Dry hole in Angola affects Phillips’ first quarter results

Petroleum News Alaska Staff

Phillips Petroleum Co. said May 10 that initial results show the first exploratory well drilled in block 34, offshore Angola, to be a dry hole.

The company said the dry hole information, received from operator Sonangol P&P in early May, caused it to reassess fair market value of the remainder of the block and determine that the company’s investment in the block needs to be impaired by $77 million, both before and after tax.

Phillips said first quarter results, announced April 26, did not include the impairment, which increased the company’s net loss for the first quarter to $102 million, or 27 cents per share. Net operating loss of $7 million, 2 cents per share, is unchanged.

Phillips said its $5 million share of the costs of drilling the exploratory well will be charged to dry hole expense in the second quarter of 2002.

Further technical analysis of the results from this first well is continuing. The company and its co-venturers have commitments to perform further seismic analysis and drill two more exploratory wells on block 34. While the initial exploratory well was dry, block 34 is a large block and is believed to have potential for exploratory success.