Greenland Operational Update

RNS Number : 1360H

Cairn Energy PLC

24 May 2011

 



FOR IMMEDIATE RELEASE                                                                                          24 May 2011

CAIRN ENERGY PLC

Greenland Operational Update

Cairn's 2011 exploration drilling campaign offshore Greenland

Following Cairn's three-well drilling operations in 2010; the Company's exploration campaign is to continue in 2011 with the drilling of up to four further exploration wells. The Government of Greenland has recently approved the location of seven exploration drill sites which allows some flexibility in programme planning and possible options for follow up appraisal wells in the event of a discovery.

The main elements of the primary 2011 exploration programme are:

Ø The drilling of up to four exploration wells, with one in each of the Atammik and Lady Franklin blocks offshore to the west of the capital Nuuk, and one in each of the Napariaq and Eqqua blocks in the southern Baffin Bay west Disko area;

Ø The acquisition of up to three 3D seismic surveys (combined total ~ 4,500km²), one in the north of Baffin Bay, one in the south of Greenland and one contingent location to be decided dependent on operational results.

Ø The four well campaign will test prospects with different structural styles and play types and is targeting a gross unrisked mean prospective resource potential of 3.2 billion barrels of oil equivalent at target subsurface depths between 2,500 and 4,750 metres.

Ø In each case the principal target is oil but evidence of both oil and gas generation is found regionally.  In view of the frontier nature of the exploration and paucity of offset well information the individual prospects are estimated to have chances of success ranging from around 10% to 20%. The wells will be drilled in water depths ranging between 288 metres and 1,530 metres.

As was the case in 2010, the programme will be carried out with a focus on safety, including the deployment of two drilling vessels. 

The total cost of the drilling campaign is estimated to be in the region of $600m, in line with previous guidance.

Atammik and Lady FranklinBlocks

Cairn increased its equity and acquired the operatorship of these blocks with effect from 1 January 2011.

The final selection of prospects for the 2011 exploration campaign is the LF-7 prospect in the Lady Franklin block and the AT-7 prospect in the Atammik block.  Both prospects contain multiple structural targets in the Tertiary and Cretaceous sections, with expected mean prospective resources of 480 and 350 mmbbls respectively, with the probability of success estimated to range from around 10% to 20% dependent on the individual target horizons. The planned TD of the AT-7 prospect well is 3600m and 4,500 metres for the LF-7 prospect well.

Follow-up prospects are present in both blocks with an estimated combined gross mean in-place resource of more than eight billion barrels or 14 Tcf.

Napariaq

This block was awarded to Cairn in the Baffin Bay Bid round the results of which were announced by the Government of Greenland in December 2010.

The exploration well in this block will target the Delta prospect, which is a large structural culmination in the Cretaceous section where the overlying Tertiary volcanics are prognosed to be thin or possibly even absent. The Delta Prospect has an expected mean prospective resource of 530 mmbbls and probability of success estimated at around 10%. The potential for stacked pay could add further volumes to these estimates.  The well is scheduled to be drilled to a depth of 4,750 metres and targets the potential reservoirs of Cretaceous age not reached in the Alpha-S1 well drilled in 2010. The Alpha-S1 well encountered oil shows in the thick (>1 km) Tertiary volcanic section.  Geochemical analysis of the oil samples confirm three types of oil one of which comes from a pre-Tertiary source rock which is presumed Cretaceous in age as it has similarities with known Cretaceous oil seeps seen onshore in the Disko area. The Delta well is important for understanding the potential of a regional Cretaceous play in the offshore Disko area.

Eqqua

The Eqqua block lies to the south of the Sigguk block where the 2010 activities were focussed and it was acquired by Cairn in the Disko West licence round in late 2007.

