Cairn eyes major swoop as it flexes its $2bn muscles

Published on Wednesday 1 April 2009 21:31

CAIRN Energy could be preparing for a major acquisition after building a cash pile well in excess of its current capital needs, a City analyst claimed yesterday.

The Edinburgh-based oil explorer told investors on Tuesday that it had drawn down a debt facility of $850 million since the start of the year, on top of the $161m raised through a share placement.

As well as its existing reserves, the company can now call on cash totalling more than $2 billion, according to North Square Capital analyst Peter .

And yesterday Lenardos concluded that this left the company with a balance sheet "poised to make an acquisition".

He explained: "They didn't draw it (the debt] down for no reason... so I think there's certainly priming of the balance sheet for something pretty major."

Lenardos said the target with the best fit for Cairn could be Premier Oil, a London-based company with assets in Asia and the North Sea. It was possible, though less likely that Cairn could look at Aberdeen-based Dana Petroleum.

Cairn has had little interest in the North Sea where most of Dana's assets are based, for more than a decade.

But Lenardos said it may be prepared to review the strategy as the current consolidation phase in the oil industry accelerated.

He continued: "North Sea oil is hot, there's lots of consolidation going on right now, and it's going to consolidate quite quickly and the window may be closing."

Cairn Energy yesterday declined to comment on the claims.

On Tuesday its founder Sir Bill Gammell said it was always looking at opportunities, however the current interest and focus was on its exploration blocks in Greenland which have "exciting" potential.