Irish oil and gas explorer Providence Resources fell the most in over a year in Dublin trading as it sketched out plans to abandon an exploration well after encountering a water-bearing reservoir.

Providence fell 10 per cent to €5.50 in Dublin, the biggest drop since April 2012, and dropped as much as 11 per cent to 480 pence in London trading.

The company this morning said the Dunquin North well in the South Porcupine basin off the south west coast of Ireland is to be plugged, as was planned, and the rig to be moved out of Irish waters. Preliminary well analysis indicates the reservoir to be water bearing, the company said.

“The lack of a discovery at Dunquin will be a disappointment,” said Muna Muleya, an analyst at Merrion Capital in a note today, reducing the stockbroker’s risked valuation for the company by 69 pence to 929 pence per share.

The presence of “a working hydrocarbon system” is encouraging for the nearby Dunquin South prospect and the wider south Porcupine Basin, according to Muleya. Dublin-based Providence holds a 16 per cent stake in the license.

ExxonMobil Exploration and Production Ireland (Offshore) Limited has a 25.5 per cent stake in the license and operates the frontier license on behalf of Providence its other partners in the prospect, today’s statement said.

Other partners in the license include Eni Ireland with a 27.5 per cent stake and Repsol Exploracion Irlanda, at 25 per cent.

Bloomberg