Cairn energy is splashing out 450 million dollars on Agora Oil & Gas, a firm with North Sea interests and owned by Lord Rothschild's investment trust.
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.
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It is to be funded through a combination of 43% cash and 57% Cairn shares, the firm said.
Agora is currently owned by RIT Capital Partners and Lord Rothschild's family interests, along with management.
The sale will result in a windfall for RIT who invested £41m in the Agora in 2009.
RIT said its anticipated cash proceeds from the transaction would be £114m, representing a total profit of £73m in just over two years.
The transaction is subject to consent from the relevant regulatory authorities in the UK and Norway.
Cairn has struggled recently with its Greenland exploration, recently announcing that it racked up a $1.19bn loss in 2011.
The loss on continuing operations was almost all down to unsuccessful exploration costs during the year of $942m.
Cairn drilled five exploration wells offshore Greenland in 2010 and five in 2011 but has yet to meet with success.
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