Oil giant says Malvinas well disappoints

Borders & Southern Petroleum reported disappointing results in the Malvinas Islands from the latest well to be drilled as part of the controversial search for oil in the British islands over which Argentina claims sovereignty.

Shares in the company plunged nearly 70 percent to a three-year low of 19.75 pence after it said today that the Stebbing well found evidence of gas but not in quantities that were likely to be commercial.

Technical difficulties meant the well did not reach lower targets, a result it called disappointing.

Borders & Southern's disappointment follows the company's initial success when its first well, also drilled south of the islands, found gas condensate, a liquid which often trades at a premium to crude oil.

The Malvinas look set to be transformed into a new oil producing region following an oil discovery made by another British firm, Rockhopper Exploration, two years ago off the north coast of the islands.

Rockhopper signed a $1 billion deal with Premier Oil on Thursday to help fund the development of the oil field.

Borders & Southern is leading the charge to find oil off the south coast of the islands. The rig will now go to drill for Falkand Oil & Gas.

Investors still wait further news of Border’s earlier discovery in the Darwin well. In April, the Darwin well found a gas condensate reservoir. Fluid samples were sent for analysis to determine the discovery’s commercial potential. The results are expected in the third quarter.

Companies involved in looking for oil in the Malvinas have ignored legal threats by Argentina which has tried to disrupt exploration there and claims sovereignty over the archipelago.