Cairn shareholders poised for $700m India payout
A long-running dispute in India is close to settlement
Cairn Energy, the Edinburgh-based oil and gas explorer, said it expects near term resolution to the India tax issue that will enable further shareholder returns and acceleration of strategy.
Up to $700m will be returned to shareholders via a special dividend and buyback.
The update on the long-running tax dispute with the Indian government comes after the New Delhi parliament voted to scrap a retrospective law.
The government presented a bill in the Lok Sabha lower house of parliament to withdraw all retrospective tax demands on Cairn and said it will refund the funds collected to enforce such levies.
Cairn’s claim against the Indian government stems from a 2012 law which was used two years later by the authorities to claim unpaid taxes from Cairn India’s 2006 corporate reorganisation.
Cairn pursued a legal action which led to an arbitration tribunal in December ruling in its favour.
Today’s update also stated that an acquisition in Egypt is advancing to completion with transition planning underway.
Proposed divestment of some of the company’s UK North Sea producing assets is progressing towards Q4 2021 completion.
Simon Thomson, chief executive, said: “Our significant acquisition in Egypt, which we expect to complete shortly, adds material gas-weighted production, low-cost, near-term growth and attractive exploration potential, in a region with strong demand trends.
“We intend to use our differentiated financial flexibility to add further scale to our production base and look forward to the next phase of strategic delivery.
“Progress in resolving our Indian tax issue and active portfolio management leave Cairn well-positioned to deliver growth from a sustainable business, focused on generating further value and returns for shareholders.”