Cairn Energy PLC To Start Drilling Program 2011 In Greenland

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Cairn Energy PLC (CNE.LN), an Edinburgh-based oil and gas exploration and production company announced Tuesday its exploration campaign is to continue in 2011 with the drilling of up to four further exploration wells at an estimated total cost of $600 million, in line with previous guidance.

-The Government of Greenland has recently approved the location of seven exploration drill sites which allows some flexibility in program planning and possible options for follow up appraisal wells in the event of a discovery.

-The main elements of the primary 2011 exploration program are:

*The drilling of up to four exploration wells, with one in each of the Atammik and Lady Franklin blocks offshore to the west of the capital Nuuk, and one in each of the Napariaq and Eqqua blocks in the southern Baffin Bay west Disko area;

*The acquisition of up to three 3D seismic surveys (combined total 4,500 kilometers squared or km(2) ), one in the north of Baffin Bay, one in the south of Greenland and one contingent location to be decided dependent on operational results.

*The four well campaign will test prospects with different structural styles and play types and is targeting a gross unrisked mean prospective resource potential of 3.2 billion barrels of oil equivalent at target subsurface depths between 2,500 meters and 4,750 meters.

*In each case the principal target is oil but evidence of both oil and gas generation is found regionally.

-In view of the frontier nature of the exploration and paucity of offset well information the individual prospects are estimated to have chances of success ranging from around 10% to 20%.

-The wells will be drilled in water depths ranging between 288 meters and 1,530 meters.

-As was the case in 2010, the program will be carried out with a focus on safety, including the deployment of two drilling vessels.

-Shares closed Monday at 419.20 pence