London Evening Standard: Cairn oil find blow for Shell boss
By Steve Hawkes,
19 January 2004
SHELL chairman Sir Philip Watts was left with more egg on his face today after a little-known UK firm made one of the biggest ever oil discoveries in India on land sold off by the supermajor for £4m two years ago.
Cairn Energy's shares leapt 148 1/4p to 518 1/4p as it revealed an exploration well in the Rajasthan basin, western India, had struck reserves estimated to hold up to 200m barrels of recoverable crude. Analysts valued the discovery at more than $400m (£222m).
The find doubles Cairn's total reserve base, and chief executive Bill Gammell said it justified the group's faith in the area. 'We just feel this region has been overlooked by the majors,' he said.
The size of the discovery is smaller than typically interests a supermajor but with new fields becoming increasingly hard to find it is likely to be another blow to Watts as he fights for his job at Shell.
Some of Shell's biggest investors have called for change after the group's humiliating downgrade of 20% of its proven oil and gas reserves - 3.9bn barrels - which stunned the City 10 days ago.
Cairn bought into the Rajasthan block in 1998 by taking a 10% share in the licence held by Shell. After upping its interest to 50%, it paid just $7.25m for full control in 2002.
Once the find is declared commercial, India's State-owned oil firm ONGC will take a 30% stake. Separate reports today said the Indian government is preparing to sell 10% of the group to raise $2.5bn.
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