London: UK oil explorer Cairn Energy lifted its estimates for reserves at its Indian operation and said the unit’s Rajasthan fields could produce more oil than previously thought.
Cairn shares had jumped 8.1% to 409-1/2 pence by 0901 GMT, compared with a 0.6% rise in the STOXX Europe 600 Oil and Gas index.
Cairn raised its estimates of oil and gas in place in Rajasthan to 4 billion barrels of oil equivalent (boe) from 3.7 billion boe and said there could be another 2.5 billion boe yet to be discovered.
The Edinburgh-based company said the fields had the potential to pump 240,000 boe per day. Previously the company said it hoped to exceed its target of 175,000 boe per day but did not specify by how much.
Cairn also reported full-year results on Tuesday. A 59% jump in output after the Rajasthan fields came online in August helped boost underlying net profit for 2009 to $53 million, up from $11 million in 2008.
Cairn added it was making progress with the pipeline to bring its crude to market. Currently oil is being transported by road tanker.
The main pipeline, which heats the waxy crude to maintain its fluidity, is finished, exploration director Mike Watts told reporters on a conference call, and work on spurs to refinery customers are nearing completion.
Crude is scheduled to be pumped through the pipeline during the second quarter, Cairn said. Another buyer, Essar Oil, has also been added to the to list of buyers for Cairn’s oil.
Cairn added that the prospects it plans to drill this year in Greenland could contain 4 billion barrels of oil.
“These numbers should be taken with a pinch of salt, given there is little data to back them up. However, it does show the potential of the region,” Peter Hitchens, oil analyst at Panmure Gordon, said in a research note.