Leaving analysts and the press equally befuddled, Canadian Superior said the abandonment of the El Paso Mariner I-85 well in the Atlantic Ocean off Nova Scotia, following 3-1/2 months of drilling, was actually not out of the ordinary when dealing with a new prospect.

In a late Monday conference call, Canadian Superior’s management attempted to calm concerns, which have run rampant since the company reported late last week that despite encountering gas pay in multiple zones on its Mariner I-85 well, it has halted drilling on the deepwater prospect because of pack ice and potential cost overruns (see Daily GPI, March 12). On this news, shares of Canadian Superior skidded 44.44%, or $1.44 per share, to close at $1.80 per share on March 11.

“Canadian Superior’s technical staff recommended to management to carry on and do the drill stem testing of this particular well,” said Coolen. “That same technical recommendation was made by our joint venture partner to their management.

“Although we at Canadian Superior certainly endorsed the recommendation and approved to carry on with the drill stem testing, in this case, our joint venture partner did not accept the recommendation from their technical team and chose to put us on notice so that any drill stem testing or any additional work on the well would be 100% to our account if we did not accept the operator’s decision not to drill stem test and plug and abandon the well.”

Although Canadian Superior said blame should not be put on El Paso, the company said it “was caught by surprise” by decisions being made by El Paso, which were likely coming out of its Houston office. “I don’t think that there was any doubt that if we had a test of this well we would have got gas, it was just a matter of quantity,” said Greg Noval, president of Canadian Superior. “That was a several million dollar issue, and quite frankly being a small company, we couldn’t afford the risk of taking on the additional costs at this juncture in our corporate career.”

Noval said some of the negative response the company has gotten from analysts has come from “some of the people in the peanut gallery, where it’s really easy to have somebody stick a mike in your face and give a quick quote without thinking or knowing exactly what is happening, or what has happened with this particular well.”

Sticking to the positive, the company said well logs have proved there was gas on its Mariner block, giving it confidence that a gas pool sits between the now abandoned Mariner I-85 and the Arcadia J-16 wells, drilled nearby two decades ago by ExxonMobil Corp. Following the hour-long call, management did not take any questions.

A number of class action lawsuits were filed Monday in the United States District Court for the Southern District of New York on behalf of purchasers of the securities of Canadian Superior Energy (see Daily GPI, March 16) after the announcement of the drilling suspension last week.

In the suits, the complaint alleges that Canadian Superior, Noval and Coolen, issued a number of “materially false and misleading statements” about its El Paso Mariner I-85 well from Nov. 17, 2003 to March 11, 2004. The suit charges the defendants with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.

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