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.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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
-
Child benefit tax return rules are changing – what is the high income child benefit charge?High-earning parents will soon be spared the hassle of filing a tax return to pay back child benefit. We explain what’s changing and how the high income child benefit charge (HICBC) works
-
Palmer Luckey: the billionaire flame of the westProfile Palmer Luckey started Oculus, the virtual-reality headset business, and sold it to Facebook for $2bn. Now he’s set his sights on the arms race.
