The disappointing conclusion was reached following a review of the follow up drilling and appraisal activity which followed the original Rookwood South-1 discovery in September 2004.

The companies said initial (pre-development) drilling indicated a commercial oil reserve with some potential size but this has not been substantiated by subsequent appraisal work.

“An alternative interpretation for the production below that initially forecast, with the benefit of the subsequent limited production history for the Rookwood South-1 well, is that the oil bearing reservoir has limited pressure support and the reservoir pressure is depleting with production,” said Oilex in a stock exchange release.

The partners still took some consolation that the discovery had opened up a new exploration trend in the permit.

“While the production results and current indicated size of the oil reserves in the Rookwood oil field are disappointing, the discovery of oil at Rookwood South-1 is significant as this well opens up a new exploration play and trend in the permit, and ongoing assessment of drilling targets along trend from this discovery are being determined,” said Oilex.

Oilex shot from below 20c in September to highs of $1.25 in November. After today’s news OEX was trading at 28c at the close of trade. Partner Victoria Petroleum is trading at 3.3c after reaching highs of 6c in October.

The interests in ATP 608P are: Oilex NL (Rookwood block 59.06%) 66.75%, Victoria Petroleum NL (Rookwood block 29.69%) 24.00%. Private interests hold the balance.