Cairn concludes sale of interest in two UK fields for $455 million

Oil and gas company Cairn Energy has completed the sale of its interests in the Catcher and Kraken fields located off the UK for $455 million.

Armada Kraken FPSO; Source: Cairn Energy

Cairn announced the proposed sale of its interests in the UK Catcher and Kraken fields to Waldorf Production in early March 2021. This deal enabled the company to sell its entire 20 per cent interest in the Catcher field and 29.5 per cent interest in the Kraken field.

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Following the general meeting held on 28 October 2021, where the proposed sale was passed by the requisite majority, Cairn announced the completion of the transaction with a firm consideration payable to the firm amounting to $455 million. This will be adjusted for working capital and interim period cashflows from the economic date of 1 January 2020.

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Cairn also reported on Tuesday that additional, uncapped contingent consideration would be payable to the company when Brent exceeds $52/bbl on average in any of the five years from 2021 to 2025. Working under the assumption that production is in line with Cairn forecasts, this contingent consideration is expected to generate approximately a further $100 million at $60/bbl Brent prices, or $175 million at $70/bbl Brent prices, and $240 million at $80/bbl Brent prices.

Cairn explained that consideration at completion was adjusted for the $362 million of interim period cash flow from the effective date. This is retained by Cairn, with cash received on completion of $53 million.

The firm added that the retained interim period cash to the last balance sheet date of 30 June was $272 million as announced in the interim results, and retained interim period cash from 30 June to 1 November was a further $90 million.

In recent company-related news, Cairn’s wholly-owned subsidiary, Nautical Petroleum, in August entered into a binding, conditional farm-out agreement, concerning five Southern North Sea gas licences with Deltic Energy.

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The agreement will allow Cairn to acquire a 60 per cent interest in each of the P2428 (Cupertino Area) and P2567 (Cadence) licenses, along with a 70 per cent interest in the P2560, P2561, and P2562 licenses located between the Breagh and Tolmount gas fields.