Shares in Cairn Energy slumped more than 10 per cent this morning after the oil company revealed that it was abandoning a well in Mexico.
The FTSE 250 company is on track for its worst day since the financial crisis. At one point, shares fell to a low of £1.57, down nearly 18 per cent from its opening price of £1.85.
The Scottish company confirmed that the Atom-1 well, Cairn’s first offshore exploration project in Mexico, was dry and would be permanently plugged.
In September chief executive Simon Thomson said that he was optimistic about high potential exploration prospects.
Cairn holds 50 per cent interest in the block nine project, part of a JV with partners Citla Energy, a Mexican company, and Italy’s ENI.
Drilling on the project only commenced in the third quarter this year. Maersk, who conducted the drilling on Cairn’s behalf, will now move to commence operations on the Bitol-1 well in November.
Cairn also has a 30 per cent stake in two non-operated wells on block seven, and 15 per cent interest in block 10.
The news represents a setback for Cairn, who earlier this month decided to withdraw from a license off Ireland.
Cairn had been conducting exploratory work with Irish partner Providence Resources, but following technical assessment had elected to voluntarily surrender their license.
In some positive news, the Edinburgh-based company announced that the outcome of its long-running arbitration case against India could finally be delivered in 2020.
The Arbitral Tribunal has indicated that although it would not commit to a specific award release date, it expects to be in a position to issue the award in the next summer.
The firm is seeking compensation for losses of more than $1.4bn (£1.1bn) under the UK-India bilateral Investment Treaty.
The final hearings concluded at the Hague over a year ago in August 2018, but procedural difficulties had affected the award timetable.
The dispute centres around Cairn Energy’s restructuring of Vedanta, its Indian subsidiary, in 2007.
Main image credit – Getty