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.
I blogged on Friday about how one of the Wikileaked (can we use that as a verb yet?) cables showed ExxonMobil’s scepticism about Falklands oil. The memo said:
ExxonMobil International Chairman Brad Corson told us he does not believe there is enough oil on the Falkland Islands Continental Shelf to be profitable, citing Shell’s earlier oil exploration attempts which they abandoned.
At the time shares in the major companies drilling for oil in the area were unchanged – after all, it didn’t sound like Corson knew anything nobody else did.
Yesterday Desire Petroleum’s shares jumped more than a quarter, which can only mean one thing: oil in the Falklands.
As The Times reported (£):
In an announcement that could exacerbate tensions over the islands’ sovereignty with Argentina, Desire said that its offshore Rachel North well had been drilled to a depth of more than 3 kilometres and discovered a 57-metre thick belt of oil interspersed with layers of sand and shale.
The Falkland oilers fanclub aren’t giving up even though Desire Petroleum has suffered another setback.
On Tuesday, the company said it had been forced to plug and abandon the sidetrack well at the Rachel prospect because of technical issues.