcement meant that Hardy's stock was pilloried on the London Stock Exchange as investors were betting big on the company striking a jackpot in the D9 Block. The stock lost more than one-third of its value, plunging 36%. The announcement also hit RIL's shares back home with the stock falling nearly 4% in a knee-jerk reaction. The UK-based exploration firm had earlier this year tom-tommed that D9 Block could have potential gas reserves of 10.8 trln cu ft and oil reserves of 143 mln barrels, which had further raised investor hopes. Stakes were also raised as the D9 Block lies right next to the famed D6
Block, where RIL along with Canada's Niko Resources unearthed a huge reservoir of gas along with sizeable oil. RIL is the operator of D9 Block and holds 90% stake, while Hardy owns the rest. RIL, which drilled the first of the four exploration wells planned in the block, will be plugging and abandoning the well.
"While encountering some background gas while drilling, the well encountered poor reservoir sands in both the Middle and Lower Miocene target levels," Hardy Oil said in a notification to the London Stock Exchange today.
It said the exploratory well--KG-D9-A1--drilled to a total depth of 4,861 m subsea to explore the Middle and Lower Miocene targets "will be plugged and abandoned".
The exploratory well, which was spudded on Aug 31 with Transocean's Deepwater Expedition rig at a water depth of 2,754 m, could cost the consortium around $50 mln. The D9 Block or KG-DWN-2001/1 covers an area of around 11,605 sq km. RIL Executive Director P.M.S. Prasad had said last month the company was optimistic on some of the existing offshore blocks in the country, including the D9 Block. "D9 is a good block... But the proof of the pudding is in eating it. That means we have to drill and actually find. The problem is that these are frontier areas and nobody has a good understanding of the geology," Prasad had said.
RIL sources said the company will continue with the exploration plan in the block, which includes drilling of another three exploration wells. Hardy Oil Director Finance Dinesh Dattani told a news channel that the initial exploration setback could delay the drilling of the remaining wells by a few months. Dattani also said the company will be revising the reserve potential of D9 Block following the drilling of the first dry well, but said it is not going to pull out from the production sharing contract.
Technical Outlook:-
The announcement meant that Hardy's stock was pilloried on the London Stock Exchange as investors were betting big on the company striking a jackpot in the D9 Block. The stock lost more than one-third of its value, plunging 36%. The announcement also hit RIL's shares back home with the stock falling nearly 4% in a knee-jerk reaction. The UK-based exploration firm had earlier this year tom-tommed that D9 Block could have potential gas reserves of 10.8 trln cu ft and oil reserves of 143 mln barrels, which had further raised investor hopes. Stakes were also raised as the D9 Block lies right next to the famed D6
Block, where RIL along with Canada's Niko Resources unearthed a huge reservoir of gas along with sizeable oil. RIL is the operator of D9 Block and holds 90% stake, while Hardy owns the rest. RIL, which drilled the first of the four exploration wells planned in the block, will be plugging and abandoning the well.
"While encountering some background gas while drilling, the well encountered poor reservoir sands in both the Middle and Lower Miocene target levels," Hardy Oil said in a notification to the London Stock Exchange today.
It said the exploratory well--KG-D9-A1--drilled to a total depth of 4,861 m subsea to explore the Middle and Lower Miocene targets "will be plugged and abandoned".
The exploratory well, which was spudded on Aug 31 with Transocean's Deepwater Expedition rig at a water depth of 2,754 m, could cost the consortium around $50 mln. The D9 Block or KG-DWN-2001/1 covers an area of around 11,605 sq km. RIL Executive Director P.M.S. Prasad had said last month the company was optimistic on some of the existing offshore blocks in the country, including the D9 Block. "D9 is a good block... But the proof of the pudding is in eating it. That means we have to drill and actually find. The problem is that these are frontier areas and nobody has a good understanding of the geology," Prasad had said.
RIL sources said the company will continue with the exploration plan in the block, which includes drilling of another three exploration wells. Hardy Oil Director Finance Dinesh Dattani told a news channel that the initial exploration setback could delay the drilling of the remaining wells by a few months. Dattani also said the company will be revising the reserve potential of D9 Block following the drilling of the first dry well, but said it is not going to pull out from the production sharing contract.
Technical Outlook:-
- RELIANCE has broken major supports and also its 75Day EMA today to hit lowest level in last 6 weeks.
- RELIANCE has the highest weightage in Nifty - 10.66%
- The stock has broken the upchannel which gave support for the last 3 months and now next important support for the stock may be Rs 1900 which nearly 8% down more from here.
Given the weightage, importance and popularity of the stock along with case going on between Ambani brothers, any weakness in this stock would weaken the indices right from the very foundation and the fall on index level may be even bigger.
Exactly one month before on this same place we had talked about RELIANCE deals making history and today we see this news.
RELIANCE deals give way to major moves, Will this make History again http://akprabhakar.blogspot.com/2009/09/reliance-deals-give-way-to-major-moves.html
| The Reliance Gas Saga Continues… |
| The ongoing Supreme Court hearing in the Reliance gas dispute is likely to see a judgement only in early 2010. The Bench headed by Chief Justice K.G. Balakrishnan, which began hearing on 20 October, will hear the three parties — Mukesh Ambani-promoted Reliance Industries, Anil Ambani-promoted Reliance Natural Resources and the government of India — till mid-November. |
