Two companies’ shares plummet as big gas gamble fails off WA coast

News that a $35 million exploration well off WA failed to find any gas caused the shares in two small ASX-listed companies to crash on Monday.

The share prices of Global Oil and Gas and Prominence Energy that had farmed into Western Gas’ Sasanof well in the Carnarvon Basin off the Pilbara coast were both down about 75 per cent in early afternoon trading in Sydney.

The dry exploration well is the end of another attempt by privately owned Western Gas to develop the Equus gas fields it bought off US giant Hess in 2017 for $US2.

Western Gas brought in the two ASX companies and London-listed Clontarf Energy to pay for most of the estimated US$20-25 million ($28-35 million) drilling cost in return for a 47.5 per cent share of the well.

Over the weekend drilling that started two weeks ago went through the layer more than two kilometres below the seabed where gas was expected, but “no commercial hydrocarbons were intersected” according to a Western Gas statement on Monday morning.

“Obviously this is a disappointing result,” Western Gas executive director Will Barker said.

Before drilling, the Sasanof field was estimated to have a mid-case resource of 7.2 trillion cubic feet of gas and 176 million barrels of light oil called condensate, according to an independent assessment procured by Western Gas.

Such a result would have put the field in the same league as Woodside’s Scarborough, with 11.1 Tcf of gas but negligible condensate.

However, the assessment also put the chance of success at 32 per cent and the odds went as predicted for investors.