CAIRN Energy dropped by more than five per cent yesterday after the Edinburgh-based explorer failed to find oil at one of its wells off the coast of Greenland.
The FTSE 100 explorer said it was plugging and abandoning the well in the Lady Franklin block 300km offshore from Greenland’s capital Nuuk and moving its rig northwards to a second prospect.
Chief executive Simon Thomson, however, said the group remained optimistic about the campaign and “was encouraged by further indications of pre-Tertiary oil-prone rocks in the Greenland acreage.”
Cairn is one of several companies including ExxonMobil and Shell that has been granted licenses over the past decade to the Arctic region, believed to be among the world’s largest untapped hydrocarbon reserves.
The group agreed last year to sell a majority stake in its Indian arm to Vedanta to concentrate on frontier exploration in Greenland.
The Franklin block was one of the largest of four wells Cairn plans to drill this year, costing around $600m (£400m).
The campaign has sparked fierce protests from environmental groups over the impact it could have on the largely untouched territory. Last month, 60 Greenpeace campaigners occupied Cairn’s headquarters in Edinburgh after the group announced that had started drilling.
The announcement dampened investor hopes, sending Cairn’s shares to their lowest in 18 months before closing at 334.8p last night.