Cairn Energy quits Norway with $100m subsidiary sale
Edinburgh-headquartered Cairn Energy this morning announced it would sell its final Norwegian oil subsidiary to Solveig Gas for $100m (£77.7m).
The disposal of Capricorn Norge AS, which is expected to complete in January, will see Cairn reduce its committed exploration capital expenditure by $100m.
Read more: Cairn Energy shares drop 10 per cent
The FTSE 250 firm said it would use the proceeds of the deal to fund its ongoing business.
The company will maintain a presence in the North Sea with its Kraken and Catcher projects, which yield significant cash flows for the business.
Analysts at RBC Capital Markets said that they expected Cairn to report a small $20m gain on the disposal.
They added that the move represented a redeployment of capital ahead of a larger-scale development campaign in Senegal in the next decade.
Cairn’s 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 news comes after a challenging autumn for the oil explorer. On 28 October the firm had one of its worst days since the financial crisis as shares slumped over 10 per cent after the company abandoned a well in Mexico.
Earlier in October the Scottish company announced that a “wildcat” well in the North Sea had come up dry.
However, the Edinburgh-based company announced that the outcome of its long-running arbitration case against India could finally be delivered in 2020.
Read more: Cairn Energy shares jump as firm powers back to profit
The Arbitral Tribunal has indicated that although it would not commit to a specific award release date, it expects to be in a position to issue the award in the next summer.
The firm is seeking compensation for losses of more than $1.4bn (£1.1bn) under the UK-India bilateral Investment Treaty.