Borders & Southern led peers Rockhopper Exploration and Falkland Oil & Gas in a downward spiral this week.
This week has been a good one for investors in oil and gas futures, as the prices of both commodities have risen strongly thanks to tensions in the Middle East. Investors in the United States Oil Fund (NYSE: USO.US) gained 5.1% this week, while its sibling, the United States Natural Gas Fund (NYSE: UNG.US), rose by 7.1%.
However, strong rises in oil and gas prices are not always enough to protect the value of junior oil and gas companies, whose fortunes are directly linked to their exploration results. The focus of this week's bad news was the Falkland Islands, which means that Falkland-focused companies occupy all three slots in my selection of this week's worst performers:
Borders & Southern Petroleum
Borders & Southern Petroleum (LSE: BOR) lost 70% of its value, falling to 18p after it failed to find oil or reach target depth on its Stebbing exploration well in the South Falklands Basin. The company was forced to plug and abandon the well, before relinquishing the drilling platform to fellow Falkland explorer, Falkland Oil & Gas. The company's future is now at risk, as the commercial viability of its earlier Darwin gas condensate find is uncertain and may depend on whether any other similar finds are made by other explorers in the area.
Rockhopper Exploration (LSE: RKH) fell by 24% this week, dropping to 193p. This share also featured in my top fallers last week, and the cause of this week's sell-off is likely to be a combination of last week's farm-out deal and the more cautious assessment of prospective resources in Falkland waters prompted by Borders' double failure to find oil.
Falkland Oil & Gas
Falkland Oil & Gas (LSE: FOGL) shed 15% this week to 73p. The company is has taken over the drilling platform that was being used by Borders & Southern and is about to start drilling its first exploration well in the Loligo prospect, which lies in a neighbouring area to Borders' wells. This proximity -- and fear that Loligo will be similarly disappointing -- is likely to have been behind this week's fall in the share price, as there is no possibility of any concrete news until later this year.
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> Roland owns shares in Falkland Oil & Gas but does not own of the other shares mentioned in this article.