OIL driller Cairn Energy has expanded its African empire by taking a stake in a project to explore off the coast of Mauritania.
The Edinburgh-based firm has entered into a “farm-in” agreement with Chariot Oil & Gas that gives it a 35 per cent share of an offshore exploration block measuring more than 12,000 square kilometres and close to where oil has been found.
Cairn is paying $26 million (£16.8m) for the stake and will meet just under 39 per cent of further exploration and development costs – reflecting a 10 per cent stake for which the Mauritanian state oil company does not pay.
The move adds diversity to Cairn’s activities along a vast swathe of the eastern Atlantic.
Known as the Atlantic Margin, the company is already searching for oil and gas off the coasts of Greenland, Ireland, Morocco and Senegal. Chief executive Simon Thomson said: “The opportunity in Mauritania presents an attractive country entry, building on our existing Atlantic Margin portfolio in Senegal and Morocco.
“By developing an increased strategic presence in the under-explored and highly prospective new plays in this region, we can generate both operational and geological synergies and fully apply our proven frontier exploration skills.”
Although it usually carries out its own exploration, the interest in the Mauritanian block will be non-operated. However, the terms of the agreement leave open the possibility that Cairn could take a majority stake and become operator.
Last week, Cairn hedged the risk on some of its work in Senegal by selling a stake to US giant ConocoPhillips for an undisclosed sum.
The Scottish company can afford its ambitious exploration programme thanks to billions of pounds raised by selling most of its stake in the Indian discoveries that made its name in the previous decade.
It has also bought stakes in a number of North Sea fields with which it hopes create a steady revenue stream to finance the search for big oil in the Atlantic for years to come.