Scottish oil and gas firm Cairn Energy is ready to reap the rewards from an unexplored area with “transformational exploration potential”, chief executive Sir Bill Gammell said yesterday.
Edinburgh-based Cairn has begun seismic testing in the seas around Greenland, which are seen by US scientists as having potentially world-class prospects.
A recent US Geological Survey report said the area may constitute the geographically largest unexplored prospective area for petroleum remaining on Earth.
Cairn aims to increase its acreage offshore Greenland, where Arctic waters are believed to offer a potential reserve of about 50billion barrels of oil equivalent (boe).
Interpreted results from the seismic programme, being carried out by Cairn’s exploration-led Capricorn subsidiary, are expected to emerge in the first half of next year.
Sir Bill likened the area’s potential to the North Sea back in the 1960s, adding: “The more we look at Greenland, the more we like what we see and we will continue to develop that opportunity.”
Cairn, which unveiled a swing to first-half operating profits from losses 12 months earlier, also said its 65%-owned Cairn India subsidiary was on track to deliver crude oil from Rajasthan during the second half of next year.
The FTSE 100-listed group added: “We continue to schedule delivery of first oil from the Mangala field in H2 2009, followed by oil from Bhagyam and Aishwariya in 2010.”
Exploration by Cairn India in the coming months will involve about six wells and several seismic acquisition programmes, all aimed at securing future growth.
Operating profits at Cairn Energy for the first half of 2008 came to £24million, boosted by high oil prices, compared with losses of £9.9million previously.
At pre-tax level, and before stripping out the impact of one-off items relating to last year’s initial public offering of Cairn India plus the more recent sale of 4% of the venture, profits fell to £221.3million from £831.6million last year.
Daily output for the first half of this year totalled 13,886boe – down from 22,486boe a year earlier – as operated fields reached or approached maturity and the group moved closer to first oil from Rajasthan.
Sir Bill said the key factors to Cairn’s future success were a strong balance sheet, operating flexibility and good growth potential.