OIL explorer Cairn Energy yesterday said it would return £1.60 per share in cash to investors as it activated its plan to distribute $3.5bn (£2.26bn) from the proceeds of the part sale of its Indian oil business.
Cairn announced that shareholders could opt to receive the cash as income, capital or a combination of both.
Shareholders have been waiting for the distribution since August 2010, when Cairn first announced plans to divest a 40 per cent stake in Cairn India to London-listed miner Vedanta Resources.
The firm said at that time it would return substantial funds to shareholders upon completion of the sale.
The deal, which saw Vedanta pay Cairn $5.5bn for the stake, was delayed for over a year due to a disagreement over royalty payments, and finally completed in December.
“The remainder of the proceeds will be used to pursue other material growth opportunities with the aim of creating and realising further value for shareholders in the future,” Cairn chief executive Simon Thomson said in a statement.
Cairn said it had $4.7bn in cash at the end of December, leaving it with $1.2bn to spend after the distribution. The firm has substantial acreage in Greenland and has recently said it is lining up exploration opportunities in Lebanon.
The cash return is conditional upon shareholder approval at a meeting scheduled for 30 January. After the announcement its share price rose 3.3 per cent.