Cairn Energy has yet to make a significant find as part of its high profile exploration programme in the Arctic.

Today the group’s shares shed nearly 10 per cent after another disappointing drilling report from Greenland.

It said that the Gamma-1 exploration had so far failed to locate oil or gas. And while Cairn continues to drill the Delta-1 exploration well to its target depth, it seems the company’s followers are fast losing patience.

Up until now the drilling programme is best known for the environmental controversy it has stirred up.  And based on the results so far it seems the band of eco-warriors, that clamped themselves onto Cairn’s rigs last year and have campaigned against the firm’s Arctic oil expedition ever since, could have simply stayed at home.

After drawing a blank last year Cairn pressed ahead with a fresh drilling programme this year but, without an exploration success, it is now preparing to drill additional wells in 2011.

It looks increasingly unlikely that the expensive Greenland drilling programme will prove to be the exploration bonanza investors had hoped for, said Evolution Securities oil analyst Richard Griffith. Instead he reckons investors may see Tullow Oil’s (LON:TLW) Guyana success last week, which opened up a major new hydrocarbon province, as a better bet.

Evo’s Griffith said the Gamma result takes 32 pence off the his ‘core plus risked’ valuation for Cairn, and if Delta also turns out to be dry it will knock off a further 10 pence.

Meanwhile Sanjeev Bahl, of Numis Securities, also took the cleaver to Cairn’s valuation. In a note to clients, entitled ‘Writing off Greenland’, the analyst downgraded his view on the stock.

“After disappointing results at the Gamma-1 and Delta-1 exploration wells we reduce our NAV valuation from 381 pence a share to 304 pence a share,” Bahl said.

“Two exploration prospects remain in the 2011 Greenland programme, however, we conservatively assume that the entire $630m programme is written-off.”

Despite his bearish point of view the analyst rates Cairn as a ‘hold’ although that’s primarily because the stock has already fallen below his ‘worst-case’ valuation.

“We see minimal further downside, and with 204 per share of cash after write-off and post completion of the Vedanta deal we see the stock is relatively defensive if oil prices were to fall,” he added. “Nevertheless, we see better value and lower risk catalysts in the mid/small-cap E&P sector.”

Elsewhere analyst’s at City heavyweight Morgan Stanley kept faith with the company, despite today’s disappointment. In a note to clients analyst Jamie Maddock repeated his ‘overweight’ rating, although he did cut his price target from 415 to 370 pence a share.

“News of an exploration well failure is disappointing but with exposure to multiple potentially company transformational wells, limited downside and the increasing likelihood of a near-term cash, we reiterate our overweight rating,” Maddock said.

He added: “The shares appear to be offering free exposure to the remaining potentially transformational exploration wells, whilst also receiving a possible healthy cash return (relating to the Cairn India disposal) between 150 and 180 pence a share in the second half of this year.”

In this morning’s stock exchange statement Cairn Energy’s chief executive Simon Thomson said: “The full results of the Gamma-1 well and the update from the Delta-1 well will be reviewed in the context of all the data gathered during the Greenland exploration campaign.

“The rigs are scheduled to move south to drill the final two wells of the programme on the Atammik block.  We remain focussed on the potential of our multi-basin position in Greenland.”

Once Delta-1 has been drilled Cairn will move the rig to continue drilling the AT7-1 well on the Atammik Block, which was suspended above its target last month. Also the fifth well will be drilled by the same rig that drilled the Gamma well. This well will target the AT2 target on the Atammik Block.