Salamander Energy shifts Asia oil drilling as wells are dry

Asia-focused oil and gas company Salamander Energy will shift its drilling campaign from the Vinh Chau basin after a second well it drilled there proved dry.

The Tom Hum Xanh-1X was drilled to a total depth of 2,103 metres without encountering significant hydrocarbons, London-listed Salamander said today.

The first well drilled in the basin, Tom Su Lua-1X, was also announced to be dry last month.

"We are disappointed that drilling in this frontier basin has not offered more encouragement. Salamander's drilling campaign will be moving on to the proven Kutei basin, offshore East Kalimantan, Indonesia," said chief executive James Menzies.

Shares in Salamander, which have lost a quarter of their value so far this year after several drilling disappointments, closed yesterday at 224p, valuing it at about £342 million.

Oriel Securities analysts Richard Rose said the result would not impact his net asset value estimates as the well was funded by Origin Energy.

"Whilst disappointing, this latest result was not unsurprising and we saw both Vietnamese wells as the upper end of the risk profile for this year's programme," he said.