Cairn Energy disappointed early hopes for oil exploration in Greenland yesterday with the admission that initial finds were too small to commercialise.
Two of the group's three wells have been plugged because the deposits are too small. The third has been suspended because Cairn has not been able to drill deep enough, although it may be revisited next year. And the group is writing off $185m (£117m) in connection with the operations.
Mike Watts, Cairn's deputy chief executive, stressed the positive implications of finding any oil at all in the unexplored Arctic region.
"Exploration in Greenland is at a very early stage and consequently to have encountered both gas and oil in two of the first exploration wells in the previously undrilled Baffin Bay geological basin is extremely encouraging," he said.
But the admissions were still a comedown from the "royal flush" of early successes championed by Mr Watts at a London conference earlier this month, and City disappointment dragged the stock down by 7 per cent.
Cairn's discovery of traces of oil and gas in its first two wells in Baffin Bay have created a flurry of interest in the inhospitable region. The company's progress is being closely watched by the international oil majors, several of which have licences to drill in the region but have not yet used them.