The Gamma prospect in the Eqqua block is a combination structural-stratigraphic trap in an interpreted Tertiary basin floor fan at 2,500 metres overlying a deeper Mesozoic structural culmination at around 4,500 metres.  The fan targets potentially thicker reservoir sands 100 km from the T-8 well but at the same stratigraphic level as the gas seen in thin sands in the T-8 well drilled in 2010.  The Tertiary Gamma Prospect has a mean prospective resources of 1,840 mmbbls or 7 Tcf and probability of success of around 10%. The planned Gamma well is not designed to drill to the deeper Mesozoic target this year as this prospect will require proof of offshore Cretaceous reservoirs from the Napariaq Delta prospect well.

Pitu and Southern Greenland blocks

The Pitu block was acquired in the December 2010 Baffin Bay Bid round, the southern Greenland blocks were acquired in 2008. 

Two 1,500km² 3D seismic surveys are planned to be acquired in each of these areas over structural complexes where leads and prospects with material potential have been identified.

The location of a third and contingent 3D seismic survey is yet to be decided and is dependent on operational results.

Mike Watts, Deputy Chief Executive, Cairn Energy, said:

"The Group's strong financial position and entrepreneurial exploration focus has allowed it to build a strategic and leading early entry position in the frontier offshore basins of Greenland, which Cairn believes has the necessary geological ingredients for exploration success."

Cairn Energy Live Audio Webcast

An audio webcast will be available at 0900 (BST) on Tuesday 24 May 2011 on the Cairn Energy PLC website: www.cairnenergy.com.  Also at 9:00am, you may listen to the conference call via telephone by calling 0208 817 9301 or [phone] (outside the UK). The call will remain in listen only mode throughout.

An archived version of the webcast of the presentations will be available by 6pm, Tuesday 24 May 2011.

A recording of the conference call will also be available from 6pm, Tuesday 24 May 2011 until 11:59pm, 7 June 2011 by dialling [phone] and using the passcode: 4957 100.

A transcript of the event will be available on the website as soon as is possible.

Enquiries:

Analysts/Investors Sir Bill Gammell, Chief Executive Dr Mike Watts, Deputy Chief Executive Jann Brown, Finance Director David Nisbet, Corporate Affairs	Tel: [phone]
Media Patrick Handley, David Litterick Brunswick Group LLP	Tel: [phone]

These materials contain forward-looking statements regarding Cairn, our corporate plans, future financial condition, future results of operations, future business plans and strategies. All such forward-looking statements are based on our management's assumptions and beliefs in the light of information available to them at this time. These forward-looking statements are, by their nature, subject to significant risks and uncertainties and actual results, performance and achievements may be materially different from those expressed in such statements. Factors that may cause actual results, performance or achievements to differ from expectations include, but are not limited to, regulatory changes, future levels of industry product supply, demand and pricing, weather and weather related impacts, wars and acts of terrorism, development and use of technology, acts of competitors and other changes to business conditions. Cairn undertakes no obligation to revise any such forward-looking statements to reflect any changes in Cairn's expectations with regard thereto or any change in circumstances or events after the date hereof.

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:

o  Cairn India limited ("Cairn India") is 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 62.2% interest in Cairn India.

o  Capricorn Oil Limited ("Capricorn"), a 100% subsidiary of Cairn, is focused on exploration. Capricorn has assets in Nepal, Greenland, Albania and 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 previously focused its activities on the geographic region of South Asia, resulting 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, Nuuk and Kathmandu. Cairn has now drilled three of the total nine exploration wells drilled offshore Greenland, previously five wells were drilled in the 1970s and one in 2000. 

Ø For reasons of operational flexibility and safety the drilling operations will be carried out with two state-of-the-art dynamically positioned drilling vessels - the Ocean Rig Corvocado, a dynamically positioned drillship and the Leiv Eiriksson, a semi-submersible drilling rig. The operations are supported by four helicopters and a range of support vessels including: five ice management vessels, two emergency response standby vessels, three supply vessels, one multirole vessel, one freighter and two wareships for accommodating crews if necessary. 

For further information on Cairn please go to: www.cairnenergy.com 

 

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