Angus Energy said a key well at its Brockham oil field south of London had encountered a water zone that was inhibiting oil production.
After experiencing some technical issues over the past few months, the well had produced 280 barrels of oil.
However, the inadvertent water production had not allowed for sustainable flow rates of oil to be reported.
Angus Energy said it was putting together a further engineering program to isolate this water zone, which would, subject to agreement from all regulators, include the return of a work-over rig.
'I am very pleased with the oil analysis clearly confirming Kimmeridge oil at Brockham,' chief executive George Lucan said.
'The water zone is obviously an unexpected hindrance but, with natural flow to surface and evidence of oil, we remain quietly optimistic of achieving commercial success at Brockham.'
At 2:30pm: (LON:ANGS) Angus Energy Plc share price was -1.5p at 5.5p