London Evening Standard: Cairn chief finds his nirvana
21 April 2004
BILL Gammell likes to name his oilfields after Indian goddesses.
He chose Mangala - 'Bliss' - for the discovery in western India three months ago that stunned the City and transformed the fortunes of his Cairn Energy business. He'd better start looking for more.
The fairytale took another twist yesterday as Cairn revealed it had found its third oilfield in northern Rajasthan, on top of the field - known simply as 'A' - discovered by Gammell's exploration team near Mangala in March.
With some 20 exploration wells still to be drilled in the coming year, the Scotsman who went to school with Tony Blair and met George W Bush who lived with the Gammells as a teenager, could be reaching for the name-guide as often as phone numbers of grateful investors.
Cairn's market value has shot up from £435m last summer to £1.5bn. It has boosted reserves by a conservative 360m barrels this year. 'It is amazing that this has happened so quickly and so successfully,' one analyst said.
It is all the sweeter for the chief executive as he stuck by India after Shell gave up and sold its development licence, covering 5000 square km, to Cairn for £11m. The block is now worth £900m.
'We had been in the southern part of Rajasthan but we hadn't hit any home runs, just singles,' he says. 'We then moved to the north and Mangala. We always knew there was oil in the basin but it was only here that we found a cracking reservoir in an oil lake. We are on to something serious.'
The challenge now is to put development plans in place for the fields it finds by the time the Indian government takes back its exploration licence in May next year.
Cairn hopes to have firmed these for Mangala and 'A' by June and July. The two may hold at least 280m barrels of recoverable crude, more than double the amount of oil on Cairn's books. Yesterday's find, 'C' has another 80m barrels.
India's State oil company, ONGC, has the right to a 30% stake in each field once they become commercial. Gammell says he has no plans to court a supermajor to provide cash to help with costs, which may include a 200km pipeline to Delhi.
'We are in the fortunate position of having no debt,' he says. 'We could always float part of the business on India's stock exchange.'