Kingia-1 well is operated by ARC and located in the onshore Perth Basin Production License L1 nine kilometres southwest of the Hovea Production Facility.
"Whilst it is disappointing that the Dongara Sandstone, which is such a good reservoir in the oil fields in the area, was not present at this location, this was recognised as one of the principal risks of this wildcat well," said Arc managing director Eric Streitberg
"Once the well is completed and a full suite of logs obtained we will be able to add the Kingia 1 information to the regional exploration picture and see if it affects the exploration program going forward."
Participants in L1 and L2 (excluding the Dongara, Mondarra and Yardarino fields) are Origin Energy 50% and Arc Energy 50%.
"The primary target here was oil, so this result is a big disappointment for the ORG/ARQ JV and should take the wind out of ARQ’s sails in the short term," said independent analyst, Peter Strachan.
"ARQ has an underlying value of about 96 cents, based on known reserves. This exploration setback could bring the company back to a value point."
Arc shares were weaker today, trading at 94 cents after hitting lows of 92c after closing unchanged at $1.03 on Friday.