SHARES in Faroe Petroleum fell 7% after a well off Norway the company had high hopes for proved to be dry.
Aberdeen-based Faroe Petroleum said the Butch East exploration well in the Norwegian North Sea had not found oil or gas at the target interval and would be plugged and abandoned.
The company's chief executive Graham Stewart said the results of the well were disappointing.
The well was the first of two that Faroe planned to drill near the existing Butch discovery in the hope of making further finds.
When drilling commenced in December Aim-listed Faroe Petroleum said: "If successful, Butch East offers the potential to substantially add to the value of the Butch field."
With shares in Faroe Petroleum closing down 10.75p at 138p, investors appeared disappointed that a good run for the company with the drill bit had come to an end.
The company made discoveries with the Snilehorn, Pil and Solberg wells in the last six months.
Analysts at Cannacord Genuity noted that Faroe's share price had risen by around 40% since the end of March.
Last month Faroe said the results of tests on the Pil find indicated it could contain 170million barrels of oil equivalent recoverable, significantly greater than expected.
Mr Stewart said then the three exploration successes provided clear vindication of Faroe's strategy of taking material stakes in what it considered to be high-impact exploration prospects.
Initial estimates suggested the Snilehorn find made in November could contain 100million barrels of oil.
However, in January Faroe said the Novus well had found oil and gas but the discovery was unlikely to be of commercial size on its own.
Faroe has amassed a big portfolio of interests in Norway, where the government provides generous tax breaks on exploration expenditure.
The company has also been busy in UK waters in recent months, partly to take advantage of the tax relief provided on losses the firm has incurred on its activity in the area.
Last month the company bought stakes in two producing gas fields off eastern England from Tullow Oil for an initial £35m.
The company had accumulated tax losses totalling £78m at the end of December, which it can set off against the profits it makes from its UK production.
The Kalvklumpen well Faroe drilled in the Norwegian North Sea in February 2012 was dry.
Faroe has 15% of the Butch licence. Centrica, which owns Scottish Gas, has 40%, Tullow has 15%. Suncor has 30%.
Analysts at Cantor Fitzgerald maintained a buy recommendation on Faroe Petroleum shares but reduced their target price for the stock to 195p, from 198p.