A $600-million (U.S.) exploration campaign by Cairn Energy PLC to find oil and gas in the waters off Greenland this summer has ended in failure.
The company admitted on Wednesday that the fifth and final attempt to find oil in the region during this year’s drilling season had produced only small levels of hydrocarbons and the group was abandoning its search.
Cairn has used the short Arctic summer to drill five wells in the waters off the western coast of Greenland at a cost of $600-million. The Atammik Block, 202 kilometres offshore from the country’s capital Nuuk, was the final well in this year’s attempt to discover hydrocarbons.
Shares in the company, which peaked at more than £4.73 ($7.42) earlier this year, have fallen with each disappointing announcement about the Greenland campaign. On Wednesday, Cairn shares closed down 1 per cent, at £2.72.
Over the past two years, Cairn has spent about $1-billion to drill a total of eight wells in Greenland’s waters – none of which has produced commercially viable quantities of oil or gas.
The Edinburgh-based company said it would spend the next few months assessing its options for the area. The company has declined to specify whether it would proceed independently with further drilling in Greenland, seek partnership agreements or simply sit on its unproved assets.
But on Wednesday, Simon Thomson, Cairn’s chief executive officer, said he remained optimistic that seismic data could encourage further exploration, though he hinted that Cairn would not go it alone.
“Evaluation of data across Cairn’s multiple blocks is ongoing against a backdrop of active farm-out discussions for selected areas,” he said.
But analysts said the company’s options in the region were limited and Mr. Thomson’s comments were overoptimistic.
Analysts at brokers Evolution said: “[Mr. Thomson’s comments]sound a bit like U.K. Chancellor George Osborne trying to put a brave face on the economic outlook. In the absence of drilling news until the 2012 summer season, the shares look mired.”