OIL explorer Cairn Energy said yesterday it has hit oil off the coast of Greenland, sending shares up 2.3 per cent to 436.5p.
Cairn disappointed investors last month when its first well in Greenland produced only a small amount of gas, but its most recent work in Baffin Bay has found evidence of a larger area of oil and gas.
“The presence of both oil and gas confirms an active, working petroleum system in the basin and is extremely encouraging at this very early stage of our exploration campaign for the Sigguk block,” Cairn chief executive Bill Gammell said.
The firm is waiting for tests on two types of oil found in the well before continuing.
Cairn agreed to sell most of its 62 per cent stake in Cairn India to rival Vedanta last month, and said it would reinvest the proceeds in its exploration of Greenland.
However, its first well has now been plugged and abandoned, the firm said yesterday, with costs of $84.2m (£54.2m) written off.
Research by the US Geological Society suggests there could be billions of barrels of oil near Greenland, though the recent drilling has triggered protests from Greenpeace, who managed to invade and briefly close Cairn’s rig in August.