If the ongoing gas leak at French oil company Total’s Elgin-Franklin well is not brought under control, the firm could see its share price drop by 50 percent, according to Stuart Joyner, head of oil and gas at Investec Securities.
Total saw a near 8 percent drop in its share price just last week, reflecting investors’ fears that the leak could last months or worsen.
For now, the causes of the leak have not been determined.
Total said on Friday that two rigs had been mobilized to drill a relief well, and that it will be only a matter of days before that drilling starts.
The company said that the leak was isolated from other wells, and that there had been no drop in pressure in the other wells.
Joyner told CNBC that “there is not much appetite to buy Total [shares] anyway, and some hedge funds might make some marginal buying, but overall people don’t want the hassle.” He estimated that the chances of the leak off the coast of Scotland developing into the sort of crisis that BP faced in 2010 are one in seven.
Analysts are concerned that if the gas leak at the Elgin-Franklin facility is not brought under control rapidly, it could cause extensive damage to the environment and to Total.
Joyner said that “if this were a Macondo-style crisis, it would wipe Total out.” Total wants to fly experts to the North Sea oil platform to plan how to cap the well, and will discuss the safety of that scheme with British experts on Monday.
The platform is enveloped in a massive gas cloud, raising worries of an explosion.
Additonal News: Total Says North Sea Platform Flare Extinguished
Additonal Views: More US Clean-Tech IPOs Launch, Amid Skepticism
CNBC Data Pages:
- Dow 30 Stocks—In Real Time
- Oil, Gold, Natural Gas Prices Now
- Where's the US Dollar Today?
- Track Treasury Prices Here
No disclosure information was immediately available for Stuart Joyner or Investec Securities.