Cairn Energy plc announced that it had nearly resolved the outstanding tax issues with India and soon expected to complete its acquisition in Egypt.
INDIA
Cairn said that a near-term India resolution would see up to $700m (£500m) returned to shareholders via special dividend and buyback, subject to approval.
The remainder will be retained to enhance further the producing asset base.
“Progress in resolving our Indian tax issue and active portfolio management leave Cairn well-positioned to deliver growth from a sustainable business, focused on generating further value and returns for shareholders,” said chief executive Simon Thomson.
EGYPT
In its H1 2021 strategic and operational report, the company announced that the proposed acquisition of Shell’s Western Desert assets was also making progress.
“Our significant acquisition in Egypt, which we expect to complete shortly, adds material gas-weighted production, low-cost, near-term growth and attractive exploration potential, in a region with strong demand trends,” added Mr Thomson.
Together with partner Cheiron, the acquisition will be for US$646 million ($323m net to Cairn), with additional contingent consideration of up to $280m ($140m net to Cairn).
Earlier in 2021, Cairn also announced a further oil find in Block 10 offshore Mexico.
FINANCES
The company reported group cash at 30 June 2021 of $341m with no debt drawn following special dividend in January 2021 of $257m.
Cairn is also progressing towards its proposed disposal of UK North Sea producing assets due for completion towards Q4 2021
Cash outflows on capital expenditure were recorded at US$25m during the first half of 2021.
2021 OUTLOOK
Cairn’s full year forecast for net capital expenditure of $125m which includes $320m for Kraken and Catcher which is refundable on sale completion; exploration and appraisal of $85m; and development and production of $40m.
The company expects to end 2021 with net cash positive excluding India proceeds.