Cairn energy features sold it possessions in senegal to russias lukoil for approximately $400m, in a bargain that will result in an unique dividend and bolster its war upper body for acquisitions at the same time of despondent coal and oil prices.

The edinburgh-based exploration and production company, which assisted kickstart the west african nations burgeoning deepwater power sector with discoveries in 2014, plans to pay out at the very least $250m to investors in offer. its shares rose 7 per cent to 133.6p at the beginning of trading in london.

Simon thomson, chief executive, said the sale would additionally take back money for potential acquisitions at the same time whenever many competitors are struggling to raise cash amid a-sharp fall in energy prices.

We constantly said we might exit senegal within right some time the proper price, he informed the financial instances. we will seriously be looking at other possibilities.

Cairn is leading a consortium of bidders for royal dutch shells assets in western egypt, which were valued at around $1bn prior to the oil crash but they are today anticipated to entice a lowered price. they produced roughly 100,000 barrels of oil equivalent every day in 2018, and would help shore up cairns production place as some of its older possessions, including into the north sea, begin to decrease.

The senegal jobs, which cairn keeps a 40 % interest, might have required the company to take a position $1.5bn over the next 3 to 4 years in development expenses, making them better suitable for larger providers such as for example lukoil, analysts stated.

But the sale offers cairn additional funds when it was already viewed as creating a relatively strong net cash position.

This deal is mostly about price creation and not balance sheet restoration, contrary to many colleagues, said jamie hosie at barclays.

The deal is expected to perform when you look at the fourth one-fourth of this 12 months. underneath the terms cairn will receive $300m in money, because of the prospective to earn around an extra $100m centered on oil rates whenever manufacturing starts.

The exchange is backdated to january 1 and lukoil will reimburse development costs for 2020, that your business states tend to be about $330m.

Lukoil, the second-largest oil producer in russia after state-backed rosneft, features an increasing presence in west africa including interests in nigeria, ghana and cameroon.

The improvements feature cairns stakes in the rufisque offshore, sangomar offshore and sangomar deep offshore contract region, such as the sangomar development.

Cairn stated last week it had increased amount of self-confidence with its long-running arbitration in asia where its looking for complete restitution for $1.4bn linked to tax repayments. the decision has been delayed by the coronavirus pandemic but might be determined because of the end for the summertime.