Red faces as Cairn strikes black gold in India

Click to follow

Cairn Energy shares jumped a further 15 per cent yesterday after the oil and gas group said test results had confirmed the "transforming" potential of a recent find in India.

The news will increase the embarrassment for Shell, which was already under pressure over the extent of its reserves. Cairn paid Shell just £4m for the Rajasthan field, where it made the discovery, 18 months ago.

The discovery has added £492m to the stock market value of Cairn, almost doubling its size from £558m before the news was announced to £1.05bn yesterday, when its shares closed at 697.75p, up 92.75p.

Following an announcement of a "significant discovery" at the field last month, which sent its shares soaring 49 per cent in one day, Cairn revealed the results of further tests. Cairn said that a flow rate of 6,000 barrels of oil per day has been achieved across three selected zones during an "open hole drill stem test" programme in the N-B-1 exploration well.

Bill Gammell, the chief executive, said: "This is a strong test result.... In isolation this discovery transforms the value of our portfolio. We expect this well to produce more than 10,000 barrels of oil per day."

The first appraisal well will start later this month. The company has also spoken of "several similar prospects in the vicinity".

Comments