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Oil and gas explorer Cairn Energy (LSE:CNE) authorised another sale of a portion of its interest in Cairn India Limited, in line with the company’s mandate of being an exploration and development company.
As announced earlier today, the independent oil and gas inked a deal to complete an on-market sale of 8% of its shareholdings valued at US$ 910 million, net of costs and reduce its stake to 10%.
The sale is the latest in Cairn Energy’s divestment of its holdings in the Bombay and National Stock Exchanges listed Cairn India, beginning with the sale of 10% interest in the said subsidiary to London-listed FTSE 100 Vedanta Resources plc (LSE:VED) in July 2011.
Vedanta acquired a majority interest in December 2011 by acquiring 30% stake, spending a total of US$5.5 billion for two transactions.
Prior to yesterday’s deal, a 3.5% interest in Cairn India was also divested in July 2012 for US$371 million.
In February 2012, Cairn Energy returned £1.60 for every share in the company to shareholders equivalent to about US$3.5 billion.
Cairn Energy’s shareholders have given its Board the authority to sell the stakes in whole or in part to do away with shareholder approval for every disposal.
Maintaining Position as Explorer and Developer
The FTSE 250 constituent’s move to divest its interest in the India-focussed oil and gas producer was in light of the company’s commitment to maintaining its position as an oil and gas exploration and development company.
“Cairn’s strategy has always been to focus on exploration, appraisal and development opportunities where the Board believes there is a strategic fit with Cairn’s ongoing goal to add and, where appropriate, realise value for Shareholders,” the company said back in April 2012.
A bold move in cognizance of the fact that Cairn India holds 70% interest in the largest onshore oil field in the country with about 7.1 billion barrels of oil in place and pumping an average of about 170,000 barrels of oil per day.
Cairn Energy sets its targets instead to the UK North Sea and the Norwegian Continental Shelf, where it holds several interests following recent acquisitions of Agora Oil & Gas and Nautical Petroleum.
“The proceeds will be used to fund Cairn’s ongoing capital requirements, which include the development of discovered resources in the North Sea as well as Cairn’s wider exploration led growth strategy,” Cairn Energy stated in the announcement.
Back in London, shares were down 2.1% 278.9 pence at 10:30 AM GMT, three hours after trading opened.
Company Spotlight
Cairn Energy is an independent oil and gas exploration, appraisal, and development company with assets spread across Europe, North America, Mediterranean, and South Asia.
