StockMarketWire.com - Cairn Energy chairman Sir Bill Gammell said the group's goal in Greenland was to establish significant reservoir potential, leading to potential commercial success.

In its Q3 interim management statement, Cairn said group gross daily production for Q3 was 169,709 barrels of oil per day (bopd), a 94% increase on the H1 level.

It realised an average price per barrel of oil equivalent of $67.14, adjusted for stock movements.

Total costs for the 2010 Greenland drilling programme were expected to be about $400m, in line with guidance.

Costs of $185m for the T8-1 and T4-1 wells, which did not result in commercial discoveries, were forecast to be written off.

The Alpha-1S1 exploration well had been suspended to allow possible re-entry to sidetrack or deepen the well at a later date. The T8-1 and T4-1 exploration wells had been plugged and abandoned.

Cairn continued to work with the Indian government to secure consents and approvals for completion of its stake in Cairn India to Vedanta.

Completion would provide the funding to continue an active programme in Greenland and return a substantial proportion of the proceeds to shareholders.

It said the resulting reduction in its equity base would re-gear the group to exploration success.

The Mangala field in Rajasthan started pipeline sales in June. Gross field revenues since then were approaching $1bn.

Mangala development drilling indicated near-term production potential of 150,000 bopd. Drilling was progressing and the reservoir continued to perform well with 107 development wells drilled to date, of which 74 were complete.

Gammell said, 'The Vedanta transaction continues to progress as we work with the government of India in a consensual manner to secure the necessary consents and approvals for completion.

'The Mangala field in Rajasthan is now producing 125,000 bopd and generating significant revenues. Net group production is now near 100,000 boepd.

'Exploration in Greenland is at an embryonic stage but the fact that we have encountered both gas and oil during this campaign, in a previously undrilled geological basin, is extremely encouraging.

'The goal of our future exploration efforts will be to establish significant reservoir potential, leading to potential commercial success.'







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