Cairn sells 40% share to Lukoil, page-59

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Cairn Energy

Cairn has sold its 40% interest in the Sangomar Deep Contract area to LUKOIL for ‘up to $400m’ plus some reimbursement of development capital expenditure incurred since 1^st January 2020 (Cairn’s net capex guidance for Sangomar in 2020 is $330m).

The company has said that they will return some $250m to shareholders via a special dividend which is ‘consistent with Cairn’s approach to capital allocation’. This sale has been a long drawn out process and whilst it is only ever correct to say that the price received is appropriate I wonder what might have been a couple of years ago in different circumstances. However the company is right to point out that the sale means ‘a reduction in development risk, financing risk and the need for significant capex over four years’.

Whatever the price achieved it is a tribute to Cairn and also Far who found and brought towards development what has rightly been called a ‘World Class’ development of which they can both be very proud.