Cairn Energy expects Indian arbitration outcome next year; Alom-1 well dry

Cairn Energy said on Monday that its Alom-1 well offshore Mexico was found to be dry and announced that the outcome of its arbitration claim against India could be delivered by next year.

The oil and gas exploration and development company said the Alom-1 well will now be permanently plugged and abandoned.

In a separate statement, Cairn said that in its proceedings against India under the UK-India Bilateral Investment Treaty, the Arbitral Tribunal has indicated that it expects to be in a position to issue the award next summer.

"Cairn continues to have a high level of confidence in the merits of its claims in the arbitration and is seeking full restitution for losses of more than US$1.4 billion," it said.

Cairn has been embroiled in a long-running tax dispute with the Indian government over charges related to a restructuring undertaken by the company ahead of the flotation of its India subsidiary in 2007.

At 0807 GMT, the shares were down 5.1% at 183.40p.

RBC Capital Markets said Alom-1 was a key well in an important new basin for Cairn that could have added around 30p to its valuation.

The bank also said: "The additional clarity on timing on news from India is welcome, as the delay to summer 2020 should enable investors to focus their attention fully on Cairn’s high-impact H2/19 drilling campaign, which started with a well on Chimera in the UK North Sea and continues with a three-well campaign offshore Mexico."