Cairn Energy Provides Update on Operations Offshore Greenland

The following operational update concerns Cairn’s exploration drilling campaign offshore Greenland.

Alpha-1S1

The multiple-objective Alpha-1S1 well has reached an intermediate depth of 4,358 metres (m) in volcanic sections. Following the conducting of extensive logging operations the well is now being deepened. The well has encountered gas shows in silty and volcanic sections over several hundreds of metres. Oil has also been observed intermittently over a 400m section in the volcanic and volcano-clastic intervals of the well which requires further evaluation.

Initial geochemical analysis of various hydrocarbon samples recovered from the well, undertaken by independent UK laboratories, confirms the presence of two oil types which have different origins and levels of maturity and are the first oils encountered in the current exploration campaign. Further geochemical analyses are ongoing on a number of oil samples.

T8-1

The T8-1 well, which, as announced on 24th August 2010, encountered gas in thin sands, reached a TD of 3,250m. The well has been plugged and abandoned. The T8-1 well did not result in a commercial discovery, consequently the well costs of US $84.2 million excluding demobilisation costs, the majority of which were incurred after 30 June 2010, have been written off in accordance with Cairn’s accounting policies.

T4-1

The T4-1 exploration well is located more than 100km north of Alpha and T8 and the well is currently drilling ahead at 1,900m.

Sir Bill Gammell, Chief Executive said:

“The T8, Alpha and T4 wells are the first wells in Cairn’s exploration programme in Greenland and are also the first wells ever drilled in the Baffin Bay Basin which is similar in size to the North Sea.

The presence of both oil and gas confirms an active, working petroleum system in the basin and is extremely encouraging at this very early stage of our exploration campaign for the Sigguk block and the entire area.”

Notes

The Stena Don, a fifth generation semi submersible and the Stena Forth, a sixth generation drillship, are carrying out the drilling programme in Greenland this summer. The drilling programme is targeting prospects, which lie in water depths of between 300 and 500 m and operations continue with an absolute focus on safety.

Cairn (77.5%) is the Operator of the Sigguk block, with joint venture partners, Nunaoil and PETRONAS (10%). Nunaoil is carried through the exploration phase but has a 12.5% stake in any development.

The Sigguk Block is approximately 175 kilometres offshore Disko Island; west Greenland.

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Source: Cairn Energy, September 21, 2010: