Cairn strikes oil in Rajasthan again

In-place reserves estimated at 400 million barrels

British exploration firm Cairn Energy today announced its third oil discovery in Rajasthan this year with gross in-place reserves of 400 million barrels.

The discovery was made in N-C-1 well, north of the Mangala find, where Cairn engineers encountered an oil column of 18 metres gross in the Fatehgarh formation, with an estimated 5.4 metres of net oil pay, according to a company press issued today.

The find comes a month after Cairn said it had discovered reserves of between 130 million and 470 million barrels. In January, Cairn announced it had struck recoverable reserves equivalent to 200 million barrels.

The release said that further work was required to gain an accurate estimate of the size of the latest find and of the proportion of the oil which can be economically extracted.

The well is located 12 km north of the Mangala, 70 km north of Saraswati and 300 metres from the present northern boundary of the block.

Unlike previous discoveries, the new find is of heavier oil with a specific gravity of 15 degrees API rather than the 24 to 31 degrees of earlier wells.

Further drilling will take place at the end of May.

"I am very pleased to announce our third exploration success in the northern part of the Rajasthan block, where we have three active drilling rigs with a fourth on the way," Cairn Energy chief executive Bill Gammell said.

"N-C-1 firmly establishes the widespread distribution of excellent reservoirs across the north eastern area, which bodes well both for the continued exploration programme and the impending appraisal of existing discoveries,," he said.

Further appraisal drilling on the Mangala and N-A oil fields is due to commence before April end.

"The finds have been fantastic news for them," said ABN AMRO analyst Finlay Thomson.

"This is the third out of four prospects to have proved successful, indicating a very good hit rate and pointing to likely further exploration drilling success in the area given the still large number of prospects to be drilled," Mark Redway, oil analyst at Canaccord Capital, said in a research note prepared o the find.