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.
Shares in Cairn Energy are up 2.95 per cent to 439.40p this afternoon in London after the Edinburgh-based oil and gas explorer said it had found oil off the shores of Greenland. The company, led by founder Sir Bill Gammell, has been drilling there since early summer.
Cairn said its Alpha-1S1 well in Baffin Bay, between Greenland and Canada, “observed oil intermittently over a 400m section” and initial analysis of various hydrocarbon samples recovered from the well confirms the presence of two oil types.
“The presence of both oil and gas confirms an active, working petroleum system in the basin and is extremely encouraging at this very early stage of our exploration campaign for the Sigguk block and the entire area,” said Sir Bill in a statement.
Cairn Energy has been forced to suspend its operations on one of its rigs in the Arctic after four Greenpeace campaigners scaled the rig early on Tuesday morning in a bid to stall oil drilling in the region.
The UK oil and gas explorer has plans to drill four wells in the waters of Baffin Bay Basin, off Greenland’s west coast, but the recent BP oil spill in the Gulf of Mexico has raised fears over the risks of offshore drilling.
Cairn announced last week that its first well had shown evidence of hydrocarbons.
A Greenpeace ship, the Esperanza, has been in a stand-off with the Danish navy off Greenland for the past few days. Many environmentalists argue that Arctic drilling is fraught with risks, from drifting icebergs to hostile weather, but as oil companies scramble to find new reserves around the world to meet demand its reserves have caught they eye of the industry.