Cairn Energy targets Nepal in pioneering oil search
JOHN BOWKER
SENIOR CITY CORRESPONDENT
CAIRN Energy, the fast-growing oil and gas firm, is trying to build on its recent run of success with a ground-breaking venture in Nepal.
The Edinburgh-based company, set to join the FTSE when the blue-chip index is updated next month, said it would explore five new areas of the country in an effort to boost its reserves.
The exploration programme will be launched without any clear indication of what it will uncover, but finance director Kevin Hart said he had balanced out the risk and reward to take the plunge.
He explained: "We havenýt got a clue if there will be oil there or not, but that is the style of this company. We are pioneers - thatýs a word that suits us well."
Chief executive Bill Gammell added: "We believe Nepal has many of the fundamental geological elements required for future exploration success."
Cairn burst on to the scene when it announced a ground-breaking oil discovery in the Rajasthan province of India last January. Its shares stood around 400p at that time, but have since rocketed more than 350 per cent as investors rushed for the stock.
The City again took kindly to yesterdayýs move, trusting the firm would get lucky once more. The shares rose 4.3 per cent or 61p to close at 1469p.
Hart denied that Cairn was simply a good gambler, pointing to the time-consuming seismic surveys and due diligence it had to do before it would be able to drill in Nepal.
He said: "Our spending has been meagre so far - barely a few million dollars. It will be two to three years before we actually drill a well there."
Cairn will become the first company to explore in Nepal since industry giant Shell in 1988. It is the second time Cairn has attempted to profit from its bigger rivalýs cast-offs - the firm bought the Rajasthan field from Shell for just ý4m.
Hart said the group was aware of the guerrilla soldiers around the foothills of Nepal, and vowed to keep the safety of the groupýs employees as the top priority.
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