Cairn Energy Plc gave a positive update on one of its exploration wells in Greenland after disappointing drilling results so far this year, lifting shares in the Edinburgh-based oil and gas company as much as 5.2 percent.
The FTSE-100 company found signs of oil and gas at the AT7-1 well, although it has been unable to evaluate the results fully because of difficult operating conditions.
The news on the AT7-1 well is clearly encouraging and the most positive well result to date (even if it does not turn out to be a discovery) having encountered thick, good quality reservoir sands for the first time, said Richard Rose, analyst at Oriel Securities.
Cairn Energy also said it found minor hydrocarbon shows at another well and that it will continue its exploration drilling program in Greenland until the end of November to allow it to complete work on these last two wells.
The company's first three exploration wells drilled in Greenland this year, as part of its five drill program, were found to be dry.
At 1054 GMT (5:54 a.m. ET), Cairn Energy shares were up 2.4 percent, outperforming a 1.7 percent gain in the European oil and gas sector .SXEP.
Cairn has concentrated on exploration in Greenland after agreeing to reduce its stake in its Indian unit.
Drilling in the Arctic has sparked protests from environmental groups who object to looking for oil in the remote, pristine environment and the company has had its activities interrupted by protesters numerous times.