Salamander Energy issues disappointing well update

Salamander Energy on Thursday issued a disappointing update on its Bedug-1 exploration well in the Bontang production sharing contract.

Although the well was found to be a gas discovery, exploration was terminated as a result of high pressures.

This also prevented the drilling of a side-track down-dip to further evaluate the oil bearing BT45 interval.

James Menzies, Chief Executive of Salamander, said: "Finding over 10 metres of gas pay on the crest and 11 metres of oil pay on the flank of the Bedug structure is very encouraging.

"Though it is frustrating that the unexpectedly high pressures have prevented us from fully evaluating the Bedug and North Kendang prospects, each of the three wells has provided evidence of the all elements of the petroleum system, and we are now evaluating results while determining the next steps in the programme."

The company has now completed the current phase of Salamander's multi-well programme in the North Kutei basin, and work is on-going to evaluate the commercial potential of the discoveries made.

The news was announced as the group held its annual general meeting, at which it confirmed that group production is ahead of budget at around 18,000 barrels of oil per day, driven by developments in the Bualuang field.

The share price plunged 16.59% to 171p by 15:07 Thursday.

NR