When Your Tool Fails Your Stock Drops 35 Percent

Houston American Energy yesterday announced a problematic exploration well. They had (drilling) tool failure. The stock barbarous 35 percent.

I read a lot of press releases: this i is amusing.

HOUSTON, March 1, 2012 /PRNewswire/ -- As reported inwards Houston American Energy Corp's (NYSE Amex: HUSA) Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 as well as inwards Form 8-K on Dec 19, 2011, drilling operations on the Company's starting fourth dimension good on the CPO-4 block inwards Colombia, the Tamandua #1, amongst a projected target depth of 16,300 feet, commenced inwards July 2011 as well as was afterward sidetracked to address drilling issues associated amongst high delineate per unit of measurement area as well as inflows of hydrocarbons as well as fluids into the good bore. As of Dec 19, 2011, the sidetrack good had been drilled to 13,989 feet as well as efforts were ongoing to command the good bore land continuing drilling to the target depth.  

Subsequently, as well as every bit of March 1, 2012, the Tamandua #1 sidetrack good had a seven inch liner run to 13,913 feet as well as was drilled to full depth ("TD") at 15,562 feet.   Upon drilling the good to TD, the good encountered Paleozoics which was a clear indication that the TD had been reached.    

While the good exhibited stone oil shows land drilling, as well as other indications of hydrocarbons such every bit log analysis that betoken possible productive sands, hole weather condition convey prohibited sufficient testing on the bottom hole sections.  There convey been many attempts to evaluate the good resulting inwards tool failures as well as stuck pipe, as well as electrical flow weather condition are such that the operator has made the determination non to seek to reenter the bottom hole sections.  As a final result of these developments, the determination has been made that without the mightiness to effectively examination the lower zones, the nearly prudent course of study of activeness is to plug dorsum the good as well as to farther evaluate the C-7 as well as C-9 Formations.  As previously reported as well as indicated past times the Logging While Drilling data, the good encountered some 200 feet of internet resistive sands inwards the C-7 formation as well as some 140 feet of internet resistive sands inwards the C-9 formation (resistive sands create non necessarily hateful pay).  

Results of the farther evaluation of the C-7 as well as C-9 formations volition hold upward announced every bit shortly every bit they are available.  After attempting to consummate the well, the rig is expected to hold upward moved to i of 2 locations that are currently permitted as well as gear upward to have the rig.  In addition, the Operator has 5 additional locations that are inwards diverse stages of permitting, place as well as construction. 

John

And a follow upward question: tin anyone explicate to me what is meant past times "net resistive sands"? The phrase does non seem anywhere inwards the Google database non linked to this company.

Post script: There is a Bloomberg article which quotes the CEO every bit follows:

“I would similar to larn far clear to our investors that the Tamandua #1 good is non beingness abandoned,” John F. Terwilliger, main executive officeholder of Houston American, said inwards an e-mailed contention today. 

“Current ongoing operations are to brand a completion endeavor inwards the C-9 as well as C-7 sands,” he said. “As previously reported, the Tamandua #1 good exhibited hydrocarbon shows inwards the C-7 as well as C-9 sands, as well as logged some 200 feet of internet resistive sands inwards the C-7 formation as well as some 140 feet of internet resistive sands inwards the C-9 formation. We are eagerly awaiting the results from these completion attempts.”

This corrects a previous article which unambiguously suggested the good was dry.