Joint venture partner Horizon Oil said the seal units and good reservoir sands were present as prognosed and the structure came in high to prediction, but both the primary and second targets were water wet.

There was a lack of shows in the right sandy zones that were drilled and Horizon’s interpretation was that oil has not migrated into the prospect.

"We are disappointed with the result of Kapul," said Horizon CEO Brent Emmett.

"The exploration risk attached to the prospect, especially the risk of oil migration, was always clear to us but the high potential and follow-up justified the test. Fortunately Horizon Oil was partly carried through the cost of the well."

Interests in Kapul-1 include Oil Search Limited 70% (operator), Horizon Oil International Limited 20% and Gedd (PNG) Limited 10%.