Edinburgh based Cairn said it has agreed to sell a further 3.5% holding in the Cairn India business to give the company flexibility to make the most of growth opportunities amid challenging global conditions.
"Cash reserves provide an engine for future growth," said a spokesman for Cairn Energy.
He added: "In current markets we believe it is prudent and pragmatic to have as strong a balance sheet as possible for the medium to long term."
Cairn engaged Citi to complete the share sale on the Indian stock market, months after raising around £3.5 billion by selling a controlling stake in Cairn India to Vedanta Resources.
Cairn Energy paid out around £2.2bn of the proceeds of the sale to Vedanta to shareholders.
Following the latest sale Cairn has retained a 18.3% stake in the Indian business, which controls acreage on which Cairn made bumper finds in India.
The spokesman declined to go into specifics about what Cairn will do with the money it raised.
However, Simon Thomson, who succeeded Sir Bill Gammell as chief executive a year ago, has said he wants Cairn to develop a portfolio that will combine potentially transformational exploration in areas like offshore Greenland with lower risk activity in places such as the North Sea.
The company has shown its willingness to use acquisitions to further that plan by agreeing to buy North Sea focused Agora Oil and Gas and Nautical Petroleum in recent months, for a total outlay of around £700m.
Agora and Nautical are involved in costly exploration and development programmes.
Cairn hopes to use the cash generated by any North Sea fields it brings into production to fund exploration work.
Cairn is engaged in a controversial exploration programme off Greenland, where it has spent $1bn without making a commercial find.
However, the next well in the programme, on the Pitu block, is unlikely to be drilled before 2014. Statoil will carry Cairn's share of the costs of that well.
Cairn is in the early stages of building positions in underexplored areas of the Mediterranean including offshore Spain.
Asked whether Cairn will distribute any of the proceeds of the latest share sale to investors, the Cairn spokesman said: "We are focused on building a business and we have returned $4.5bn to investors in the last five years."
On Thursday Cairn Energy's finance director, Jann Brown, won the prize in the finance category in the FirstWomen 2012 awards made by the CBI and Real Business magazine.