The first London trading day of 2011 is proving to be a volatile one for oil explorers.
Cairn Energy is having a very good morning, its shares trading up 4.5 per cent after the company announced it had secured two rigs for its exploration off Greenland’s coast. The new rigs mean the company now forecasts it will drill up to four wells this year. Gordon Gray at Collins Stewart is quoted in the Guardian saying:
With rigs now contracted, we expect net asset value estimates for Cairn to rise as it gives details on target prospectivity in the coming weeks.
But there is bad news for Falklands bulls. The continuing saga of whether there is really commercially viable oil there took another twist today after Desire abandoned another well in the Falklands after finding no oil. The company said:
Based on preliminary drilling and wireline logging data there are no significant hydrocarbons in the Dawn prospect and the well will be plugged and abandoned with gas shows around 1,434 metres.
This has sent its shares plummeting more than 20 per cent, adding to the near-50 per cent fall seen a month ago after a similar announcement about a different Falklands well. The shares are now nearly 80 per cent below their October peak.
Welcome to 2011, everyone.