Newspaper article The Evening Standard (London, England)

New Oil Find in India Does the Trick for Cairn Energy; Market Report

Newspaper article The Evening Standard (London, England)

New Oil Find in India Does the Trick for Cairn Energy; Market Report

Article excerpt

Byline: MICKEY CLARK

ANOTHER day, another encouraging oil find for Cairn Energy in India.

The company has just completed a successful drilling report at its appraisal well in the Mangala oil field in north Rajasthan.

It said it had carried out tests between Mangala-1 and Mangala-4 to assess how deep and how wide the reservoir between the two wells is. Chief executive Bill Gammell says the results of the tests "reinforce our confidence" for the future of the Mangala development. Test drilling of a further two wells is due to start later this month.

The shares, which have climbed from a low of 380p earlier this year on the back of prospects for Rajasthan, responded to the news with a rise of 22p to 10761/2p.

Traders say Cairn may even challenge for a place in next week's quarterly reshuffle of the top 100 companies if it can maintain its current pace. The oil explorer is currently worth [pounds sterling]1.62 billion and Deutsche Bank says it is still undervalued. It has upgraded the shares from hold to buy with a target price of 1200p which would value the company at [pounds sterling]1.8 billion.

Investment bank Canaccord, which specialises in oil flotations, recently pitched its yearend forecast at 1500p.

At present, Cairn is 12th among those looking for promotion to the FTSE 100 index, behind the likes of Capita, 11/2p better at 3071/4p and valued at [pounds sterling]2 billion, water utility Kelda, up 41/2p at 4953/4p ([pounds sterling]1.85 billion), Rank, off 1p at 3081/4p ([pounds sterling]1.84 billion) and Trinity Mirror, 5p better at 6251/2p ([pounds sterling]1.82 billion). Those facing the chop include mining outfit Antofagasta, 3p cheaper at 900p ([pounds sterling]1.7 billion) and fund manager Schroders, up 71/2p up at 6071/2p ([pounds sterling]1.75 billion). …

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