Oil explorer Cairn Energy has put its controversial drilling plans in the Arctic on the back burner as it focuses on an ambitious programme off the west coast of Africa.
The Edinburgh-based firm has so far seen its efforts to strike oil off Greenland prove fruitless, but yesterday said it was working with its joint venture partners – Norway’s Statoil and Greenland’s national oil company Nunaoil – to “mature” its plans for the Pitu block.
Cairn estimates there could be more than five billion barrels of oil waiting to be found off the island, where its activities have been criticised by environmental campaigners.
Although the company had expected to resume drilling in the Arctic this year, this is now seen as unlikely as it concentrates on a $400 million (£243m) programme of nine exploration wells in the North Sea and so-called Atlantic margin.
A source said Statoil’s attention has also been diverted elsewhere after the Norwegian company made a significant offshore discovery in Canada last year, which could yield up to 600 million barrels of oil.
Along with two wells Senegal and one each off Morocco and Ireland, Cairn is planning a further five non-operated wells, including four in the North Sea, in what is described as its busiest year for a decade.
Chief executive Simon Thomson, right, said: “Cairn plans to drill nine wells in its 2014 exploration programme across an attractive mix of frontier and mature basins.
“Over the last 12 months, Cairn has built a long-term sustainable business. The exploration programme will provide investors with exposure to material growth potential alongside mature basin development and pre-development assets, all against a backdrop of continued balance sheet strength.”
Thomson said the group had net cash of $1.25 billion at the end of December and said its remaining stake of about 10 per cent in former subsidiary Cairn India was worth a further $1bn.
London-listed miner Vedanta Resources paid almost $9bn two years ago for a controlling stake in Cairn India.
The explorer itself is also in the process of returning up to $300m to investors, and Thomson said it has so far bought back shares worth about $42m.
Cairn’s finances are expected to receive a further boost when its Catcher and Kraken projects in the North Sea begin production over the coming years.
Analysts at SP Angel said yesterday’s update “underlines the progress that the company has made in a short period of time”, helped by the cash pile Cairn built up by selling the bulk of its Indian business.
The broker added: “The only weakness we see is the share buyback programme, as we believe that the company is a once again a growth company, and the dollars could be better invested for value creation.
“Still, that is being picky.”