October 6, 2011 / 1:27 PM / 7 years ago

CORRECTED (Sept 22)-UPDATE 2-Petrominerales wells tests disappoint; shares slip

(Corrects Sept 22 item to delete reference in paragraph 6 to majority holding by Petrobank. That stake was distributed to Petrobank shareholders in late 2010. The same error was included in several other recent stories on this company.)

* Says Babaco-1, Calandria-1 well flows at non-commercial rate

* Says Boruga tests only water

* RBC cuts price target by C$2 to C$48; production estimate

* Shares down 14 pct

Sept 22 (Reuters) - Some potential wells of Petrominerales Ltd in Llanos Basin in Colombia tested below commercial levels, sending its shares down as much as 14 percent.

Colombia’s fourth-largest oil producer’s Babaco-1 well flowed at non-commercial rates, while Boruga, which had previously indicated 35 feet of net oil pay, produced only water during the test.

Calandria-1 exploration, which had shown 40 feet of net oil, did not produce commercial amounts of hydrocarbons, and the company blamed it on the heaviness of oil.

“In the currently weak equity markets, we anticipate significant short-term weakness following this update,” said RBC Capital Markets analyst Nathan Piper in a note to clients. The brokerage cut its price target on the stock by C$2 to C$48.

Shares of the company were trading down 9 percent at C$26.61, compared to a more than 3 percent fall in the wider TSX index. Earlier the company’s shares touched a session low of C$24.92.

On Sept. 14, Petrominerales said it expected production to reach full capacity within 48-72 hours at the Colombian fields, which were rocked by protests.

On Thursday, the company, however, said it recovered 95 percent of its production, dragged by a pump failure at one of its wells.

Its August production of 39,323 barrels of oil per day (bopd) was below its average 40,000 bopd.

RBC’s analyst Piper also cut third-quarter production estimate by 10 percent. (Reporting by Aftab Ahmed in Bangalore; Editing by Sriraj Kalluvila)

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