NEW DELHI: Edinburgh-based Cairn Energy Plc today said it will acquire Norwegian oil firm Agora Oil & Gas for $ 450 million.
This is Cairn’s first major deal after selling out majority stake in its Indian unit to London-listed mining group Vedanta Resources, and follows its strategy of reducing exposure to exploration in Greenland where most of its assets are located.
“Cairn is pleased to announce the acquisition of Agora subject to regulatory approval, a private Norwegian company with non-operated, exploration, appraisal and development assets in the United Kingdom and Norwegian North Sea,” the company said in a statement.
The acquisition of Stavanger, Norway-based Agora, which is owned by Lord Rothschild’s investment trust, would be funded through a combination of 43 per cent cash and 57 per cent Cairn shares.
Agora is owned by RIT Capital Partners plc and Lord Rothschild’s family interests, along with the management.
The proposed acquisition includes Agora’s 15 per cent stake in the Catcher area planned for development and a 20 per cent interest in the Tybalt discovery, which both have further drilling programmes planned this year.
Cairn’s has been for past two years focused on Greenland but it has so far failed to find oil and may be seeking new projects that can offset its exposure to the country. It drilled five exploration wells offshore Greenland in 2010 and five in 2011 but has yet to meet with success.
“We estimate that Agora has 22 million barrels of oil equivalent in 2C contingent resources (95 per cent oil) and a growing prospective resource currently estimated at 49 mmboe, held through 10-30 per cent non-operated interests in 11 licences,” the statement said.
The deal will see Agora adding extra drilling activity to Cairn’s 2012 exploration and appraisal programme, with nine wells scheduled to be drilled in the UK and Norway this year.
Cairn said the acquisition would result in it having “a more balanced overall business”, by adding lower risk, near term exploration, appraisal and development assets to its “frontier exploration” in Greenland and the Mediterranean.
The transaction is subject to consent from the relevant regulatory authorities in the UK and Norway.
“This is an important first step in establishing balance in the Cairn portfolio. This acquisition secures a building block in areas where we see the opportunity to build cash flow from near-term, lower risk exploration, development or producing properties,” Simon Thomson, Chief Executive of Cairn Energy PLC said.