December 20, 2010 / 8:58 PM / in 7 years

UPDATE 1-Archer Petroleum to abandon Radway prospect

* Tests show oil in well was not commercially profitable

* Extends closing date on Texas prospect buy

* Shares down 8 percent

Dec 20 (Reuters) - Canadian oil and gas explorer Archer Petroleum Corp ARK.V said it would abandon its Radway Prospect in Alberta after tests showed the project would not be profitable, sending its shares down 8 percent.

Tests on the single wellbore operated by South Bay Resources showed the sands contained heavy oil than natural gas, and that the oil was not of sufficient gravity to be commercially profitable.

“Since we believe that the pay in the well will be, at best, marginally profitable, we will be abandoning the Radway Prospect,” said Claude Perrier, chief executive of Archer, which has 35 percent working interest in the well.

Archer will now focus on buying interests comprising 1280 acres in the Matagorda Bay prospect in the Texas Gulf of Mexico. It has extended the closing date on the deal to Jan. 17 to allow all documentation to be completed. Shares of Archer, which also owns projects in the Permian Basin and the Bakken Shale, were down 8 percent at C$0.12 in late afternoon trade on the Toronto Venture Exchange. (Reporting by Savio D‘Souza in Bangalore; Editing by Vyas Mohan)

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