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Cairn Energy unlikely to drill for oil off Greenland next year after 2011 campaign failed – Oriel Securities

Cairn Energy unlikely to drill for oil off Greenland next year after 2011 campaign failed – Oriel Securities

Oriel Securities commented on Cairn Energy’s (LON:CNE) statement today that it has not made a commercial discovery during its 2011 exploration drilling campaign offshore Greenland. 

The broker does not expect to see any more drilling offshore Greenland next year, even though activity on the licences will continue in 2012 with seismic acquisition and interpretation ongoing.

Oriel’s oil analyst Richard Rose told Bloomberg:  “Effectively these are write-offs…  That’s the end of the program, rigs are going to disappear, and we won’t see any drilling there next year.”

The group told investors this morning that the AT7-1 well as well as the fifth well of the 2011 campaign,  AT2-1, both in the Atammik Block, have been plugged and abandoned after they did not find commercial hydrocarbons.

A 3D seismic programme covering 1,500 square kilometres acquired on the Pitu block in Baffin Bay is currently being processed with fully migrated results expected in 2012, Cairn said.

The 3D seismic data acquired over parts of southern Greenland is currently being processed and fully migrated results are expected in the first half of 2012.

Cairn plans further evaluation to review and assess the exploration programme over the last two years as active farm-out discussions over select areas continue for future operations in Greenland. 

An additional 3D seismic survey over the Lady Franklin and Atammik region is under consideration for 2012 with the potential for further drilling in the West Greenland basins in subsequent years, the group added.

The BBC cited Greenpeace senior campaigner Vicky Wyatt as saying: "However the company tries to spin this, Cairn's Greenland misadventures have been an unmitigated disaster from day one, the company squandering a fortune drilling one dry hole after another. These results show that the incredible technical, economic and environmental risks of operating in the Arctic simply aren't worth it."

Shares fell 5.2 percent in early deals, making Cairn the biggest loser in a widely depressed FTSE100 opening session. While the FTSE recovered as the day progressed, Cairn remained by far the worst performer, and was still trading 4.9 percent lower by 12.17 am at 261.4 pence.

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