RIL stock sinks 4% on dry gas well

Hardy Oil to abandon well in D9 block in Krishna-Godavari basin.

Hardy Oil's announcement that it is abandoning a well in the D9 block of the Krishna Godavari basin pulled down the stock of Reliance Industries, operator of the field, by four per cent on the Bombay Stock Exchange today. The scrip closed at Rs 2047.3 on the exchange.

Hardy’s stock plunged 36 per cent on the London Stock Exchange. Hardy Oil and Gas, through its wholly owned subsidiary, Hardy Exploration and Production (India) Inc, holds a 10 per cent participating interest in the D-3 and D-9 fields in the K-G basin on the east coast. RIL holds 90 per cent in the blocks.

The British company, in a statement to the LSE, said the well, KGD-A1, drilled for exploration purposes, would be “plugged and abandoned”. “While encountering some background gas while drilling, the well encountered poor reservoir sands in both the Middle and Lower Miocene target levels,” it added.

In an official statement, RIL said it “remains committed to pursuing the exploration campaign within this block and will drill three more wells. Any rumour of RIL surrendering this block is completely baseless and unsubstantiated”.

This May, Hardy Oil claimed the D-3 and D-9 fields off the east coast may hold as much as 9.5 trillion cubic feet and 10.8 trillion cubic feet of gas, respectively citing estimates by consultant Gaffney, Cline and Associates Ltd.

However, following this announcement, the upstream regulator, Directorate General of Hydrocarbons (DGH), had disputed Hardy Oil’s estimates, terming it” a false and a wrong claim” as exploration and production companies in India are required to submit data to the DGH and get it vetted before making a formal announcement of estimated reserves.

V K Sibal, the Director General of Hydrocarbons, in a letter to the Securities and Exchange Board of India and the London Stock Exchange, said the claims had not been verified by the oil regulator.

“Hardy’s announcement is indicative of a dubious attempt to influence the share market sentiments in their favour,” Sibal had said in his letter.