Cairn offloads Norwegian arm in $100m deal

Cairn will use the proceeds from its Norwegian assets to fund its ongoing business. Picture: Contributed
Cairn will use the proceeds from its Norwegian assets to fund its ongoing business. Picture: Contributed
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Cairn Energy, the Edinburgh-headquartered oil explorer and producer, is putting an end to owning assets in Norway by inking a $100 million (£78m) deal to offload oilfield operator Capricorn Norge.

The FTSE 250 company is selling its wholly owned subsidiary to Solveig Gas Norway, with the transaction set to take effect 1 January. The buyer will also pay customary working capital adjustments on completion.

Cairn Energy executives James Smith (left) and Simon Thomson. Picture: Contributed

Cairn Energy executives James Smith (left) and Simon Thomson. Picture: Contributed

Cairn will use the proceeds of the disposal to fund its ongoing business. Additionally, following the deal, Cairn will reduce its committed exploration and development capital expenditure by about $100m.

Cairn chief executive Simon Thomson said: “This is a further attractive transaction for Cairn shareholders in line with our consistent strategy to realise value and redeploy capital within our portfolio.

“We continue to have a material business in the UK North Sea where production performance of the Kraken and Catcher assets remains strong.”

The transaction is expected to complete in early 2020 and remains subject to relevant approvals.

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Cairn also pointed out that the gross asset value of the interests being transferred, as per its half-year report issued in September, was $207.4m, and the net asset value $80.1m.

Additionally, Capricorn Norge made a loss of $6.5m for the period ending 30 June.

Cairn Energy last month said a decision over its long-running £1 billion-plus tax claim against the Indian government is unlikely to be made until next summer. The firm also made a disappointing start to its drilling programme off the coast of Mexico.

The Scottish business – which has operational offices in London, Norway, Senegal and Mexico – in September reported that it had swung back into the black in the first half – booking a pre-tax profit of $43.4m compared to a $602.9m loss the year before.