SHARES in Cairn Energy fell as much as nine per cent yesterday after the company said that its latest well off the coast of Greenland had failed to find oil.
The FTSE 100-listed oil and gas explorer said it was preparing to plug and abandon the Gamma-1 offshore well, disappointing investors looking to the company to open a new oil frontier in the Arctic.
Drilling is continuing at another well in the same area, Delta-1, the company said, but so far that well showed only minor signs of hydrocarbon.
The company has already been frustrated in Greenland this year, when the first well of its 2011 exploration programme in the Lady Franklin block came up dry, showing the difficulties of finding commercial quantities of oil in the vast and little-explored Arctic territory.
Cairn has pinned its hopes on finding oil off Greenland, after selling most of its prized Indian assets to Vedanta Resources for $9bn (£5.5bn).
The explorer used some of the proceeds to fund its drilling campaign, which will cost $1bn over 2010 and 2011. Cairn said it will also look for partners to bear the cost of exploration in 2012, such as oil majors Exxon Mobil and ConocoPhillips.
Chief executive Simon Thomson said the company remained “focussed on the potential of our multi-basin position in Greenland”.
The group has two wells to drill before the end of the summer, when winter conditions set in, making it much more hazardous to work.
Shares closed down 8.2 per cent at 287p.