Cairn Energy eyes oil deal in Falklands

CAIRN Energy, the cash-rich oil explorer, is one of several independent firms considering a deal to invest in the Falkland Islands.

The Edinburgh firm, run by ex-Scotland rugby cap Sir Bill Gammell, has spoken to Rockhopper Exploration as it continues to look for ways to grow. Rockhopper has caught the eye of several larger explorers after it made its first discovery in the Falklands in 2010. This was followed by a “significant” oil and gas find at the Sea Lion field last year.

A deal could spark a new round of tension with Argentina, whose president Cristina Fernandez de Kirchner has recently renewed claims on the “Malvinas”. David Cameron has moved to quash the debate, however, saying Britain would “never negotiate” over the territory unless islanders request he do so.

City A.M. understands Cairn has been through a data room set up by Rockhopper last year as the smaller firm seeks a partnership deal.

AIM-listed Rockhopper, which was set up in 2004 to hunt for oil and gas in the Falklands, has several other prospects to the north of the islands which could make it a buyout target.

Last week Cairn said it would return cash to shareholders as part of a plan to distribute $3.5bn (£2.28bn) from the proceeds of the part-sale of its Indian oil arm. Rockhopper and Cairn declined to comment.