Cairn does Greenland deal, may face competition on Rockhopper

23rd Jan 2012 07:04

Edinburgh-based explorer Cairn Energy is to partner with Statoil ASA to help exploit the Pitu block in the Baffin Bay Basin, west of Greenland.However, the firm offered no clue as to whether a tie-up with Rockhopper was on the cards in its trading update.Recent reports claim Cairn has held talks with AIM-listed Rockhopper over the possibility of taking a stake in its Falkland Islands operations. Reports suggest that if the company is interested in grabbing a piece or all of Rockhopper, it may face competition fomr US oil firm, Anadarko.Cairn recently sold a 40% stake in its India business to Vedanta Resources for $4.7bn.Most of it - $3.5bn - was returned to shareholders but the firm the deal still left the firm sitting on a $1.2bn cash pile, with speculation rife as to what it will do with it.Chief executive Simon Thomson remained coy, only saying that Cairn was "well positioned to access new opportunities and further growth in 2012".Under Cairn's agreement with Norwegian firm Statoil, the latter will acquire a working interest of 30.625% in the Pitu licence, subject to the approval of the Greenland Government.Cairn will retain operatorship of the exploration (with a 56.875% interest in the block) and Statoil will operate any future development. Nunaoil has an ongoing 12.5% interest in the block.The exact financial terms of the agreement are remain secret but Cairn said that Statoil would pay a signature bonus, back costs on the block and promoted terms of future exploration expenditure. The 1,500km2 3D seismic data collected by Cairn over part of the Pitu block in Baffin Bay is currently being processed with fully migrated results expected in the second quarter of 2012.