Red Emperor shares plummet after disappointing drilling update

Shares in Red Emperor Resources plummeted on Monday after the company said it failed to find any viable hydrocarbons in the Palawan Basin in the Philippines.

The company said the first reservoir at the Hawkeye-1 exploration well was of “variable quality”, while the second was a “poorer quality reservoir.” It said that even if confirmed oil bearing, the combination of poor reservoir and low net pay would render the potential leg sub-commercial.

“While the Hawkeye-1 exploration well has proven the existence of hydrocarbons in SC55, the hydrocarbon size discovered appears to be at the low end of expectations and not likely economic to develop,” Red Emperor said.

The well will now be plugged and abandoned and the results will be analysed with respect to other prospects, including Cinco, in the license that potentially share the same charge source.

The company said the well cost a total of $25m and it expects to retain a cash balance of around $12m after operations are completed.

At 0926, Red Emperor shares were down 58.9% at 1.34p.