Beacon Energy PLC (AIM: BCE) shares dropped sharply on Monday morning following the release of disappointing results from the Schwarzbach sidetrack well at the Erfelden field in Germany.
The company informed investors through a statement that testing performance suggests the new sidetrack well will stabilize with production rates between 50 and 100 barrels of oil per day, significantly below expectations.
The company stated that the most likely reasons for the poor performance are residual reservoir damage and poor permeability in this specific area of the Erfelden field.
Additionally, Beacon Energy highlighted that due to current financial uncertainties, it might not finalize and publish its annual report for the year ending December 31, 2023, by the June 30 deadline. If this occurs, its shares would be suspended on July 1 (next Monday).
“This is a hugely disappointing outcome for all stakeholders, given the very encouraging results obtained from the electronic logs,” said chief executive Stewart MacDonald in a statement.
“The likely stabilized production rate indicates we have been extremely unlucky with the challenges encountered in the original well, and our technical team is working diligently to understand these results against the reservoir characteristics derived from the electronic logs obtained.”
MacDonald added, “The company will now consider a range of options to reduce costs, maximize cash generation, and assess the next steps.”
In London, Beacon shares plummeted 66% in early trading, reaching 0.005p.
