CAIRN Energy has underlined its confidence in the potential to make big finds in the frontier waters off Ireland as one of the industry’s big guns appeared to back its judgement.
Edinburgh-based Cairn is set to increase its exposure to the area after acquiring an option to buy into a licence 90 miles off south west Ireland which contains a big prospect.
The company’s interest in the licence is shared by French giant Total, which has bought a stake in the acreage outright.
Total has also acquired an option to buy an interest in a licence that Cairn moved into in March. A well is due to be drilled on the licence within weeks.
Cairn made no comment on the latest deals yesterday.
However Total’s decision to invest in the territory provides a clear endorsement of Cairn’s decision to move into the area.
It comes amid hopes there may be huge amounts of oil and gas to be found in the under-explored deeps off Ireland’s west coast.
Ireland’s Petroleum Affairs Division says there have been four commercial natural gas discoveries since exploration began offshore Ireland in the early 1970s. There have been no commercial oil finds.
Excitement about the area appears to have been rekindled in recent months after enthusiasm for exploration work off Ireland waned amid the fall-out from the crude price plunge.
Cairn and Total are working with the Providence Resources business led by Tony O’Reilly , a champion of the potential of the area.
Cairn expanded into Ireland in 2013 by acquiring interests in two other licences off Ireland.
However, it deferred a well planned for 2015 and has yet to drill off the country.
After Cairn acquired an additional licence off Ireland last year, the latest deals signal the company wants to increase the momentum behind its Irish exploration programme.
Cairn and Providence expect to drill a well in June, which will target two prospects on frontier exploration licence 2/14.
The company may have become happier to sanction the investment required to drill off Ireland following its success off Senegal.
Recent appraisal drilling has underlined the potential of one of the finds the company made off the West African country in 2014.
It moved into Senegal and Ireland under chief executive Simon Thomson’s plan to combine drilling in what are deemed frontier areas with lower risk activity in the North Sea.
Total has acquired the right to buy a 35 per cent interest in licence 2/14 for up to around $27 million, depending on the results of the forthcoming well. Cairn has a 30 per cent stake.
Mr O’Reilly said Providence was delighted to agree the option deal with a giant that is a world leader in deep sea developments.
He welcomed Cairn’s decision to give itself the possibility of acquiring acreage close to where the firms are already exploring.
Cairn has acquired an option to take a 20 per cent interest in licence 16/27, in return for paying up to around $10m costs.Total has agreed to buy a 50 per cent stake in the licence for up to around $25m.
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