Cairn Energy has entered into binding Heads of Terms with PETRONAS International Corporation Ltd, (PICL), the overseas arm of Petroliam Nasional Berhad (PETRONAS), on the following terms:

• Cairn has agreed to sell to PICL a 10% interest in its existing 6 operated blocks offshore Greenland, subject to the required Government and partner approvals.
• PICL has an option to increase its interest to 20% in any development in these blocks, in return for payment of further consideration to reflect a market valuation of the additional 10% interest at that time.
• Cairn and PICL have also agreed to co-operate on an 80/20 basis on any other Open Door or Bid Round initiatives in Greenland.
• In addition, PICL has acquired from Cairn 43.6million shares in Cairn India Limited (CIL)representing a 2.30% stake in CIL, taking the total holding of PICL in CIL to 14.94%.

The total consideration to be paid by PICL in respect of the above transactions is US $310 million. These funds will be targeted for additional investment in Greenland exploration.

Sir Bill Gammell, Chief Executive Officer, Cairn Energy PLC said, “We are delighted that PETRONAS is joining with us in Greenland as we take forward our leading exploration position. The acquisition of additional CIL shares by PETRONAS reflects our shared belief in the continuing growth potential of Rajasthan while giving Cairn increased financial and operational flexibility in line with our growing confidence in Greenland.”

Tags: Cairn Energy PLC, PETRONAS