Cairn Energy To Pay £188M Dividend After Senegal Assets Sale

Cairn Energy announced that it will pay shareholders a special dividend of £188 million ($250 million) following the completion of the sale of its Senegal assets.

Upon completion of the sale, which is expected before the end of the year, Cairn Energy (CNE) will pay a special dividend of 32 pence per eligible ordinary share, amounting to a return of £188 million to shareholders. The special dividend is expected to be paid on January 25, 2021 to those on the register on January 8, 2021.

Cairn Energy is an independent oil and gas exploration company with activities in the North Sea, West Africa and Latin America, and production in the UK North Sea.

The dividend payment comes after Cairn said that it received all government and third-party approvals for the sale of all of its interests in Senegal to Woodside. Under the terms of the deal, Cairn will get about $525 million in cash, consisting of $300 million acquisition value and a $225 million reimbursement of expenditure incurred on the sale assets since January 1, 2020.

Cairn will also be eligible to receive an additional payment of up to $100 million if conditions are met related to the timing of first oil production from the Sangomar development and the prevailing oil price at that time. (See CNE stock analysis on TipRanks)

Meanwhile, Peel Hunt analyst Werner Riding today downgraded the stock to Hold from Buy with a 157p price target (7.2% downside potential).

Taking a more optimistic outlook, Berenberg analyst James Carmichael earlier this month upgraded CNE to Buy from Hold and lifted the price target to 200p from 140p, citing the stock’s “compelling” risk/reward profile at current levels. Additionally, the analyst believes that current crude prices suggest upside for energy stocks.

Apart from Riding’s Hold rating, the rest of the Street has a bullish outlook on the stock with a Strong Buy analyst consensus based on 5 Buys. With shares down 18% on a year-to-date basis, the average analyst price target stands at 177p and implies 4.3% upside potential lies ahead over the coming 12 months.