Cairn Energy PLC’s (LON:CNE) (LSE:CNE.L) stock price has edged higher today after an update on its Senegal appraisal well. Cairn Energy’s investors may be pleased to hear operations at the SNE-5 appraisal well offshore Senegal were completed safely and successfully ahead of schedule and under budget. This followed drilling, logging, drill stem testing and the setting of pressure gauges.
Cairn Energy’s SNE-5 appraisal well targeted a location in the Upper Reservoirs where 2 principal units are located within the oil leg. Two drill stem tests were in line with expectations, with DST 1a flowing from an 18m interval at a maximum rate of approximately 4500 bopd on a 60/64” choke. For DST 1b, an additional 8.5m zone was added and the well flowed at a maximum rate of 4200 bopd.
The SNE-5 well has been plugged and abandoned. The Stena DrillMAX drill ship is moving location to start operations in the near future on the VR-1 well. It has 2 main objectives: an Aptian exploration target and an appraisal objective in the SNE field.
In my view, today’s news from Cairn Energy could help its stock price in the long run. The company is making progress in my opinion and I believe that’s a reason why its share price is 1% higher in the last 3 months, while other oil stocks such as Tullow Oil plc (LON:TLW) (LSE:TLW.L) and BHP Billiton plc (LON:BLT) (LSE:BLT.L) are down 13% and 1% respectively. However, other resources stocks such as Glencore PLC (LON:GLEN) (LSE:GLEN.L) and Rio Tinto plc (LON:RIO) (LSE:RIO.L) are 11% and 3% higher respectively.
In my view, Cairn Energy has investment appeal. I think it is making progress and since I’m bullish on the oil price, I think its share price could perform relatively well in the long run. I’m also optimistic about BHP Billiton and Tullow Oil, with them being among my favoured oil stocks. Likewise, I think Glencore and Rio Tinto also have long term investment appeal. Therefore, while not my top investment pick on valuation grounds, I think Cairn Energy’s stock price has potential.