Oil explorer Rockhopper let down investors yesterday with the information that one of its wells off the coast of the Falklands holds no oil.

Shares fell in excess of ten per cent subsequent to the announcement about the Ernest well, before paring some losses to close down one per cent at 302.3p.

The Aim-listed Corporation announced that it will direct its attention to the nearby Sea Lion well, which struck around 242m barrels of obtainable oil in May.

The latest well drilled in the Falkland Islands by the British oil explorer Rockhopper has been found to be a dry hole.

The drilling of Rockhopper's Ernest prospect was being carefully observed after the Sea Lion well, drilled by the company in the same basin in May, resulted in a significant oil discovery that sent Rockhopper's shares soaring by
500 per cent to more than 330p.

Executive chairman Dr Pierre Jungels said that: “The group has been transformed by the discovery on the Sea Lion prospect and is now working through the steps required to ensure that shareholders get the best possible value from it.”

“The result of Ernest is disappointing, but the well was always designed to investigate an entirely different geological play type from Sea Lion,” added the managing director Sam Moody.

In the meantime Falkland Oil & Gas has dropped 9.75p to 113.25p following reported losses of $2.16m for the six months to June. Its cash balance has fallen from $93.5m to $80.4m, and after abandoning Toroa it is now seeking a suitable rig to drill in the deeper water areas of its license. But it said there was considerable competition for suitable rigs, which could extend the drilling programme into 2011.

The company will now move to carry out further tests on the Sea Lion discovery to help it plan a potential appraisal campaign. Shares in Rockhopper closed down 2.5p at 302.25p last night, valuing it at £582m.