The Scotsman: Cairn's soar-away success ups pressure on Shell: “The Edinburgh-based group’s astonishing success raises further questions about the quality and calibre of Shell’s management and the company’s modus operandi.” (ShellNews.net)
Mon 16 Aug 2004
MANY a minnow natural resource company has sought fame and fortune picking up the "too small to bother with" exploration area cast-offs from the global giants. Not all succeed. But there can be few more dramatic examples of extraordinary fortune in the world of oil than Scots oil explorer Cairn Energy.
In January it bought an oilfield in India from oil giant Shell for £4 million. It has since made three major strikes and drilled 25 wells. Last month it raised just over £100m on the stock market to pay for the development of that field. Last week, shares in Cairn shot up another 12 per cent on news of the latest successful drilling, to hit £14.89.
The shares have more than trebled since January, making Cairn in stock market terms Scotland’s best share performer and it is now on the threshold of FTSE 100 status, which must give the directors of Shell cause for thought.
The Edinburgh-based group’s astonishing success raises further questions about the quality and calibre of Shell’s management and the company’s modus operandi.
Shares in Cairn have been volatile over the years and a private investor might prefer going in through an investment trust that specialises in oil or in Scottish companies. One can understand how index tracker funds have had to stick with Shell and ignore Cairn. But the omission from the other trusts is less easy to explain.
For example, Cairn does not figure among the top ten holdings of Kel Thygesen’s Natural Resources Investment Trust and is not to be seen in the top ten list of Scottish Mortgage Trust or Scottish Investment Trust or Scottish Value Trust. It is the same story at Securities Trust of Scotland and at Second Scottish National Trust, except these latter two have clung on to their holdings in Shell.
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