HOUSTON, June 13 (Reuters) - Faroe Petroleum said a closely watched well i
t shared with Chevron Corp in the UK North Sea would be abandoned, citing the lack of a workable reservoir system at the site.
The Aberdeen-based oil and gas explorer, which operates in the UK and Norwegian North Sea, also said drilling costs were higher than expected, after bad weather and technical problems delayed work.
Faroe, which has a 10 percent stake in the Lagavulin licence, said it found hydrocarbons and a working petroleum system at the prospect west of Shetland region, but no reservoirs after drilling 1,567 metres (5,140 feet).
'Whilst the outcome of the well is a disappointment, the presence of hydrocarbons has however now been proven and offers encouragement to continue our deep water exploration plans in the region,' Chief Executive Graham Stewart said in a statement.
The company said it was well-funded, despite incurring additional costs while drilling the Lagavulin well, and the result would not impact its future drilling programme.
In November, Faroe said the Lagavulin well had a reserve potential of 500 million barrels of oil equivalent.
Chevron confirmed that it had completed drilling operations at the Lagavulin well, which it started last October, in about 5,000 feet (1,520 m) of water 160 miles (257 km) north of the Shetland Islands.
'The well is now being plugged and abandoned,' Chevron said in a statement.
(Reporting by Anirban Sen in Bangalore and Braden Reddall in Houston; Editing by Don Sebastian) Keywords: FAROEPETROLEUM/
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