Cairn Energy and Nautical Petroleum have agreed the terms of a deal that will see Cairn buy the North Sea E&P player for 450p per share in cash.
Shares in Nautical closed last night at just short of 300p and were unchanged on the day, indicating that parties close to the deal had done a pretty good job of keeping it quiet. As such, the offer represents a premium of 51.1 percent on Nautical’s closing price and values its share capital at £414 million.
Cairn’s move on Nautical comes just a month after it wrapped up the acquisition of Norwegian North Sea oil group Agora. The deals are part of a strategy by the group to expand its existing portfolio in north-west Europe and to introduce more appraisal and development assets.
In particular, the addition of Nautical will increase Cairn’s interest in UK Licence PL1430 (the Catcher area), including the Catcher, Burgman, Carnaby and Varadero oil discoveries, by 15 percent, taking Cairn’s overall interest to 30 percent. It also brings with it a 25 percent interest in Kraken, another large North Sea oil development project, and a 6 percent interest in the Mariner oil field, planned for development sanction by the operator, Statoil.
Simon Thomson, the chief executive of Cairn, said: “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, the chief executive of Nautical said: “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. I would like to thank my fellow directors, employees and consultants at Nautical, who have been instrumental in delivering these outstanding results.”
