Cairn’s $600 Million Greenland Oil Campaign Ends in Failure
By Brian Swint - Nov 30, 2011 10:08 AM MT
The Leiv Eiriksson, a semi-submersible drilling rig owned by Ocean Rig UDW Inc., which is due to be used by Cairn Energy Plc in their offshore operations in Greenland during 2011, is seen in this undated handout photograph released to the media on Wednesday, May 11, 2011. U.S. Secretary of State Hillary Clinton will push for an Arctic oil spill response taskforce this week as Cairn Energy Plc prepares for its busiest drilling season off the coast of Greenland. Source: Ocean Rig/Cairn Energy Plc via Bloomberg EDITOR'S NOTE: NO SALES. EDITORIAL USE ONLY
Cairn Energy Plc (CNE) ended this year’s $600 million drilling program off Greenland after the biggest exploration campaign attempted in the Arctic island’s waters failed to make a viable discovery.
The AT7-1 well, which had encountered traces of oil and gas, has been plugged and abandoned, the Edinburgh-based company said today in a statement. The AT2-1 well, the last of five drilled this year, was also abandoned after reporting only “minor hydrocarbon shows.” The company will evaluate its program next year and seek partners for investment.
“Effectively these are write-offs, though there were some encouraging signs,” said Richard Rose, an oil analyst at Oriel Securities Ltd. “That’s the end of the program. Rigs are going to disappear, and we won’t see any drilling there next year.”
Cairn’s eight-well program, spread over two years, was one of the industry’s most advanced efforts to find oil in Arctic waters and drew protests from activists who said it risked damaging a pristine environment. Exxon Mobil Corp. (XOM), Chevron Corp. (CVX), Royal Dutch Shell Plc (RDSA) and Statoil ASA (STL) hold licenses to explore off Greenland, an autonomous Danish territory of 56,000 people.
Cairn fell 1 percent to 272.3 pence in London as of the 4:30 p.m. close. The shares are down 35 percent this year.
The unsuccessful Greenland campaign may raise concern that the company, which also has exploration licenses in Spain, may need to find a new focus after it agreed to sell a majority interest in its Indian business to Vedanta Resources (VED) Plc last year. The company has been waiting for more than a year to get approval for the deal.
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