FOR IMMEDIATE RELEASE 26 October 2010
CAIRN ENERGY PLC ("Cairn")
Greenland Operational Update
The following operational statement concerns Cairn's 2010 exploration drilling campaign offshore Greenland.
All operations concluded at the end of the drilling season as agreed with the Greenland Bureau of Minerals and Petroleum (BMP) and the Stena Forth and Stena Don rigs have been released off contract. The Alpha-1S1 exploration well has been suspended to allow possible re-entry to sidetrack or deepen the well at a later date. The T8-1 and T4-1 exploration wells have been plugged and abandoned.
As previously announced, the Alpha-1S1 well encountered oil shows in the volcanic section. In accordance with the BMP regulations, drilling operations ceased as of 30 September 2010. At this point the well was still in volcanics and the prognosed Mesozoic section had not been reached.
The T4-1 well, which was targeting a Tertiary objective at a different stratigraphic level to T8-1, failed to encounter any significant hydrocarbons and found only thin reservoir sands, although geochemical analyses continue on selective samples.
The T8-1 well, which (as announced on 24 August 2010) encountered gas in thin sands has been plugged and abandoned.
The T8-1 and T4-1 wells did not result in commercial discoveries; consequently the well costs, including all associated demobilisation and other costs, of US ~$185 million are forecast to be written off in accordance with Cairn's accounting policies. The primary objectives of the Alpha prospect were not reached, the well has been suspended and any future re-entry work depends on the results of further evaluation.
Geophysical operations in Greenland are still active with a 2,500km 2D seismic survey currently ongoing on the Eqqua Block and some data will also be acquired in the Sigguk block (~ 215km) for well-tie purposes. A 7,400km 2D survey was completed during the summer across the offshore south Greenland blocks.
Cairn has now drilled one third of all exploration wells ever drilled offshore Greenland and the first wells in the Greenland Arctic for almost 35 years. This campaign has demonstrated to the Greenland Government and the industry that drilling operations can be successfully and safely carried out in this area.
Mike Watts, Deputy Chief Executive, Cairn Energy, said:
"Exploration in Greenland is at a very early stage and consequently to have encountered both gas and oil in two of the first frontier exploration wells in the previously undrilled Baffin Bay geological basin is extremely encouraging.
Cairn continues to evaluate all the data acquired this summer. Plans for the forward exploration programme in 2011 are already underway and will be announced in Q1 2011."
Cairn Energy PLC
Sir Bill Gammell, Chief Executive
Dr Mike Watts, Deputy Chief Executive
Jann Brown, Finance Director
David Nisbet, Corporate Affairs
Tel: 0131 475 3000
Brunswick Group LLP
Tel: 0207 404 5959
Cairn Energy Conference Call
A conference call will be held at 0900 (UK time) on Tuesday 26 October 2010.
Dial In Details
UK Free Call: 0800 073 1809
UK Standard International: +44 (0)1452 542 400
USA Free Call: 1 866 223 9797
An archived version of the conference call will be available later on the Cairn Energy website: www.cairnenergy.com
NOTES TO EDITORS:
Ø Cairn Energy PLC ("Cairn") is an Edinburgh-based oil and gas exploration and production company listed on the London Stock Exchange. Following the IPO of Cairn India in January 2007, there are two separate arms to the business:
Ø Cairn India limited ("Cairn India") is now listed on the Bombay Stock Exchange and the National Stock Exchange of India and has interests in a total of 11 acreage blocks in India and Sri Lanka. Cairn currently retains a 62.37% interest in Cairn India.
Ø Capricorn Oil Limited ("Capricorn"), a 100% subsidiary of Cairn, is focused on exploration. Capricorn now has assets in Bangladesh, Nepal, Northern India, Greenland, Tunisia, Albania, and pending licence awards in Spain.
Ø "Cairn" where referred to in this release means Cairn Energy PLC and/or its subsidiaries (including Cairn India and Capricorn), as appropriate.
Ø "Cairn India" where referred to in the release means Cairn India Limited and/or its subsidiaries, as appropriate.
Ø "Capricorn" where referred to in this release means Capricorn Oil Limited and/or its subsidiaries as appropriate.
Ø Cairn has focused its activities on the geographic region of South Asia, which has already resulted in a significant number of oil and gas discoveries. In particular, Cairn made a major oil discovery (Mangala) in Rajasthan in the north west of India at the beginning of 2004. Cairn has now made more than 20 discoveries in Rajasthan block RJ-ON-90/1.
Ø Cairn India is headquartered in Gurgaon on the outskirts of Delhi, with operational offices in Chennai, Gujarat, Andhra Pradesh and Rajasthan.
Ø Cairn Energy PLC (including Capricorn) is run from Edinburgh with operational offices in Dhaka, Chittagong and Kathmandu.
Ø Rothschild is acting as financial adviser to Cairn on the proposed transaction. Merrill Lynch and RBS Hoare Govett are corporate brokers to Cairn.
For further information on Cairn please go to: www.cairnenergy.com