Cairn unveils new Indian oil find

Published on Monday 22 December 2008 20:18

CAIRN Energy, Scotland's largest oil explorer, has had further success in India reporting another discovery near its major fields in Rajasthan.

Its majority-owned Indian business said it had tested a well in Raageshwari in the southern part of its Mangala development area, which flowed at a stabilised rate of 500 barrels of oil a day and a further 400,000 cubic feet of gas per day.

Cairn India chief executive Rahul Dhir said the well – the first in the firm's latest drilling programme – demonstrated the potential for additional incremental reserves close to its existing assets.

Cairn was transformed by discoveries in India earlier in the decade, propelling it into the top-flight FTSE-100 index.

Oil from the major fields in Rajasthan is set to flow in the second half of 2009. Shares in Cairn Energy rose 80p to 1,928p.

Meanwhile, there were warnings today that small oil and gas explorers may face a fight for survival in 2009, after the Ernst & Young oil and gas eye, which monitors oil companies on Aim, fell 60 per cent since the start of 2008.

Alec Carstairs, oil and gas partner at E&Y, said the credit crunch, recession fears and falling commodity prices have created a major flight from the sector, with the final quarter of 2008 set to raise the lowest amount of cash for five years.

"A number of junior oil and gas companies are finding it increasingly challenging to secure funding. Without cash, a company cannot progress from exploration activities to the production phase," he said.