The All Ordinaries Index (ASX: XAO) is up a healthy 0.7% today, but ASX All Ords stock Melbana Energy Ltd (ASX: MAY) isn't joining in the rally.
Shares in the oil and gas company closed yesterday trading for 6.6 cents. In morning trade on Tuesday, shares were swapping hands for 3.6 cents apiece, down a precipitous 45.4%. The share price has since regained some of those losses, trading for 3.9 cents apiece at the time of writing, down 40.9%.
Here's what's putting the ASX All Ords stock under heavy selling pressure.
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What did the ASX All Ords stock report?
The Melbana Energy share price is crashing after the company released an update after market close yesterday on its appraisal well Alameda-3.
The ASX All Ords stock holds a 30% interest in and is the operator of Block 9 PSC, an oil project located onshore in Cuba, where the well is situated.
On 9 June, the company commenced a flow test of the Marti reservoir, penetrating the Alameda-3 well.
As you can likely guess by the cascading share price, all did not go well with the latest testing.
Melbana Energy noted that despite good indications of fracturing from wireline logs and high reservoir pressures, "results of the test were not as expected".
The ASX All Ords stock took two stabs at flowing the well but said that both times it did not achieve the complete removal of drilling mud and downhole fluids from the test string. And oil did not flow to surface.
On the plus side, Melbana reported recovering oil on reverse circulation of the DST string, demonstrating the presence of oil very deep on the structure.
The company has ruled out mechanical blockage and suspects the lack of flow is due to emulsions in the lower portion of the test string. It has now suspended the Marti reservoir section while it awaits the results of the latest data analysis.
Melbana will now conduct tests on the shallower Alameda formation.
What did management say?
Commenting on the flow test results sending the ASX All Ords stock plunging today, Melbana Energy executive chairman, Andrew Purcell, said:
The logs we have obtained in the Marti formation show excellent fracturing and the down hole pressure is very high. This is consistent with what we encountered here last time but, so far, we've been unable to get clean flow to surface.
There may have been a reaction between the different fluid system we are using this time (which has delivered excellent well control) and the reservoir so we're going to pause this test whilst we study the samples and data we've obtained and get on to testing the shallower Alameda formation in the meantime.
With today's intraday losses factored in, the ASX All Ords stock is down 56% over 12 months.
