Cairn Energy surges on Senegalese oil discovery

FTSE 250-listed oil and gas group Cairn Energy has discovered oil at its FAN-1 exploration well offshore Senegal, causing shares to surge on Tuesday.

The discovery "materially upgrades the prospectivity" of the Sangomar Deep Block, the company said.

Cairn, which has a 40% working interest in the block, said that discovery of oil at FAN-1 is an "important event" for its joint venture with Conocophillips (35%), FAR (15%) and Petrosen (10%), which owns three blocks offshore Senegal.

The Sangomar well, located 100km offshore, found a 29-metre net oil bearing reservoir in cretaceous sandstones.

No water contact was found in a gross oil bearing interval of over 500 metres.

Initial estimates for the FAN-1 well range from 250m barrels at a 90% probability of success (P90), 950m barrels at P50 and 2,500m barrels at P10. These are broadly in line with pre-drill estimates.

"We have encountered a very substantial oil-bearing interval which may have significant potential as a standalone discovery," said Cairn's chief executive Simon Thomson.

"Furthermore, this result materially upgrades the prospectivity of the block with a proven petroleum system and a number of deep fan and shelf prospects established."

The stock was up 10.4% at 198.55p in early deals on Tuesday.