Shares in Heritage Oil fell 17% this morning following their announcement of a major gas find in Kurdistan. [UPDATE: the shares ended the day down 29%]
While the discovery is very significant, the market was hoping for oil rather than gas, leading to a share sell-off.
The full text of the announcement follows:
Heritage Oil Plc (LSE: HOIL), an independent upstream exploration and production company, announces a major gas discovery in the Kurdistan Region of Iraq (“Kurdistan”). Following completion of the deepening and testing of the Miran West-2 well, management estimates that the Miran West structure has P90-P50 gross in-place volumes of gas of between 6.8-9.1 trillion cubic feet (TCF) with 42-71 MMbbls of condensate and 53-75 MMbbls of oil.
· Highly productive Jurassic reservoir intervals tested at a restricted cumulative flow rate of over 75 million cubic feet per day (MMscfd)
· Estimated gross P90-P50 in-place volumes of between 6.8-9.1 TCF, with a P10 upside of 12.3 TCF
· Management estimates Heritage has mean risked contingent and prospective resources in Miran West and Miran East of 744 million barrels of oil equivalent (MMboe), based on a 75% working interest
· Significant increase in contingent resources following the successful testing of hydrocarbons
· Development options being considered with first production targeted for 2015 using planned regional infrastructure
· 2011 multi-well drilling programme has been accelerated with the Miran West-3 appraisal well scheduled to commence drilling in the second quarter
· Second rig planned to commence drilling in the autumn of 2011
· Size of 3D seismic programme has been expanded following this successful well
· Miran East prospect risk reduced