Cairn Energy PLC (LON: CNE) has today announced that it has entered into a farm-out agreement for the sale of a 10% interest in the Nova development offshore Norway.
With effect from 1 January 2019, ONE-Dyas Norge AS shall acquire 10% in the project by paying US$59.5 million(m) plus customary working capital adjustments on completion.
Following this transaction Cairn will retain a participating interest of 10% interest in the Nova development and reduce its capital expenditure to the end of 2021 in the Nova area by ~US$110m.
Cairn Energy PLC will use the proceeds of the transaction to fund group exploration and development activities.
The Nova field development plan was submitted and approved in mid-2018 by the Norwegian Petroleum Directorate with first oil targeted in 2021.
The transaction remains subject to written consent by the Norwegian Ministry of Petroleum and Energy, partner and third-party approvals.
As a result of the transaction, subject to approvals, the partners in these licences will be as follows:
Licences PL418/PL418B: Wintershall DEA (Operator) 45%, Spirit Energy 20%, Edison 15%, Cairn 10%, ONE-Dyas 10%
Licence PL378: Wintershall DEA (Operator) 76%, Cairn 12%, ONE-Dyas 12%
Jefferies International Limited has acted as financial advisor to Cairn in connection with the farm out agreement.
The gross asset value of the interests being transferred (as per Cairn’s Annual Report issued on 12 March 2019) was US$62.5m, the net asset value was US$28.5m.