Reliance shares hit as partner says gas well dry

By Pratish Narayanan

MUMBAI (Reuters) - Shares in Reliance Industries slid 4 percent to their lowest close in almost seven weeks after partner Hardy Oil and Gas said a well the companies drilled in a block off India's east coast was dry.

Investors had hoped that a four-well drilling programme would prove the block contained many billions of cubic feet of gas.

"The failure to find either significant amounts of gas or high reservoir quality sands is likely to significantly increase the risks associated with the other prospects," Nick Copeman, oil analyst at Oriel Securities.

Reliance Industries, India's top conglomerate, holds a 90 percent interest in the D9 block, which is situated in the vast Krishna Godavari (KG) basin where the company made India's biggest gas find in another block.

Analysts said the decline in shares may be an overreaction, and Reliance's business, which spans oil and gas exploration, refining, petrochemicals and retail, is sufficiently diversified to be significantly hurt by the abandoning of a single well.

However, the block is material far smaller Hardy.

"This is not bread and butter for Reliance, but it is for Hardy," said Arun Kejriwal, a strategist at research firm KRIS.

Shares in Hardy Oil, which on Thursday's closing price was valued at $620 million and which holds a 10 percent stake in the D9 block, plunged more than 35 percent to 353 pence in London.