To acquire 10% to 30% nonop interest in 11 licenses with nine planned wells in U.K. & Norway North Sea, including 15% stake in Catcher area & 20% interest in Tybalt discovery.
Cairn Energy Plc, Edinburgh, U.K., (London: CNE) plans to buy private Norwegian E&P Agora Oil & Gas AS for US$375 million in cash and stock.
The purchase price is approximately 43% cash and 57% stock and includes a US$58-million potential tax shelter in the U.K. and Norway.
The Agora team holds 16% equity and will receive approximately 90% of their consideration in Cairn shares. Agora is currently owned by RIT Capital Partners PLC and Lord Rothschild's family interests, along with management.
Agora has nine wells (eight firm, one contingent), scheduled to be drilled in the U.K. and Norway in 2012. The proposed acquisition includes Agora's 15% stake in the Catcher area planned for development and a 20% interest in the Tybalt discovery, which both have further drilling programs planned this year. Agora holds 10 to30% nonoperated interests in 11 licenses.
The 2C contingent resources 22 million barrels equivalent (95% oil) and a growing prospective resource ia currently estimated at 49 million barrels equivalent (net Pmean risked) and 213 million barrels equivalent (net Pmean unrisked). Three wells are currently operating: two exploration wells (Skarfjell and Cladhan South); and one appraisal well (Tybalt).
The Agora team that will join Cairn has a proven ability to create and realize value through exploration, appraisal and development. Previously, the same team built Revus Energy ASA from an initial value of US$170 million in 2005 to its $750 million sale value in 2008. Their experience in creatively identifying new play concepts and prospects in a relatively mature basin will be a significant asset and highly complementary to the Cairn team.
Cairn chief executive Simon Thomson says, “This acquisition secures a building block in areas where we see the opportunity to build cash flow from near term, lower risk exploration, development or producing properties. Agora possesses attractive core assets and significant exploration potential both in 2012 and beyond in an area offering future organic growth.”
Agora CEO Svein Ilebekk says, “Cairn is a strongly funded business, providing financial flexibility for our next phase of growth. We have a shared mindset and, together, we have the capacity to expand our exploration efforts and to realize the full potential of the business.”