HRT fails to find commercial oil in first of three Namibia wells

Mon May 20, 2013 10:01pm EDT

* Announcement comes 10 days after CEO Mello resigned

* HRT says non-commercial amounts of top-quality oil found

* HRT plans to drill two more wells in Namibia with Galp

* Declares latest Amazon region well a dry hole

RIO DE JANEIRO, May 20 (Reuters) - Brazil's HRT Participações em Petróleo SA said it failed to find commercially viable quantities of oil in the first of three wells off Namibia's coast, in another blow for the company whose founder stepped down as CEO this month.

HRT's shares have fallen more than 90 percent from an all-time high in 2011 after its other main project -- a joint venture with Russia's state-owned NK Rosneft AO in Brazil's Amazon -- found natural gas but no significant quanties of oil.

The company's geologist founder, Marcio Mello, who resigned as CEO on May 10, told Reuters in April the closely watched Namibia prospects may hold about 10 billion barrels of oil, enough to supply all U.S. needs for a year-and-a-half.

HRT said on Monday that the Wingat-1 well found small, but not commercially viable, quantities of high-quality light crude at 32 to 42 degrees on the American Petroleum Institute (API) scale.

However, it said the drilling discovered oil source rock that confirmed the oil potential of the Walvis Basin off Namibia.

HRT drilled Wingat-1 with Portugal's Galp Energia SGPS SA which has a 14 percent stake in the well. It plans to drill two additional prospects with Galp and is still looking for a partner in a fourth prospect, known as Meerkat.

Mello, who will remain on HRT's board of directors, said in April that data from U.S.-based oil resource certification company Degolyer and MacNaughton found a 24.1 percent chance, on average, of finding the following volumes in the four blocks: 1.3 billion barrels in Wingat, 4.3 billion barrels in Murombe, 3.2 billion barrels in Moosehead and 1.3 billion barrels in Meerkat.

The Wingat-1 well was drilled in 1,500 meters of water to a final depth of 5,000 meters, using Transocean Ltd's semisubmersible Transocean Marianas rig.

The well was drilled beyond its original target depth of 4,127 meters, an additional effort that found the source rock, HRT said, adding that the well was drilled within budget.

HRT has a 55 percent stake in its Amazon joint venture with Rosneft. The partners have found natural gas, but have not yet made clear how they will transport the gas from the remote region or find a market for it on site.

HRT said on Monday that its latest well in the Solimões Basin of Brazil's Amazon region was being abandoned as "dry".

HRT shares rose 4.1 percent in Sao Paulo on Monday before the Namibia failure was announced. The stock has lost 25 percent this month.

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