CAIRN Energy has said the results of the latest drilling off Senegal highlight the world class potential of the find it made there in 2014.
The Edinburgh-based firm said a well to appraise the SNE 1 find had struck a column of oil maintaining the 100 per cent success rate it has enjoyed in drilling on the field.
The four appraisal wells drilled on SNE-1 have all found oil. As the wells have been spread across an area covering more than 50 square kilometres the success has boosted hopes that SNE could be a massive field.
Cairn’s chief executive Simon Thomson said: “we are delighted with the results to date of the multi-well evaluation programme, which has confirmed the scale and potential of this world class asset.”
Analysts at joint house broker JP Morgan Cazenove said the results of the latest well made it likely Cairn would increase its central estimate of the size of the find, from 385 million barrels.
They will increase confidence the find is big enough to justify the costs involved in bringing it into production.
The plunge in the crude price since June 2014 has made it harder for finds to pass that test.
However, the costs of services such as drilling have fallen sharply amid the resulting downturn in the sector.
Mr Thomson said: “We see clear potential to access additional cost savings from the current lower operating environment in respect of planned future activity.”
Cairn has identified a range of other prospects on the acreage it holds off Senegal.
The company will provide an update on the Senegal programme when it announces interim results in August.
It moved into Senegal under Mr Thomson’s plan to build a portfolio that combined drilling in relatively under-explored areas with lower risk field development activity in the North Sea.
At Cairn’s general meeting last week, Mr Thomson said it was making good progress in the North Sea. The company has stakes in the giant Kraken and Catcher fields which are due to come onstream over the next two years.
Mr Thomson said Cairn was eyeing acquisitions in the North Sea and West Africa.
The company made bumper finds in India under the leadership of founder Sir Bill Gammell but has become embroiled in a $1.6bn (£1.1bn) tax dispute in the country.
Stephane Foucaud of FirstEnergy Capital investment bank said the results of the latest well would increase confidence in current estimates of the size of the SNE find, without justifying an increase. Uncertainty about the outcome of the Indian tax case would weigh on Cairn Energy shares.
They closed down 5.2p at 209.8p.
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