Acquisition will expand Cairn's presence offshore Shetland
Oil and gas exploration firm Cairn Energy has agreed to buy London-based Nautical Petroleum in a £414 million deal.
Edinburgh-based Cairn said acquiring Nautical was an attractive opportunity to expand its existing portfolio in north-west Europe and the North Sea.
The cash offer values shares in Nautical at 450 pence, which Cairn said represents a premium of 51.1 per cent based on Tuesday's closing price of 297.8 pence and a 45.3 per cent premium based on the three-month average.
The deal, led by Cairn's wholly-owned subsidiary Capricorn Energy Ltd, would increase Cairn's stake in the Catcher prospect by 15 per cent to 30 per cent, including the Catcher, Burgman, Carnaby and Varadero oil discoveries.
Nautical also holds a 25 per cent stake in the Kraken development north east of Shetland, a six per cent stake in the Mariner field south east of Shetland – which is being developed by Statoil – and a 50 per cent stake in Block 9/1a and the associated Ketos prospect west of the Kraken block.
The acquisition would be the second in the North Sea for Cairn in recent months, having agreed a £281 million deal in April to acquire Norwegian exploration firm Agora Oil and Gas.
Cairn said in March it intended to invest some of its cash pile from its £3.4 billion sale of a 40 per cent interest in its Indian subsidiary to build up near term recoverable reserves.
Cairn has so far spent more than £500 million in two years of unsuccessful exploration activity offshore Greenland.
Last January, Cairn sold a 30 per cent stake in one of its Greenland exploration licences to Norwegian rival Statoil.
Simon Thomson, chief executive of Cairn, said: "We are pleased to reach agreement with the board of Nautical, which has unanimously recommended our proposed offer, and we look forward to building on what they have achieved with the business to date.
“This acquisition is another step towards building a balanced portfolio of transformational exploration, appraisal and development assets, and complements our recent acquisition of Agora to help build a platform in North West Europe.
“Specifically we will increase our equity position in the Catcher area, which contains several oil discoveries and follow-on prospectivity, and acquire a material stake in Kraken, another large, North Sea oil development project.
“In addition to these discoveries, this acquisition will add a number of North Sea exploration prospects to our existing 2012 and 2013 exploration programme in the UK and Norway.”
Steve Jenkins, chief executive of Nautical, added: “We are pleased to announce Cairn’s recommended offer to our shareholders.
“As a board we feel the offer recognises the significant value in Nautical’s portfolio and provides our shareholders with the opportunity to crystallise this value, with certainty in cash, today.
"Since Nautical’s inception and IPO in 2005 we have built a significant company with an outstanding record of hydrocarbon discoveries and commercial success.”
He added: “We believe that Cairn’s technical abilities and financial strength can continue the company’s successful track record and bring further benefits for our employees and partners.”