Oil and gas explorer Cairn Energy said today it was still confident of success off Greenland despite its 2011 drilling campaign failing to make a commercial discovery.
The firm, based in Edinburgh, added it was in “active talks” over a farm-out about future operations and considering further seismic surveys in the Lady Franklin and Atammik areas offshore of Greenland next year.
Cairn’s 2011 campaign in the Arctic region saw it drill five wells. The last two, both in the Atammik area, have recently been abandoned.
One, the AT7-1 well, drilled by the Leiv Eriksson rig, has shown signs of hydrocarbons – and 173.8ft of reservoir quality sands – but is now thought to be water-filled.
However, Cairn chief executive Simon Thomson said he was still confident of prospects in the region.
He said: “The first phase of Cairn’s exploration programme in Greenland has encountered oil and gas shows across multiple basins and now reservoir quality sands in the Atammik block.
“Whilst we have yet to make a commercial discovery, we remain encouraged that all of the ingredients for success are in evidence.”
The firm, which is selling a controlling stake in its Cairn India business to mining group Vedanta Resources in order to focus on Greenland, said it was now assessing two sets of 3D seismic data.
It added the work covered an area of the Pitu block in Baffin Bay and parts of southern Greenland, with results expected next year.
Analysts at investment bank Evolution Securities said Mr Thomson’s comments “sounded a bit like George Osborne trying to put a brave face on the economic outlook”.
They added: “The Vedanta deal, which underpins the valuation of Cairn through its stake in Cairn India, could get sorted by year end but in the absence of drilling news until the 2012 summer season the shares look mired.”
When Cairn entered the region the firm predicted a one-in-10 rate of success on exploration wells.
Its operations have been met by protests from environmentalists, including Greenpeace, concerned about the Arctic region.
Cairn also has exploration prospects off Spain and bids to explore off Cyprus and Lebanon.
The Leiv Erikson is due to leave Greenland for the Falklands where it is to work for Falkland Oil and Gas from late January.