Cairn Energy shares slump as Greenland well disappoints

Shares in Cairn Energy (CNE.L) dropped sharply this morning after the oil exploration company announced that its second well in Greenland, Gamma-1, has failed to produce oil.

Shares were off 20.4p, or 6.53% to 292p.

The UK company has been pursuing its controversial Arctic exploration with five wells in the area costing $600 million this year. It hopes to open up a multi-billion barrel basin in the region.   

Cairn will open a new well and drilling is continuing at another site, Delta-1, but so far it has shown little evidence of hydrocarbons.

Andrew Whittock at Liberum Capital said: ‘the Gamma well was dry and there is no encouragement yet from the Delta well. The share price could fall sharply but there is little reason yet to increase exposure to Greenland ahead of next year’s programme.’

The controversial drilling programme in the Arctic has failed to produce exciting results to date with Chevron, Exxonmobil, and DONG Energy some of the big names with licences to prospect in the area.

Environmental groups have protested against the exploration of oil in the region and Carin have been embroiled in legal action, taking out an injunction against activists on the publication of their policy on oil spills in the region.  

Shares in Cairn have fallen by 30.5% in the year to date.