Sometimes you’ve got to read between the lines to find out what a company wants to say, and others will hit you with the bad news up front.

It’s unusual, however, to see from two companies about the same news.

Byron Energy’s (ASX:BYE) and Metgasco’s (ASX:MEL) Louisiana well SM74 D14 is a write off.

It’s been plugged, abandoned and “represents a commercial failure on the part of the project”.

That was from Metgasco, which owns a 30 per cent stake in the well.

Byron on the other hand was a little more circumspect — it is the 70 per cent owner and the operator of the well after all — saying the data suggests a failed trap, a name for an oil-holding reservoir.

Too hard too early

The news is another example of how constant updates ahead of obtaining real data can backfire in a bad way.

Byron has issued near-weekly progress reports on the SM74 well since May, and today disappointed investors torpedoed the stock 23 per cent to a low of 22c.

Metgasco suffered a 15 per cent drop to 4c.

Byron boss Maynard Smith followed the usual script for failed wells, offering the consolation that the data would “provide valuable seismic calibration” for deeper exploration in the area.

Neither company suffered as badly as Pancontinental (ASX:PCL) last year however, which promised oil from an offshore Namibian field for months before turning up nothing and saw its share price slashed by 70 per cent.

Fellow African oil explorer Far (ASX:FAR) also felt the fallout from a failed foray, which halved its share price.


A leaky trap

In Louisiana, Byron says the sands around the trap were good quality “wet…interbedded with thin resistive show” — normally a good sign for oil.

The company suggested the reason it didn’t find oil was because a fault had ruptured the trap and caused the profitable hydrocarbons to leak away, leaving only uncommercial residual oil and gas in its wake.

Byron still has the SM58 well to drill in mid-August.

Louisiana’s offshore fields haven’t been fair weather sailing for Byron.

Unexpected weather meant a scheduled shut down of the SM71 field for pipeline maintenance took longer than expected, and last year it lost some tools down one of the wells and had to fish them out before it could start production.

But production from the area and extra cash from partners that had bought into different wells made Byron cashflow positive in the March quarter, with net cash of $US7.8m ($11.1m) and a bank balance of $US13m.