Investors hoping to cash in on an oil boom off the vast, untapped coast of Greenland were dealt a blow yesterday after Cairn Energy said that, after spending $1bn (£636m) and drilling eight exploration wells, it had failed to make a commercially viable discovery in the region.
The FTSE 100-listed oil and gas prospector, which drilled three wells in its quest to find resources off the coast of Greenland last year, said it had plugged and abandoned the final two wells in its five-well exploration campaign for 2011. The region is mostly unexplored and, counting Cairn's contribution, only 14 exploration wells have been sunk there so far, five of which were drilled in the 1970s.
Simon Thomson, Cairn's chief executive, put on a brave face after the announcement. Although the company had not made a commercial find, he said, "the first phase of Cairn's exploration programme in Greenland has encountered oil and gas shows across multiple basins and now reservoir-quality sands" in its Atammik exploration area. This is one of the 11 Greenland exploration blocks, covering about 102,000 square kilometres, in which the company has an interest.
"While we have yet to make a commercial discovery, we remain encouraged that all of the ingredients for success are in evidence," he added, signalling the company's determination to press on with efforts to find resources in the region.
Besides the financial toll, the campaign has brought controversy, with Cairn facing protests from Greenpeace earlier this year. Yesterday, the oil firm's announcement weakened its shares, which were down by nearly 1 per cent at the end of the day, ending up on the FTSE 100 loser board while the blue-chip index turned sharply higher.
The focus now is expected to be on Cairn's deal to sell a large chunk of its Indian business to Vedanta, and on the oil group's efforts to rope in partners for future operations in Greenland.Reuse content