Oil explorer Cairn Energy has sold its entire stake in a number of oil fields off the coast of Senegal to Russian firm Lukoil for $400m (£310m).
The firm said it would return “at least” $250m to shareholders as part of a special dividend. Shares in the FTSE 250 firm shot up 7.4 per cent on the back of the announcement.
Under the deal, Cairn will sell its 40 per cent interest in the Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore contract area.
The sale is expected to complete in the final quarter of this year, with Cairn to be paid $300m when it closes.
Cairn will also receive up to $100m dependent on the timing of first oil from the fields and the average Brent oil price during the first six months of production.
According to Lukoil, the field will come onstream in 2023 with a designed production level of 5m tons of oil a year.
The Russian firm estimates that the field contains 500m barrels of oil in total.
Lukoil’s president Vagit Alekperov said that the purchase would allow it to reinforce its presence in West Africa.
Cairn’s chief executive Simon Thomson said the sale would free up cash for Cairn to expand.
“Cairn will have enhanced financial flexibility to invest in and grow the business whilst always remaining committed to returning excess cash to shareholders”, he said.
The Africa-focused explorer is reportedly leading a consortium bidding for Shell’s onshore Egyptian assets, which were initially priced at $1bn.
However, due to the recent crash in oil prices caused by the coronavirus pandemic, the asking price is now expected to be considerably lower.