Cairn Energy PLC (Cairn) is pleased to announce a farm-in as Operator to two licences offshore West of Ireland in the Porcupine Basin, which contains the undeveloped Spanish Point gas condensate and Burren oil discoveries, and six adjacent licensing option blocks. The acreage covers an area of 2,753km2 with more than 500km2 of 3D seismic and will provide locations for Cairn’s frontier drilling programme.

The two licences – FEL 2/04 (which includes the Spanish Point and Burren discoveries) and FEL 4/08, together cover an area of 1,242km2 – are currently operated by Chrysaor (60% Working Interest (WI)) with Providence Resources (32% WI) and SOSINA Exploration Ltd (8% WI). The six adjacent licensing option blocks, known as Licensing Option (LO) 11/2, cover an area of 1,511km2 and can be converted to a FEL from October 2013.

Cairn will acquire, subject to regulatory and partner approval, a 38% WI and Operatorship by paying a pro-rated share of back costs amounting to $4.1million (as at 31 December, 2012) and 63.33% of future exploration and appraisal costs for up to two wells, subject to a cap. Costs in excess of the cap will be shared by the parties according to their equity interests. Based on Cairn’s estimate of the expected well cost, Cairn anticipates it will be contributing ~55% of the cost of each well.

Drilling of the first appraisal well on Spanish Point is targeted for Q2 2014. The partners also currently expect to propose a 3D seismic work programme on LO 11/2. A further well will be considered following the initial appraisal well.

Simon Thomson, Chief Executive, Cairn Energy PLC said:

“The addition of this prospective acreage off the west coast of Ireland in the Porcupine Basin brings further exploration and appraisal potential to Cairn’s frontier Atlantic Margin portfolio. Our operated, multi-well exploration programme, for which a rig has been secured, will start later this year in Morocco.”

Read more: