OIL explorer Cairn Energy yesterday got the green light for its Irish drilling programme, weeks after taking stakes in a number of licences.
Dublin approved Cairn’s farm-in as operator with a 38 per cent working interest in two exploration licences and one licensing option in the Porcupine basin to the west of Ireland.
The basin contains the undeveloped Spanish Point gas and Burren oil discoveries. Edinburgh-based Cairn also said it had entered into a contract to secure a drilling rig for an appraisal well in one of the exploration licence areas.
Cairn and its joint venture partners Chrysaor, Providence Resources and Sosina Exploration plan to mobilise the rig to begin operations in the second quarter of 2014.
Under the farm-in deals, which were announced in May, Cairn is acquiring a 38 per cent working interest and operator rights for £2.6 million plus an agreement to pay 63.33 per cent of future exploration and appraisal costs for up to two wells, subject to a cap.
The deal adds to Cairn’s extensive exploration plans for the Atlantic margin in coming years – it already has permits to search for oil off the coasts of Greenland, Morocco and Senegal.
At the time the deals were announced, Cairn chief executive Simon Thomson said the stakes brought further exploration and appraisal potential to its “frontier” portfolio.
The Irish government estimates that the “Irish Atlantic margin”, where the licences are located, could have potential oil and gas reserves of ten billion barrels of oil equivalent.
Although a number of discoveries have been made in the area, they were in the past deemed to be too small to be developed economically. Shares in Cairn rose by 0.5p to 265.5p.