Cairn spreads out the risk – Farms out shares to Statoil
January 28, 2012 1 Comment
Cairn Energy plc, now operating in Greenland, is a global oil and gas exploration company with headquarters in Edinburgh (United Kingdom). As far as Greenland is concerned, Cairn Energy holds 11 exploration licenses, including Salliit, Uummannarsuaq, Saqqamiut, Kingittoq, Lady Franklin, Atammik, Eqqua, Sigguk, Ingoraq, Napariaq, and Pitu as an operator. (Cairn Energy, Summary of Interest)
Cairn Energy sells some of it’s stake in Pitu
On the 23rd of January, 2012, Cair Energy managed to farm out a 30% stake in the Pitu license block to the Norwegian state-owned Statoil company. (Read BBC article here) Cairn has thus far managed to hold very high controlling positions in all 11 of it’s licensing blocks. Greenland’s state-owned oil and gas company Nunaoil, on the other hand seems to have made it policy to keep a minimum of a 12.5 percent interest in all offshore exploration efforts (with the exception of 4 southern blocks that are held to the tune of only 8 percent each).
As Cairn has so far failed to have made any substantial discoveries, it has for quite some time seemed interested in shaking off at least some of it’s risk. The firm is simply less diversified than some of it’s rival companies, and it does have a lot of it’s eggs in one basket (Greenland). Looking at the map above, one can see that Statoil, Shell, GDF Suez and Maersk all have interests in the vicinity. It is easy to see how economies of scale could spill over from operations in any of these 4 surrounding blocks into the Pitu region given new ownership. Given that Statoil has the status of Arctic exploration champion and is awash with cash, it is abundantly clear that the deal was a positive one for Greenland.
The price of the 30% share in Pitu has not yet been disclosed by Cairn. It did however note that it will receive an upfront payment from Statoil in meeting various costs. What we are seeing here is likely an effort on the part of Cairn to rebuild it’s exploration portfolio.
If you wish to see a complete map of Greenland that includes all current offshore exploration blocks, please do so by redirecting yourself to our ‘Greenland Exclusive Economic Zone / Oil and Gas Licenses‘ page.