NEW YORK (AP) -- Shares of McMoRan Exploration Co. plunged for a second day after the oil and natural gas drilling company said it is taking longer than expected to develop a well in the Gulf of Mexico.
THE SPARK: McMoRan said Monday that it plans a flow test on the Davy Jones No. 1 well but did not release an update on the timing of the test.
The New Orleans company is injecting a solvent into the formation to clean out perforations in order to test the flow. That has to be finished before commercial production can begin.
THE ANALYSIS: Analysts say it has been more than a year since the original target date for the flow test, without any measurable results.
McMoran's update "likely did little to improve investor sentiment and may have raised more questions regarding the well's ability to produce commercial amounts of gas," JPMorgan analyst Joseph Allman wrote in a research note published Tuesday.
If McMoRan fails to unclog the well, it potentially may have to abandon it, Allman stated.
THE SHARES: In morning trading McMoRan Exploration fell $1.51, or 15.7 percent, to $8.14. The price has ranged from $7.76 to $16.57 per share in the past 52 weeks.