Cairn Energy announced Thursday that it has entered into a farm out agreement for the sale of a 10 percent interest in the Catcher development and adjacent acreage in the UK North Sea. With effect from Jan. 1 Dyas UK Limited (Dyas) shall acquire 10 percent in each of the following UK Continental Shelf licences P1430, P2040, P2070, P2077 and P2086 by funding Cairn’s exploration and development costs in respect of the licences up to a cap of $182 million.
Following this transaction Cairn will retain a 20 percent interest in the Catcher license and a reduced interest in each of the remaining licenses as detailed below. As a result of this transaction Cairn will reduce its capital expenditure to the end of 2017 in the Catcher area by approximately $380 million (inclusive of the carry payment detailed above) to $200 million.
License P1430 (Catcher) received UK Department of Energy and Climate Change (DECC) approval of its Field Development Plan (FDP) in June. Licenses P2040, P2070, P2077 and P2086 are adjacent licenses in the Greater Catcher area.
Simon Thomson, chief executive, Cairn Energy said:
“Cairn remains focused on delivering value for shareholders from disciplined capital allocation and portfolio management across a balanced asset base. This value enhancing transaction provides us with significant additional operational flexibility to deliver the Group’s strategy.”
The transaction remains subject to DECC, partner and third party approvals.
As a result of the transaction, subject to approvals, the partners in these licenses will be as follows:
Note: The gross asset value of the interests being transferred (as per Cairn’s half-yearly report issued August 19) was $93,860,528.13.
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