Gammell confident he can seal deal in India to drive Greenland plans
• Sir Bill Gammell is optimistic of a deal for the sale of the majority stake in Cairn India, a move that would free up funds for the group's exploration of Greenland
He was also upbeat about prospects in Greenland after initial tests found gas but no oil, forcing the shares to fall just over 4 per cent or 18.9p to 445.5p.
Gammell, the group's chief executive, told The Scotsman there had been similar disappointment when the firm began exploring in India but those early tests turned into a significant find.
The cautious report from Greenland overshadowed upbeat half-year results which showed the company had swung from a $21 million (13.6m) loss into a $57m profit, largely because of Cairn India's Rajasthan fields coming on stream.
Revenue soared 311 per cent from $81m to $333m. Speaking about prospects in Greenland, Gammell said: "We are at the start of a marathon. We are encouraged but it is too early to say."
The T8-1 well in the Baffin Sea between Greenland and Canada is the first to be drilled in the area for a decade and one of only seven in total. Drilling is continuing at the site, and Cairn plans to drill at least two more wells. There will be an update early next month and again in October when the group will know more clearly how much capital it will require from the sale of its stake in Cairn India.
Consultancy Wood Mackenzie said the Greenland territory could have reserves of more than 20 billion barrels of oil equivalent.
Rivals, including Exxon Mobil and Chevron, and Canada's Husky Energy, have snapped up offshore licences in the hope of discovering a major new oil producing basin.
Cairn said that though the gas find was too small to be commercially exploited, it supported the view that the area could yet yield material finds.
Gammell said: "I am encouraged that we have early indications of a working hydrocarbon system with our first well in Greenland, confirming our belief in the exploration potential."
He remained equally optimistic that the company's plan to sell up to a 51 per cent stake in Cairn India to Vedanta Resources for $8.5 billion will go ahead despite last minute moves by Indian rivals to scupper the deal.
"The government needs to endorse the overall transaction, I'm very conscious of that," Gammell said.
But he added that Cairn had a strong track record in achieving government approvals in the past. "From a practical point of view just look at what we've achieved over the last 15 years working in partnership with the government, with the state government of Rajasthan and with ONGC," he said.
It emerged on Monday that state energy firms Oil and Natural Gas Corp (ONGC), GAIL and Oil India could make a counterbid.
India's trade minister Anand Sharma said yesterday ONGC should have the last word on Vedanta's proposed acquisition.