Cairn Energy and its consortium partner, Cheiron, have announced the proposed acquisition of a portfolio of upstream oil and gas production, development and exploration interests from Shell Egypt and Shell Austria in the Western Desert, onshore Egypt.
The acquisition will cost up to $280 million ($323 million net to Cairn), with additional contingent payment of up to $280 million ($140 million net to Cairn) if certain requirements are met. Capricorn Egypt, which is a wholly-owned subsidiary of Cairn, is to acquire 50% of the assets, while the remaining 50% goes to Cheiron.
Rothschild & Co is the financial advisor and sponsor to Carin for the Transaction.
Below are highlights of the Transaction:
- Adds working interest 2P reserves of 113 mmboe as at 31 December 2020.
- Adds low-cost 2021 forecast working interest production of between 33,000-38,000 boepd with an opex/bbl of <US$6/boe, with significant potential to increase production levels in future years.
- Two-thirds of production from the Assets is gas weighted, adjusting Cairn’s current hydrocarbon split towards gas.
- Significant Cashflow from Operations (CFFO) contribution: average CFFO1 for previous three reported years (2017 – 2019) was US$140 million net to the interests being acquired by Cairn.
- Enhances near-term growth opportunities with 2C contingent resources working interest of 49 mmboe as at 31 December 2020 to Cairn and significant exploration potential remaining.
- Cairn, together with Cheiron, plans to finance the Acquisition with a new joint acquisition reserve-based lending facility of up to US$350 million, joint junior debt facility of US$100 million and existing cash on balance sheet.
- The economic effective date of the Acquisition is 1 January 2020. Production for the assets being acquired averaged 83,000 boepd (Cairn working interest of 41,500 boepd) in 2020.
The Chief Executive Officer of Cairn, Simon Thomson, said: “We are delighted to be entering a country that has significant oil and gas growth opportunities where the Government has created an attractive environment for inward investment. Our Joint Venture with established Egyptian operator Cheiron creates a strong partnership with extensive experience and complementary strengths across the upstream value chain.”
,%20with%20additional%20contingent%20payment%20of%20up%20to%20$280%20million%20($140%20million%20net%20to%20Cairn)%20if%20certain%20requirements%20are%20met.%20Capricorn%20Egypt,%20which%20is%20a%20wholly-owned%20subsidiary%20of%20Cairn,%20is%20to%20acquire%2050%%20of%20the%20assets,%20while%20the%20remaining%2050%%20goes%20to%20Cheiron.Rothschild%20&%20Co%20is%20the%20financial%20advisor%20and%20sponsor%20to%20Carin%20for%20the%20Transaction.Below%20are%20highlights%20of%20the%20Transaction:ul%20liAdds%20working%20interest%202P%20reserves%20of%20113%20mmboe%20as%20at%2031%20December%202020./li%20liAdds%20low-cost%202021%20forecast%20working%20interest%20production%20of%20between%2033,000-38,000%20boepd%20with%20an%20opex/bbl%20of%20<US$6/boe,%20with%20significant%20potential%20to%20increase%20production%20levels%20in%20future%20years./li%20liTwo-thirds%20of%20production%20from%20the%20Assets%20is%20gas%20weighted,%20adjusting%20Cairn’s%20current%20hydrocarbon%20split%20towards%20gas./li%20liSignificant%20Cashflow%20from%20Operations%20(CFFO)%20contribution:%20average%20CFFO1%20for%20previous%20three%20reported%20years%20(2017%20–%202019)%20was%20US$140%20million%20net%20to%20the%20interests%20being%20acquired%20by%20Cairn./li%20liEnhances%20near-term%20growth%20opportunities%20with%202C%20contingent%20resources%20working%20interest%20of%2049%20mmboe%20as%20at%2031%20December%202020%20to%20Cairn%20and%20significant%20exploration%20potential%20remaining./li%20liCairn,%20together%20with%20Cheiron,%20plans%20to%20finance%20the%20Acquisition%20with%20a%20new%20joint%20acquisition%20reserve-based%20lending%20facility%20of%20up%20to%20US$350%20million,%20joint%20junior%20debt%20facility%20of%20US$100%20million%20and%20existing%20cash%20on%20balance%20sheet./li%20liThe%20economic%20effective%20date%20of%20the%20Acquisition%20is%201%20January%202020.%20Production%20for%20the%20assets%20being%20acquired%20averaged%2083,000%20boepd%20(Cairn%20working%20interest%20of%2041,500%20boepd)%20in%202020./li/ulThe%20Chief%20Executive%20Officer%20of%20strongCairn/strong,%20Simon%20Thomson,%20said:%20em“We%20are%20delighted%20to%20be%20entering%20a%20country%20that%20has%20significant%20oil%20and%20gas%20growth%20opportunities%20where%20the%20Government%20has%20created%20an%20attractive%20environment%20for%20inward%20investment.%20Our%20Joint%20Venture%20with%20established%20Egyptian%20operator%20Cheiron%20creates%20a%20strong%20partnership%20with%20extensive%20experience%20and%20complementary%20strengths%20across%20the%20upstream%20value%20chain.”/em){kind=link}