Cairn is pleased to announce that it has entered into a farm out agreement for the sale of a 10% interest in the Catcher development and adjacent acreage in the UK North Sea. With effect from 1 January 2014 Dyas UK Limited (Dyas) shall acquire 10% in each of the following UK Continental Shelf licences P1430, P2040, P2070, P2077 and P2086 by funding Cairn’s exploration and development costs in respect of the licences up to a cap of $182million (m).
Following this transaction Cairn will retain a 20% interest in the Catcher licence and a reduced interest in each of the remaining licences as detailed below. As a result of this transaction Cairn will reduce its capital expenditure to the end of 2017 in the Catcher area by approximately $380m (inclusive of the carry payment detailed above) to $200m.
Licence P1430 (Catcher) received UK Department of Energy and Climate Change (DECC) approval of its Field Development Plan (FDP) in June 2014. Licences P2040, P2070, P2077 and P2086 are adjacent licences in the Greater Catcher area.
Simon Thomson, Chief Executive, Cairn Energy PLC said:
“Cairn remains focused on delivering value for shareholders from disciplined capital allocation and portfolio management across a balanced asset base. This value enhancing transaction provides us with significant additional operational flexibility to deliver the Group’s strategy.”
The transaction remains subject to DECC, partner and third party approvals.