Cairn will take over Agora, a Norwegian company owned by RIT Capital Partners Plc and financier Jacob Rothschild, for an enterprise value of $375 million and net working capital of $75 million, according to a statement today. It will pay 43 percent in cash and 57 percent in shares.
The deal gives Cairn, which has spent about $1 billion in Greenland without making a find, more diverse exploration acreage after selling off most of its Indian unit. While no drilling is scheduled for Greenland this year, Agora has planned as many as nine wells in the U.K. and Norway.
“This is an important first step in establishing balance in the Cairn portfolio,” Chief Executive Officer Simon Thomson said in a statement. “This acquisition secures a building block in areas where we see the opportunity to build cash flow from near-term, lower-risk exploration, development or producing properties.”
Cairn rose 4 percent, the most in more than five months, to 333.2 pence in London.
The explorer may buy more fields and companies, Thomson said on a conference call with journalists, without giving specifics on where he’s looking or how much the company may spend.
“We will be active this year in terms of other opportunities,” he said. “We’re not constrained financially.”
Agora’s fields include more than 200 million barrels of net unrisked resource potential, an “attractive part” of the deal for Cairn, Thomson said.
RIT Capital, with Rothschild as chairman, backed Agora in November 2009. The company will receive about 114 million pounds ($183 million) in cash from the deal against its initial investment of 41 million pounds, it said in a separate statement.
Agora has drilled 10 wells in the past two years, only one of which came up dry, RIT said. It has about 55 million barrels of prospective resources, most of which is oil, it said.
“Agora was only established just over 2 years ago,” Rothschild said in a statement. “The achievement of the management team since then has been a remarkable one. We’re proud and delighted to have been their founding partner, and wish them every possible success in the next phase of their development with Cairn.”
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