Cairn eyes 12 Greenland drill sites - and wins first Spanish block licences

Published on Wednesday 26 January 2011 21:47

CAIRN Energy has identified up to 12 drilling targets to begin its 2011 campaign off the coast of Greenland, while also being awarded its first two Spanish exploration licences. The Edinburgh-based oil and gas explorer said it would narrow the list of Greenland sites down to four in May in time for the summer drilling season, writes Peter Ranscombe.

Cairn has also acquired, at no cost, partner EnCana's stake in the Lady Franklin and Attamik blocks in what analysts at Bank of America Merrill Lynch called the "more benign" south of Greenland, taking the Scots firm's holding to 87.5 per cent.

Chief executive Sir Bill Gammell said: "In Greenland the results from our 2010 drilling programme were encouraging and the goal of our future exploration efforts will be to establish reservoir and potential commercial resources."

Cairn, along with joint venture partners Nunaoil and Petronas, began drilling in an area 110 miles off Disko Island in west Greenland in July.

In October, the Scottish company announced it had abandoned two of its three exploration wells at the end of the Arctic exploration season and wrote off 117 million in costs.

Earlier this month, Cairn said it had hired two drilling vessels from Ocean Rig for the summer season in Greenland.

Richard Rose, an analyst at Oriel Securities, estimated that a commercial discovery off Greenland could be worth about 240p to Cairn's shares - which edged up 0.2p to close at 433.1p - assuming oil prices remained at about $90 a barrel.

In yesterday's operational update, Cairn said it was confident of completing the sale of its stake in Cairn India to mining giant Vedanta for 5.4 billion before April's deadline.

The explorer also noted it had been awarded licences to examine five blocks off the coast of Spain. Entitlement to the blocks came with the company's acquisition of MedOil in 2007.

Analysts said they expected seismic studies initially rather than drilling to take place in Spain's Gulf of Valencia because of Cairn's other commitments.

Last year the firm announced it would drill exploration wells off Tunisia and Albania.