The proceeds from the Placing will be used to provide additional flexibility for Cairn's ongoing operations in India and Bangladesh. Specifically, they will support the fast track development of Cairn's existing discoveries in Rajasthan, whilst providing additional resources for increased exploration activity.
In India, Cairn currently has five drilling rigs operating an extensive exploration and appraisal drilling programme in Rajasthan. Cairn expects to complete appraisal operations on the Mangala field shortly and appraisal of the NA field is ongoing.
A Declaration of Commerciality for Cairn's existing discoveries in Rajasthan and an extension application in respect of the acreage to the north of the NC discovery have been submitted to the Indian Government.
In Bangladesh, the acquisition and transfer of operatorship of Shell's upstream assets completed on 30 June 2004 and a seismic acquisition campaign is currently underway on Blocks 5 and 10. Cairn also plans to commence additional infill development drilling on the Sangu field early in 2005 with a view to increasing production levels from the field to help meet growing domestic demand.
A full operational update will be provided at the time of Cairn's interim results announcement, which is scheduled for Tuesday 7 September 2004.
The Placing Shares are proposed to be placed by Hoare Govett and Canaccord through an accelerated bookbuild and will be made available to both new and existing eligible institutional investors. The Placing will be conducted in accordance with the terms and conditions set out in the Appendix to this announcement.
The Placing is conditional upon, inter alia, the admission of the Placing Shares to the Official List of the UK Listing Authority (the "Official List") and to trading on the London Stock Exchange's market for listed securities (together "Admission") becoming effective by 8.00 am on 7 July 2004 (or by such later time and date as Hoare Govett, Canaccord and the Company may agree but not later than 8.00 am on 9 July 2004). The Placing is also conditional on the placing agreement made between the Company, Hoare Govett and Canaccord not being terminated prior to such date.
Application will be made to the UK Listing Authority for the admission of the Placing Shares to the Official List and to the London Stock Exchange for the admission of the Placing Shares to trading on the London Stock Exchange's market for listed securities. It is expected that Admission will become effective and dealings in the Placing Shares will commence on 7 July 2004.
The Placing Shares will be issued credited as fully paid and will rank pari passu in all respects with Cairn's existing ordinary shares, including the right to receive all dividends and other distributions declared, made or paid after the date of issue.
Bill Gammell, Chief Executive, commented:
"Cairn has achieved major exploration and appraisal successes in Rajasthan and has this week completed the acquisition and transfer of operatorship in Bangladesh.
The proceeds of this Placing will provide additional flexibility for ongoing operations, supporting an acceleration of development and exploration activities in Rajasthan."
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