Oil group Cairn Energy (LON:CNE) has set out the details of a planned US$600 million exploration drilling campaign offshore Greenland later this summer. Following an initial three-well operation in 2010, Cairn will drill up to four wells targeting a gross unrisked mean prospective resource potential of 3.2 billion barrels of oil equivalent. It will also shoot around 4,500 sq km of 3D seismic. The group said it had agreed seven exploration targets with the Greenland government, giving it some flexibility in programme planning and possible options for follow up appraisal wells in the event of a discovery.

Cairn currently operates 11 blocks, with a combined area of 102,000 sq km offshore Greenland, which is equivalent to 15 quadrants or 450 blocks in the UK North Sea. Last year it drilled three wells and acquired 15,000km of seismic data. In January 2011 it increased its equity interest to 87.5% and became operator of the sub-Arctic Atammik and Lady Franklin blocks offshore west Greenland. As part of the new programme, one well will be drilled in each of the Atammik and Lady Franklin blocks and one in each of the Napariaq and Eqqua blocks in the southern Baffin Bay west Disko area. The 3D seismic acquisition will comprise three separate surveys; one in the north of Baffin Bay, one in the south of Greenland and one contingent location to be decided dependent on operational results.

Cairn noted that all of the proposed wells were targeting oil but that evidence of both oil and gas generation had been found regionally. In view of the frontier nature of the exploration and paucity of offset well information the individual prospects are estimated to have chances of success ranging from around 10% to 20%. The wells will be drilled in water depths ranging between 288 metres and 1,530 metres.

Mike Watts, Cairn’s deputy chief executive, said: “The group’s strong financial position and entrepreneurial exploration focus has allowed it to build a strategic and leading early entry position in the frontier offshore basins of Greenland, which Cairn believes has the necessary geological ingredients for exploration success.”

In a note to investors, broker Evolution Securities said the operations update left Cairn shareholders standing at a cross roads. It said that the prize was not just the leverage that this summer’s four well campaign provides but the wider…

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