CASH-RICH oil explorer Cairn Energy’s stock surged yesterday after it unveiled plans to buy back up to $300m (£186m) of shares in the firm.
The shares will be repurchased through Cairn’s brokers Morgan Stanley and Jefferies and reviewed by the board on a quarterly basis.
“We believe that [the share buyback] would be around 12p per share accretive to our net asset value if bought back at the current share price,” said broker Numis.
Shares rose nearly five per cent yesterday, closing at 289.4p.
Cairn also said yesterday that it is poised to start drilling in Morocco, as part of a new year-long “high impact” exploration programme.
The multi-well project will offer shareholders “exposure to material growth potential”, said chief executive Simon Thomson.
The FTSE 250 firm is focusing on the Atlantic Margin as part of its new exploration plan, which includes Morocco, Senegal, Mauritania, West of Ireland and Greenland.
A number of potential follow-up ventures have also been mapped.
Cairn remains in a strong financial position, with $1.4bn of net cash and a 10 per cent interest in Cairn India valued at $1bn.
“Cairn continues to follow its policy of maintaining appropriate balance sheet strength as it progresses its exploration and development programmes,” said Thomson.