Shares in oil and gas group Faroe Petroleum (LON:FPM) fell by nearly 20p to 150.25p during trading this morning on news that its Lagavulin exploration well was set to be plugged and abandoned after failing to find a workable reservoir. While the Chevron-operated well, drilled in acreage to the west of Shetland, did find a working petroleum system, it failed to live up to the successes of Faroe’s Glenlivet and Tornado discoveries made in the region during 2008. Faroe holds a 10% stake in the Lagavulin and is now turning its attention to the next wells in a 17-well campaign spanning the next two years.

Well 217/15-1z, on the Lagavulin prospect was spudded in October 2010 and drilled in 1,567 metres water depth. Total depth was reached on 10 June 2011. Hydrocarbons and a working petroleum system were confirmed but no workable reservoir system was found to be present at the location. Extensive data gathering has been undertaken in the well and detailed analysis is underway to fully evaluate the well results. Faroe noted that the Lagavilin drilling had been slower than expected because of a number of operational and technical challenges, notably poor weather conditions and variable drilling formation. As a result of the delays, the cost of the well was greater than projected.

Since it was set up in 1998, Faroe has been active in basalt exploration in the Atlantic Margin, in partnership with several major oil companies, including Chevron, BP (LON:BP), Eni and Statoil. It said the results of the Lagavulin exploration well would significantly advance its understanding of the geology and ability to unlock the high potential basalt play in the Atlantic Margin region.

Among the fully-funded 17 firm and expected wells scheduled to end 2013, Faroe is participating in two further near-term high impact exploration wells in the west of Shetlands area, namely the shallow water Fulla well, where it holds a 50% interest, and the deep water North Uist well. The first of these to be drilled, Fulla, is located close to the producing Clair oil field, in shallow water and is expected to commence in June, with Faroe as operator, while North Uist is now expected to be drilled in early 2012. Furthermore, three wells are scheduled to spud in Norway in the coming months: Butch and T-Rex in August and…

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