Cairn Energy Plc, the U.K. explorer that completed a two-year drilling campaign in Greenland without making a commercial find, sold a 30.6 percent stake in the Pitu block to Statoil ASA.
Cairn will remain the operator for the field with a 56.88 percent interest through the first drilling, while Statoil will operate future developments, Statoil said in a statement on its website. Cairn won exploration rights for the area in the first Baffin Bay licensing round in 2010 for a period that expires in December 2014.
“More such deals will occur during the currently active farm-out process,” Sanford Bernstein & Co. analysts led by Oswald Clint wrote in a note today. “Cairn is actively rebuilding their exploration portfolio.” Clint rates Cairn “outperform.”
Cairn shifted its focus to Greenland and other exploration after selling 40 percent of Cairn India Ltd. to Vedanta Resources Plc for $5.5 billion. Cairn, which doesn’t plan further Greenland drilling this year, will return $3.5 billion to shareholders in a special dividend from the India deal.
Cairn’s current market capitalization of about $6.3 billion falls below its cash holding of $4.7 billion plus the value of its remaining 22 percent stake in Cairn India, which is about $2.6 billion.
Exxon Mobil Corp., Chevron Corp, and Royal Dutch Shell Plc also own rights to explore Greenland, an autonomous Danish territory of about 56,000 people.
The Pitu license off the western coast of the island country is adjacent to the Shell-operated Anu and Napu licenses in which Statoil has minority interest, Statoil said.
“Statoil’s extensive operating and development experience makes them the partner of choice for the Pitu block where we see significant potential,” Cairn said in a statement in London.