The Times: Discoveries push £2.4bn Cairn into FTSE 100
“…it will also seal the humiliation of an already shamed Shell”
By Nick Hasell
September 06, 2004
CAIRN Energy is set to secure a place in the FTSE 100 for the first time in this week’s quarterly index reshuffle after four significant oil discoveries in India this year triggered a near-fourfold rise in its shares.
Elevation to the benchmark index will mark a triumph for Bill Gammell, chief executive of the Scottish oil and gas explorer, who boasts a close friendship with US President George Bush and a school acquaintance with Tony Blair. But it will also seal the humiliation of an already shamed Shell, which originally owned 50 per cent of the strike-rich property in Rajasthan that is the basis of Cairn’s current £2.4 billion stock market valuation.
Shell judged the prospects of the Indian field too speculative and sold its half-interest to Cairn two years ago for $7.25 million. Cairn’s plans for the field — including its attempts to seek an extension to the north of the property — should prove the focus of its first-half results on Tuesday.
As of last week’s close, Cairn will take the place of Schroders, the fund manager, whose stock market value has shrunk to £1.8 billion amid the summer lull in equity markets, the levels of which are a key determinant of its fee income.
There is also an outside chance that Hammerson, the property developer, will also win FTSE 100 promotion for the first time next week.
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