Hardy abandons exploration in one D9 well of KG basin

Oct. 23 It took one piece of bad news from its favourite hunting ground, the Krishna-Godavari Basin, to send the Reliance Industries stock plummeting nearly four per cent on Friday to Rs 2,047.30 from Rs 2,133.55.

The company has a 90:10 joint venture with Hardy Oil and Gas of the UK for exploratory work in the KG D9 block. Earlier in the day, Hardy communicated to the London Stock Exchange that it would have to “abandon” the first exploration well, KGD9-A1, in the block after encountering “poor reservoir sands”.

Hardy stock dips

In the process, the Hardy stock crashed 36 per cent on the London Stock Exchange and had its fallout in the RIL scrip back home. Incidentally, Hardy operates in the block through its wholly-owned arm, Hardy Exploration & Production (India) Inc.

The well will now be plugged, with drilling due on at least three more. RIL, meanwhile, reiterated that there was no move to abandon the entire exercise at the block. “Any rumour of RIL surrendering this block is completely baseless and unsubstantiated,” the company said in a press release. There is a commitment to drill three more wells in this block, it added.

According to RIL, the well had encountered sands at both the “upper and lower Miocence target levels” and that the data obtained from this first well were significant. This would be integrated with the “existing geological model” to improve the understanding of the geology and petroleum system within the block before drilling subsequent wells.

“RIL remains committed to pursuing the exploration campaign within this block and will incorporate data and information from this well to upgrade the prospect inventory for drilling of three more wells,” the company said.

According to sources, the news hit market sentiment in a big way simply because there were huge expectations from the well.

Agency reports, in fact, said that Hardy had predicted potential gas reserves of 10.8 trillion cubic feet and oil reserves of nearly 150 million barrels which had only fuelled investor expectations.

From the market’s point of view, the KG Basin could do no wrong especially in the context of the hefty gas find on the D6 block where RIL along with Niko of Canada have reported a substantial discovery.

“It is not as if every well will yield oil or gas. World over, companies go through their own ups and downs in exploration and production. This is all part of the game and there is no need to panic,” sources said.