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What: Shares in oil and gas exploration and production company Cairn Energy (LSE: CNE) were up 11% in early trading today as the company announced a second discovery of high-quality oil in its Senegal exploration program.
So What: Preliminary results show that the SNE-1 Well, located off the coast of the west African country, has proven reserves of 150 million barrels of oil. Proven reserves are viewed as having a 90% chance of extraction. However, the company believes the well could hold up to 670 million barrels of accessible oil.
Cairn reported an even larger discovery at its FAN-1 exploration well earlier this month, with estimates ranging from 250million barrels of proven reserves up to 2,500 million barrels of possible reserves.
What Now:The company, which owns a majority interest in the wells alongside Conco Phillips, WI FAR and Petrosen, the national oil company of Senegal, will continue to evaluate the well. The Karstified and fractured Lower Cetraceous shelf carbonates has not yet been reached, and a further announcement will be made once these have been fully evaluated by the company.
CEO Simon Thomson said,
This is a significant oil find for Cairn and Senegal and based on preliminary estimates is a commercial discovery and opens a new basin on the Atlantic Margin.
On 30th June 2014 the company reported a strong balance sheet with of $1.1bn of cash or cash equivalents.
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Zach Coffell has no position in any shares mentioned. The Motley Fool UK has recommended Cairn Energy. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.