11/09/2012 10:25 EST | Updated 01/09/2013 05:12 EST

Niko says Indonesia well finds 'no commercial reservoir'; shares plummet

CALGARY - Shares in Niko Resources Ltd. (TSX:NKO) plummeted Friday after the international oil and gas explorer announced a dry well in Indonesia.

The stock closed down almost 17 per cent to $9.87 on the Toronto Stock Exchange — a mere shadow of its 52-week high of about $55. The stock dropped as low as $8.89 earlier in the day.

The rout came after the Calgary-based company (TSX:NKO) and its partner, Zaratex N.V., announced "no commercial reservoir was encountered" when they drilled the Jayrani-1 offshore well in western Indonesia's Aceh region.

Earlier this week, Niko announced another exploration failure at its Maestro-1 well in Trinidad and Tobago.

Niko suspended its quarterly dividend in late September as it embarked on what it described as the most significant exploration program in its history. The Ocean Monarch drilling rig was sent to Indonesia shortly thereafter.

Niko said its board of directors will periodically review the timing and level of future dividends. Most recently, it doled out six cents per share to its investors every quarter.

Niko is now sending Ocean Monarch to the West Papua region of Indonesia. The company said it has made changes to the rig to cut costs and get work done more quickly.

"The Niko Indonesia business plan has been to acquire a large number of (production sharing contracts) in emerging exploration trends, use advanced technology to develop a portfolio of high impact wells, execute leveraged farm-outs and target partners with worldwide deep water experience," the company said in a release.

"By taking a portfolio approach, Niko will benefit from economies of scale in drilling operations as well as increase the statistical likelihood of success."