ON THE RIG: Cairn Energy chief executive Simon Thomson, centre, with the company's deputy chief executive Mike Watts, right.
Edinburgh-based Cairn confirmed yesterday it planned to use the $910m from the latest sale of shares in Cairn India to fund development work in the North Sea and exploration work around the world.
Chief executive Simon Thomson said: "Cairn is delighted to have realised further value from its Rajasthan discoveries in India.
"In line with our stated strategy these proceeds will be used to deliver exploration-led growth and fund the development of discovered resources in the UK and Norwegian North Sea."
News that the company is switching further investment from India to the North Sea signals Cairn's enthusiasm for an area in which it has built a big position in recent months.
The company returned to the North Sea as part of a plan to build a rebalanced portfolio.
This will combine assets the company hopes to bring into production fairly quickly and lower risk exploration activity in areas such as the North Sea with potentially transformational drilling in frontier areas.
Cairn bought North Sea-focused Agora Oil and Gas and Nautical Petroleum for around £700m in total using some of the proceeds raised by previous sales of shares in Cairn India, which controls the acreage on which Cairn made several bumper finds in Rajasthan.
While the company did not say how the funding raised by the latest stake sale will be allocated, it is likely a share will go towards the costs of developing two big oil finds Nautical and Agora hope to bring into production in 2015.
These are Kraken East of Shetland and Catcher in the Central North Sea.
Both are likely to require hefty investment in production infrastructure.
Agora made what it called a significant oil discovery off Norway in April. The acreage held by Agora and Nautical contains other finds and exploration prospects.
Cairn still hopes to achieve success off Greenland, where it has spent $1bn without making a commercial find.
The company has acquired exploration interests in relatively unexplored areas off Spain and Morocco and is eyeing the eastern Mediterranean region.
Cairn said it reached agreement with Citi investment bank to sell 152,629,500 shares in Cairn India, representing an approximate 8% shareholding in Cairn India, for around $910m net of fees. It will retain a 10% holding following the sale.
Last December Cairn raised $5.5bn by selling a controlling stake in Cairn India to Vedanta Resources and distributed $3.5bn to shareholders.
Cairn sold a 3.5% stake in Cairn India for $371m in June.
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