The group also plans to return at least $250m as a special dividend after completion of the sale.
The deal, which comes amid a torrid time for the oil industry as it battles the economic impact of the Covid-19 pandemic and a sharp fall in crude prices, sees Cairn sell its entire 40 per cent interest in the Rufisque, Sangomar and Sangomar Deep (RSSD) contract area.
Cairn said the transcation was consistent with its “disciplined approach to portfolio management and capital allocation, and its long-term strategy to return capital to shareholders”.
Chief executive Simon Thomson said: “We are proud of what Cairn has achieved in Senegal. Our discoveries were the country’s first deep-water wells and opened up a new basin play on the Atlantic Margin.
“What’s more, they successfully laid the foundations for Senegal’s first oil and gas development, which will deliver enduring benefits to its people.
“With a strong balance sheet, low breakeven production and limited capital commitments, Cairn will have enhanced financial flexibility to invest in and grow the business whilst always remaining committed to returning excess cash to shareholders.”
The deal will have an effective date of 1 January 2020 and is expected to complete in the fourth quarter, Cairn added.
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