Cairn campaign off the coast of Greenland hit by failure

Company said it had plugged and abandoned the final two wells in its 2011 campaign

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, around $1bn (£636m) and eight exploration wells later, 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, has seen the drilling of only 14 exploration wells to date, five of which were drilled in the 1970s.

Putting a brave face on the announcement, the chief executive, Simon Thomson, said that although the company had not made a commercial find, "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, one of the 11 Greenland exploration blocks covering about 102,000 square kilometres in which it has an interest.

"Whilst 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 also brought controversy, with Cairn facing protests from Greenpeace earlier this year.

Yesterday, the oil firm's announcement led to weakness in 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 the completion of Cairn's deal to sell a large chunk of its Indian business to Vedanta Resources, and on the oil group's efforts to rope in partners for future operations in Greenland.

Beyond the stock market, City analysts also expressed disappointment at yesterday's release, with oil-sector analysts at Evolution Securities saying that Mr Thomson's comments at the end of Cairn's update sounded "a bit like [the Chancellor of the Exchequer] George Osborne trying to put a brave face on the economic outlook".

Investec analyst Angus McPhail said the business, whose shares are down by around 35 per cent since the start of the year, "probably needs to refocus on another area", while his Canaccord Adams counterpart Richard Slape warned that, when it came to the search for partners, "people are going to question why Cairn is seeking to farm out after drilling a bunch of dry holes rather than 18 months ago". "They will find somebody to come in [but] it may not be on such good terms as they would have got before," Mr Slape added.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Beige is back: The drab car colours of the 1970s are proving popular again

Beige to the future

Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own