Picture: 123RF/PAN DENIM
Picture: 123RF/PAN DENIM

Bengaluru —  Oil and gas producer Cairn Energy said on Monday it will sell its Senegal interests to Russia's Lukoil  for up to $400m  and intends to return at least $250m as a special dividend after sale completion, sending its shares up 5%.

Cairn said it will sell its entire 40% interest in the Rufisque, Sangomar and Sangomar Deep (RSSD) contract area and added that the sale and special dividend was consistent with its “disciplined approach” to portfolio management and capital allocation.

Shares in Cairn Energy rose 5.2% to 133.5p in London.

The sale comes at a time when the industry is reeling from declining demand caused by the Covid-19 pandemic and a dramatic slide in crude prices.

Earlier in 2020, Cairn had said it was assessing “substantial initiatives to reduce and rephase” investment in the $4.2bn Sangomar oil development project, along with its partners, including Woodside and FAR.

According to Lukoil's estimates, the recoverable hydrocarbon reserves of the Sangomar field total about 500-million barrels of oil equivalent. It plans to launch the field in 2023 with designed production level of 5-million tonnes of crude oil a year.

Entering the project with already explored reserves at early stage of their development is fully in line with Lukoil's strategy and allows it to reinforce its presence in West Africa, according to the company's president Vagit Alekperov.

The cash consideration payable on completion is $300m, along with further contingent consideration of up to $100m dependent on the timing of first oil and the average Brent oil price during the first six months of production.

Reuters

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