The Guardian (UK): Cairn gushes after gas find in India: “The latest success builds on a string of finds in Rajasthan last year on acreage it bought for a song from Shell.” (ShellNews.net) 12 Jan 05
Wednesday January 12, 2005
Cairn Energy reclaimed some goodwill in the City yesterday when it announced a new gas discovery in the Rajasthan area of India.
Shares in the exploration and production company rose 3% to £10.79 after chief executive Bill Gammell said the Raageshwari-5 well was "encouraging".
Further evaluation and appraisal work is needed to fully assess the true value, Mr Gammell admitted, less than a month after he delivered disappointing drilling news which sent his shares down 18%.
The latest success builds on a string of finds in Rajasthan last year on acreage it bought for a song from Shell.
The Edinburgh-based company has already profited from the earlier Indian exploration which propelled it into the FTSE 100 list of leading shares.
The discoveries also won former Scottish rugby international Mr Gammell the Young Entrepreneur of the Year award from accountant, Ernst & Young. Bruce Evers, an oil analyst with Investec Securities, said that the latest find was encouraging. "I think the shares are fair value at their current level but if Cairn confirms additional reserves from this gas find then I am sure the stock will respond."
Mr Evers said that anything over 150bn cubic feet of gas could easily be shipped by pipeline to areas of need such as Gujarat.
Cairn has permission from the Indian government to extend its Rajasthan exploration area. The company reported a pre-tax profit of £22.4m in the first six months to June 2004.
The drilling successes - at a time of higher oil prices - gave a boost to the entire exploration and production sector of smaller oil and gas firms.
Cairn floated on the stock exchange in 1989 and went into India as a joint venture partner with Shell. In 2002 Cairn bought out its partner's stake in Rajasthan for £4m but later found that the area could be worth nearly £300m.
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