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

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."