Cairn Energy has once again bitten dust at one exploration well in the West Disko area off Greenland as another threw up only minor hydrocarbon shows.
The latest results sent shares diving in London and are a further blow to the UK independent which is battling a tide of criticism from environmental watchdog Greenpeace over its controversial Arctic drilling programme.
Cairn reached total depth at the Gamma-1 well in the Eqqua Block almost 300 kilometres offshore Ansiaat with the Greek-owned drillship Ocean Rig Corcovado, a statement read on Tuesday.
The Edinburgh-based outfit was targeting a deep water Tertiary basin floor fan not far from where biogenic and thermogenic gas was found during drilling last year.
"The Gamma-1 well intersected the prognosed basin floor fan at the anticipated depth, although no reservoir or hydrocarbon shows were encountered in the interval," Cairn reported.
The well is now to be plugged and abandoned and the Ocean Rig Corcovado will head almost 600 kilometres south to the Atammik Block to drill the AT2 prospect, the fifth well in Cairn's 2011 drilling programme.
The Delta-1 well in the Napariaq Block, also in the West Disko area, has also thrown up disappointing results some 365 kilometres off Aasiaat. Although drilling continues and "the well has so far encountered several hundred metres of Tertiary volcanic section", Cairn said that this is "thicker than anticipated and with only minor hydrocarbon indications".
The semi-submersible drilling rig Leiv Eiriksson, also owned by Greek company Ocean Rig, has been working on the Delta-1 well. Once drilling is complete here the unit will shift back to the AT7-1 well in the Atammik Block some 200 kilometres off Greenland's capital Nuuk.
Cairn chief executive Simon Thomson had minimal comments to make on the latest results, writing in Tuesday's statement: “The full results of the Gamma-1 well and the update from the Delta-1 well will be reviewed in the context of all the data gathered during the Greenland exploration campaign."
Reiterating that the two drilling units are to be shifted on, Thomson negated some of the disappointment from the latest developments by vowing: "We remain focussed on the potential of our multi-basin position in Greenland.”
Investors were quick to react to the negative news as shares slumped over 6% at the time of writing and before the London Stock Exchange opened for trading on Tuesday morning.
The latest disappointments come just over a month after Cairn hit dust at the LF-7-1 well in the Lady Franklin Block off Greenland. Although the well did not hit oil, initial analysis did indicate the presence of pre-Tertiary oil prone source rocks in the basin, however.
“By no means is this the end of the story, it’s just the beginning,” Thomson said of the development in early August.
“This will have no impact on this year’s drilling campaign. What we are doing is trying to make the right pin pricks in vast enexplored areas. At this stage we need a lot of luck so we will just continue.
“From an exploration point of view we are encouraged, certainly not discouraged by this.”
Cairn has stepped up its campaign off Greenland after selling off a large chunk of its Indian unit.
The company said last month it is "more likely than unlikely" that it will carry out a proposed 3D seismic acquisition programme of around 4500 square kilometers this year.
This year’s programme follows a three-well exploration programme in the Baffin Bay basin last year.