tap raises questions on tallaganda

Peter Klinger, The West Australian
April 19, 2012, 7:22 am Tap Oil suffered at the hands of investors yesterday after questioning whether the high-impact Tallaganda-1 well in the Carnarvon Basin, which had been hoped for as a potential supply source for an LNG project, was in fact commercial.

Tap shares slumped almost 11 per cent to 78.5¢, wiping $23 million off its market value as investors reacted with disappointment to the outcome of a well they had hoped would transform the Perth oil and gas company.

"Further analysis is required to assess the commercial viability of the project," Tap, which has a 20 per cent stake in the BHP Billiton-operated well and needs BHP's approval for announcements, said yesterday.

Tallaganda struck gas when it reached a final depth of 4.4km a week ago. At the time Tap announced that "gas shows were encountered" and yesterday reiterated that further analysis had "confirmed a gas discovery".

Tap did not provide more details yesterday.

It was a different story for BHP, which told reporters yesterday that Tallaganda had encountered a "gross hydrocarbon interval of 245m and 86m net pay in the well" before adding that more evaluation and appraisal was required to determine the well's commerciality.

Tap last night would not comment on BHP's Tallaganda version.

Tap shareholders are unlikely to be impressed given BHP appears to be more bullish on Tallaganda than it has allowed Tap to be. Tap shares were worth 92¢ a week ago on investor hopes Tallaganda would live up to its hype as a likely success