Cairn Energy Plc, a U.K. oil explorer, fell in London trading after announcing plans to search for crude in frontier acreage off the coast of Morocco.
The company declined 4.3 percent, the most since May 4, to 283.7 pence. Cairn will buy 50 percent of the Foum Draa blocks in Morocco, a third purchase this year after acquiring North Sea explorers Agora Oil & Gas AS and Nautical Petroleum Plc.
Cairn is diversifying exploration after spending $1 billion on a campaign in Greenland that failed to strike oil and gas. It still owns about 18 percent of Cairn India Ltd., which is down 13 percent since reaching a year-high on Feb. 21, after selling a 40 percent stake and returning $3.5 billion to shareholders.
“The disappointment today was that the exploration program, while active, doesn’t have much that can impact the share price in the next three to six months,” said Stuart Joyner, an analyst at Investec Securities Ltd. in London. “There’s also the weakness of Cairn India, and the value of that asset still underpins the share price.” Cairn expects to have more than $500 million in cash at the end of the year.
“Cairn is actively re-balancing its portfolio to deliver exploration-led growth,” Chief Executive Officer Simon Thomson said. It’s trying to “offer investors exposure to capital growth potential through future transformational exploration.”