CAIRN Energy has received another boost to its exploration credentials after making what may be a significant find off Mexico with partners.
The Edinburgh-based firm has a stake in a well which made a discovery estimated to contain up to 300 million barrels.
The Saasken-1 well was operated by Italian oil giant Eni, which highlighted the potential of the acreage concerned.
Eni said studies suggested 10,000 barrels oil daily could be produced from the well. There are other prospects on the block controlled by the partners in the Saasken-1 well.
Cairn noted Eni’s announcement but made no comment on the find.
However, it appears to provide some vindication for Cairn’s decision to move into Mexico. The company announced in October that the first well it drilled off the country was dry.
Cairn moved into Mexico in 2017 under chief executive Simon Thomson’s plan to combine potentially transformational drilling in what were seen as frontier areas with lower risk activity in the North Sea.
Cairn generates bumper profits in North Sea as revenues hit $500m
After Cairn was awarded exploration licences covering blocks in the southern Gulf of Mexico that year, Mr Thomson said it could build a strategic portfolio in what he described as a highly prolific yet under-explored region.
The company won the acreage in what was only the second licensing round completed by oil and gas rich Mexico.
Activity in the country was long dominated by state-owned Pemex.
The Mexican government opened the oil and gas sector up to international investors in 2014 in the hope of attracting outside expertise to help maximise the potential of the country’s resources.
Mr Thomson’s belief in the potential of frontier areas will have been reinforced by the success the company enjoyed off Senegal.
Cairn made a big oil find off Senegal in 2014 with one of the first wells to be drilled off the country.
In January the company and partner firms approved a $4 billion plan to develop the field with first oil targeted in 2023. The field is expected to become the first to enter production off Senegal.
Cairn Energy approves plan to develop bumper oil field
Cairn made its name for making big finds in India under its founder Sir Bill Gammell, who was succeeded by Mr Thomson in 2011.
Cairn enjoyed a drilling success in UK waters in 2018 when it made a find thought to contain up to 50 million barrels oil equivalent with the Agar-Plantain well drilled east of Shetland with Azinor Catalyst and Faroe Petroleum.
Mr Thomson has highlighted the potential to make finds in the North Sea.
However, Cairn suffered drilling disappointments in Norway in advance of exiting the country.
In November Cairn agreed to sell its Norwegian subsidiary to local player Solveig Gas for a headline $100 million.
The company drilled three dry wells off Norway earlier in the year.
The sale of the Norwegian business freed up funds for Cairn to invest in other areas.
Cairn Energy's $100m Norway exit puts lucrative UK North Sea operations in focus
Cairn is generating huge amounts of cash in the North Sea after starting production from the Kraken and Catcher fields in recent years with partners. It could draw on the cash to help fund development work in Mexico.
Eni noted the potential for the Saasken find to pave the way to a significant development that could include other fields in the area.
It said: “The discovery is opening a potential commercial outcome of Block 10 since several other prospects located nearby may be clustered in a synergic development.”
Eni is the operator of Block 10 with a 65 per cent stake. Cairn has a 15% interest with Russia’s Lukoil on 20%.
Cairn and Eni are drilling the Bitol-1 well in Block Nine off Mexico.
Shares in Cairn Energy closed up 0.7p at 179.2p.
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