Cairn Energy gives $3.5bn to shareholders from Indian sale

Cairn Energy is to return $3.5bn to shareholders following the sale of 30% of its Indian business to Vedanta Resources. The total sale value was $4.1bn.

The company says it will give shareholders "an element of choice as to when and in what form they receive cash".

Cairn discovered significant quantities of oil in Rajasthan back in 2004 and full production began in 2009. The site is expected to reach 175,000 barrels of oil per day at its peak.

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The transaction with Vedanta was agreed last year but the two firms have had to wade through significant Indian bureaucracy to actually get the cash in the bank.

Cairn still holds a 22% stake in its Indian division but is now focused on exploration off the west coast of Greenland where it has drilled 5 holes so far this year, all have been dry.

Simon Thomson, chief executive of Cairn, said of the transaction: "It crystallises the very significant value creation that we have delivered from our Indian business...Our remaining 22% shareholding in Cairn India, retained cash and balance sheet strength provide financial flexibility and an excellent platform for future growth opportunities."

Cairn's stock price has fallen 34% since January, mainly as a result of its unsuccessful Greenland campaign.

BS