Cairn to return $3.5 bn to shareholders

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fe Bureau: New Delhi, Dec 09 2011, 03:50 IST

UK’s Cairn Energy on Thursday said it would return to shareholders $3.5 billion or two-thirds of the proceeds from the majority stake sale of its Indian arm to mining giant Vedanta Resources. The new majority shareholder in Cairn India, in the meantime, said it would strive to double the energy firm’s current capacity. Cairn India now operates the largest on-shore oil field in the country located in Rajasthan and has contracts to sell 1,55,000 barrels a day of crude from there.

Cairn Energy said the return of cash is expected to be made in a manner that will give shareholders an element of choice as to when and in what form they receive the cash.

This could cheer the Edinburgh explorer’s shareholders who were last month told that the company failed to make a commercial hydrocarbon discovery in Greenland in the first exploration phase but was encouraged by evidence of future success. The company spent about £400 million so far this year on Greenland exploration.

The net proceeds to Cairn Energy from the sale of 40% in its Indian arm was $5.5 billion. After the sale, Cairn retains about 22% in Cairn India. Vedanta Resources now holds 58.5% in Cairn India including the 20% stake it holds through subsidiary Sesa Goa.

Cairn India scrip closed its trading on the National Stock Exchange on Thursday with a loss of R11.80 or 3.67% at R310.30. This is below the price of R355 a share at which Cairn sold its shares. Vedanta Resources on

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