Cairn set fair to take pioneering role in Greenland on rig deal
Cairn has secured a specialist vessel to drill for six weeks in the third quarter of 2010, a year earlier than the market had expected.
Greenland is predicted to be one of the last major frontiers for oil exploration. Despite there having been no drilling there since the 1970s, the US Geological Society has said the area might contain billions of barrels of oil. However, the freezing waters and the risk of icebergs means it is a specialised – and costly – region.
Cairn, built on exploration success in India, is increasingly excited about Greenland. Deputy chief executive Mike Watts has said its geology meant it would be "almost impossible" for Greenland not to have a working hydrocarbon system.
Cairn moved quickly when Greenland began offering exploration rights in an attempt to cut its dependence on Denmark.
Cairn was granted exploration rights over 52,000 square kilometres in the first licensing round in early 2008 and another 20,000 sq km later that year after direct negotiations with the government.
Major oil companies, including Exxon Mobil and Chevron, also own exploration rights there, although Cairn appears to be set to be the first to begin drilling.
In March, the company tapped shareholders for 116 million to give it the firepower to hire one of the specialist vessels that would allow it drill in 2010 if one became available, although 2011 was thought to be more likely.
Shares in Cairn topped the FTSE 100 yesterday after announcing that it had subcontracted the Stena Forth from US group Hess, which is using the vessel for a drilling campaign in Libya next year.
Built in South Korea, the 228 metre vessel was delivered for use earlier this year, designed to operate in harsh conditions such as the Barents Sea.
Cairn chief executive Sir Bill Gammell said yesterday: "We are equipped to commence drilling with a vessel that offers considerable operational flexibility."
Phil Corbett, at house broker Royal Bank of Scotland, said the news was "an early Christmas present to shareholders", with the Greenland campaign likely to be "one of the most eagerly anticipated exploration campaigns" of 2010.
Shares in Cairn closed up 4.7 per cent at 3,188p, their highest level in more than a year.