Stuart Petroleum Shares Drop as Well Finds Water

By Angela Macdonald-Smith

Oct. 1 (Bloomberg) -- Stuart Petroleum Ltd., operator of the Bazzard-1 exploration well off Australia's southeast coast, fell the most in almost six years in Sydney trading after saying first area targeted by the well contains water instead of oil.

Adelaide-based Stuart dropped 27.5 cents, or 21 percent, to A$1.065 on the Australian stock exchange. Moby Oil & Gas Ltd., a partner in the venture, fell 44 percent, the most since its July 2004 listing. The exchange's benchmark energy index gained 2.4 percent.

The Bazzard-1 well is targeting a discovery of about 100 million barrels. Stuart is funding all of the drilling under an investment agreement with the partners, which include Cue Petroleum Pty and Exoil Ltd.

Results from the initial target zone reached by the well showed ``minor'' signs of oil and gas, yet ``the surrounding sands are interpreted as water saturated,'' Stuart said today in a statement to the exchange. Drilling at the well is continuing toward the next targeted zone, it said.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net