Edinburgh's Cairn Energy seals £230 million-plus Egyptian acquisition with 'significant' potential
Cairn Energy, the Edinburgh-headquartered oil and gas explorer, has completed the acquisition of Egyptian assets offering “significant exploration potential”.
The capital firm, together with its consortium partner Cheiron Petroleum, has acquired the oil and gas assets from Shell in the Western Desert, onshore Egypt, for $323 million (£236m).
Capricorn Egypt, a wholly owned subsidiary of Cairn, acquired 50 per cent of the assets, with the remaining 50 per cent acquired by Cheiron subsidiaries.
There is an additional contingent consideration of up to $140m over four years net to the Scottish group if certain requirements are met.
Cairn said the portfolio was in a region with strong demand growth, offering low cost production, near-term development, owned infrastructure and significant exploration potential.
Chief executive Simon Thomson said: "The addition of the Western Desert assets to our portfolio is an important first step in expanding and diversifying our producing asset base, alongside offering significant exploration potential.
“We look forward to working alongside our partners to deliver the attractive growth opportunities the assets provide.”
Earlier this month, Cairn revealed that a long-running tax dispute with India was nearing its conclusion allowing it to return hundreds of millions of pounds to investors.
Bosses said they expect the country's government to hand over $1.06 billion (£770m) after officials seized a stake in its Indian operations as part of a tax payment they claimed was owed.
Both sides have been embroiled in legal disputes through international courts ever since but recent changes to India's tax laws led to the Scots firm being offered a refund in return for ending its litigation.
As a result, Cairn said it proposed to hand back up to $700m to shareholders.
The money will be handed out to shareholders via a special dividend of $500m and a share buyback programme, where the company buys up shares on the open market, for some $200m.
The company's dispute with India stretches back to 2006 when it restructured its Indian operations and passed ownership of its Rajasthan oil fields to Cairn India.
In 2012, the country's government passed laws that could retrospectively tax mergers and acquisitions, including the restructuring of Cairn, for capital gain tax payments.