Cairn Energy PLC has set up two wells for drilling for oil off the shores of Greenland. Their first well was shut down after no commercial discoveries were made with exploration costs amounting to 84 million dollars. Their second well seems to be more promising. The Chief Executive Bill Gammell made a statement saying that there are presence of both oil and gas in active form in the petroleum system in the basin. Cairn plans to continue exploring this well off Greenland’s west coast over the next few years.
The industry over all reacted well to the discoveries of potential oil despite the closing of their first well and its 84 million dollar write-off. Along with the discoveries of oil, Cairn’s shares have been trading 3% higher in the past few weeks. Though there has been good feedback there has also been bad. Canacccord Genuity said the write off was “clearly a disappointing result, even if there is a reason for long-term optimism.” Cairn has put much of its company in the hands of the Greenland project, but plans to sell the bulk of its stake to a mining company Vedanta Resources PLC for what could be as much as 8.5 billion.
Not only does Cairn have to worry about the fact that they have put so much trust in the shores off of Greenland for finding oil but also the fact that the company Greenpeace has recently targeted Cairn, claiming that their drilling posses too great a risk to the environment there.
-Nicole Lombardo
http://online.wsj.com/article/SB10001424052748704129204575505434270269628.html?mod=WSJ_Energy_leftHeadlines
It seems that Clairn Energy PLC has taken numerous risks with this project for drilling the two wells. I'm curious about what encouraged them to set up these wells in the first place because it doesn't seem very well (no pun intended) researched. I feel this company has put a lot at risk and has already lost one of its wells. The other one, though there are some promising aspects, doesn't seem as if it is in a safe position. I feel a major part when investing in something so great, such as building the well, topics like whether it would be an environmental risk or not, would be better studied. At a time when the oil market has been so rocky you would expect a company to be a little more thorough in the planning stage.
ReplyDelete-Ashley Luddy