Fletcher forsakes Brunei gas well

WELLINGTON - Fletcher Challenge Energy has abandoned its first gas exploration well in Brunei and will soon commence a second.

The Bendahara Selatan A-1 well was not commercial.

"We are disappointed that this well is not commercial but the information gathered during drilling will significantly enhance our understanding of the region, and greatly assist in further exploration efforts in offshore Brunei. We will now be turning our attention to Laksamana Utara, which is the second well in our campaign," said Fletcher Energy chief executive Greig Gailey.

Preliminary analysis suggested BSA-1 found 40m of gas-bearing sand within the shallower Pleistocene target interval, and the primary and secondary Pliocene target level sands were also gas bearing but reservoir quality and thickness were limited.

Fletcher Energy will begin drilling the Laksamana Utara offshore well this week. A drilling rig is expected to arrive by Thursday.

Fletcher Energy, which owns a 27 per cent stake in offshore blocks covering 2400sq km, closed on the Stock Exchange down 11 cents at $5.16.


Meanwhile, the Bloomberg news service reported one of the energy division's American investments would sell shares publicly.

California-based Capstone Turbines, which sells a small generator that produces electricity and heat with less pollution than traditional generators, is preparing to sell 8.3 million shares to fund expansion.

Indicative pricing valued Fletcher Energy's 22 per cent stake at $NZ183-$206 million compared with a book value of $20 million.

Credit Suisse First Boston senior broker David Price said that added about 60 cents to Fletcher Energy's share price.

Credit Suisse has a buy recommendation on the stock, valuing it at about $6.60.

Fletcher Energy spokesman Stephen Jones said the company had no plans at the moment to sell the stake.

- NZPA