(Alliance News) - Challenger Energy Group PLC on Wednesday said that its Saffron-2 well in Trinidad has been successfully drilled and that work is underway to improve production levels at the site.
Despite the drill completion, Challenger "failed to achieve sustained production" from zones due to technical and mechanical issues encountered during tests, Chief Executive Eytan Uliel commented.
Challenger shares plummeted 22% to 1.35 pence in London following the announcement.
A commercial production rate of 81 barrels of oil per day has been established at Saffron-2, with produced oil already being sold and generating immediate revenue for the company.
However, whilst commercial, the current flow rate being produced from the well will come as a disappointment to shareholders according to analysts at SP Angel.
Nevertheless, Challenger is planning to drill further wells and production rates will be maximised by additional clean-up and near-term production income will be improved, the company said.
The Upper Cruse reservoir units also remain to be perforated and produced, Challenger noted.
"Pleasingly, testing in the Middle Cruse has resulted in an economic level of production thus far being achieved, and we are working to increase production further," Uliel said.
"Focus now turns to integrating what we have learned from this well, to updating our resource estimate accordingly, and to defining the best way forward for the project as a whole - building production and cashflow remains our overarching strategic imperative."
By Will Paige; willpaige@alliancenews.com
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Challenger Energy (CEG)