Good news at last from Greenland for Cairn

8th Nov 2011 08:23

Oil giant Cairn Energy saw its share price rise 4% after it reported encouraging results from its five well exploration drilling campaign offshore Greenland. The AT7-1 well on the Atammik Block in South Ungava has encountered a 113m gross interval with approximately 50m of reservoir quality sands. Mud losses and poor hole conditions have hampered the full evaluation of this interval which is of potential interest because of oil and gas shows, the firm said. Part of the interval is behind casing. A logging programme is ongoing across the well, following which the well will be deepened to reach the anticipated total depth. A tester programme is planned to try and recover fluid samples to surface. Meanwhile, the AT2-1 well has reached a total depth of 4,847m having encountered minor hydrocarbon shows. Logging operations are currently under way. The firm said operations will continue to the end of November to allow activities on the last two wells in the Atammik block to complete.Westhouse Securities, the resource industry-focused broker, said: "Encountering evidence of hydrocarbons in both wells in the newly drilled Atammik block is a very encouraging sign for Cairn's exploration efforts offshore Greenland and suggests that the company's geological model has merit. The Atammik block is a substantial distance away from Cairn's previously drilling activities on the Lady Franklin, Eqqua and Napariaq blocks which have all yielded disappointing results to date." In the broker's view, the news will serve to boost Cairn's exploration efforts in Greenland where it has an extensive acreage position covering eleven offshore blocks and increase overall industry and environmental attention in one of the world's last frontier exploration plays. The share price rose 3.99% to 299.6p by 08:27.NR