Cairn Energy adds 20% to resource estimate

Oil explorer Cairn Energy has added 20 per cent to its resource estimate for its oilfield off the coast of Senegal.

Cairn is based in Edinburgh, Scotland, and also has an interest in exploration off Ireland’s west coast.

It said its 2C resource estimate, or its best estimate of contingent resources, at the SNE field had increased to 385 million barrels of oil after positive drilling results.

In a statement, chief executive Simon Thomson said the company was "well-placed" to deliver additional value to shareholders.

“We are delighted with the results to date of our multi-well evaluation programme offshore Senegal, which has confirmed the scale and extent of the significant resource base in this world class asset,” he said.

“Cairn’s 2C current resource estimate for the SNE field has gone up by 20 per cent and the positive results of the latest appraisal well provide the potential to further increase the size of the SNE field.

“A combination of financial strength and continued exposure to material growth opportunities leaves Cairn well-placed to deliver additional value for shareholders from its balanced portfolio.”

In a note, Davy said the update was "positive" for the group's valuation.

“Cairn Energy’s revised best or 2C estimate for the SNE field offshore Senegal is now 385 mmbbl,” it said. “This represents a 17 per cent increase on the group’s previous best estimate of 330 mmbbl.

“It is an interim upgrade with results from the more recent successful second appraisal well, SNE-3, still being assessed and yet to be integrated.

“The group’s low estimate of resources is now 200 mmbbl, which was previously guided as the economic threshold for the field. We believe this morning’s update is positive for the group’s valuation.”