(Preliminary Results Announcement) PDF 0.71MB - Cairn Energy PLC

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2 Assets and Investments: Oil and Gas Assets2. 1 Corporate AcquisitionsAgora Oil & Gas ASOn 9 May 2012, Cairn Energy PLC completed the acquisition of 100 per cent of the issued share capital of Agora Oil &Gas AS. Agora Oil & Gas AS was a private Norwegian company with non-operated exploration assets in both theNorwegian North Sea and, through its wholly owned subsidiary Agora Oil and Gas (UK) Limited, in the United KingdomNorth Sea.Agora Oil & Gas AS was acquired as the first step towards Cairn’s stated goal of expanding its portfolio by adding lowerrisk, near-term exploration, appraisal and development assets to complement transformational frontier exploration inother regions, resulting in a more balanced business overall. The acquisition added drilling activity to Cairn's 2012exploration and appraisal programme, with six wells drilled in the UK and Norway during the period from acquisition. Theacquisition included Agora’s 15% stake in the Catcher area planned for development.Nautical Petroleum plcOn 8 August 2012, Capricorn Energy completed the acquisition of 100 per cent of the issued share capital of NauticalPetroleum plc. Nautical was an independent oil and gas exploration and production company, incorporated in Englandand Wales and headquartered in London. Nautical’s assets include exploration assets nearing development in the UnitedKingdom North Sea (including interests in the Catcher, Kraken and Mariner fields) and further exploration licences in theUnited Kingdom, Ireland, France and Morocco. One exploration well was drilled in the period post acquisition.Nautical was acquired to expand Cairn’s portfolio in North-West Europe and to continue its strategy of balancing itstransformational exploration portfolio with appraisal and development assets. Amongst other items, the acquisitionincreased Cairn’s equity position in the Catcher area by a further 15%, taking Cairn’s overall interest to 30%. TheCatcher area contains several oil discoveries and follow-on prospectivity. The acquisition also brings a material stake inKraken, another large, North Sea oil development project.Recognised amounts of identifiable assets and liabilities acquiredAgora NauticalFair value Fair value$m $mIntangible exploration/appraisal assets 411.0 565.5Property, plant and equipment - other 0.5 -Income tax assets 30.4 -Trade and other receivables 25.7 11.3Bank deposits - 7.8Cash and cash equivalents 41.4 82.5Trade and other payables (48.7) (2.4)Bank loan (6.2) -Provisions - (6.6)Deferred tax liability (215.3) (269.4)Total identifiable assets 238.8 388.7Goodwill 214.3 259.6Total consideration 453.1 648.3Satisfied by:Cash 196.2 648.3Equity instruments (47,662,603 ordinary shares of Cairn Energy PLC) 256.9 -Total consideration transferred 453.1 648.3Net cash outflow arising on acquisition:Cash consideration (196.2) (648.3)Less: cash and cash equivalent balances acquired 41.4 82.5(154.8) (565.8)22
2. 1 Corporate Acquisitions (continued)GoodwillThe goodwill of $214.3m recognised on the acquisition of Agora arises largely from deferred tax provided of $196.6mon the temporary taxable difference between the fair value of intangible exploration/appraisal assets acquired and theirrespective tax base costs.Similarly, the goodwill of $259.6m recognised on the acquisition of Nautical also arises largely from deferred taxprovided of $269.4m on the temporary taxable difference between the fair value of intangible exploration/appraisalassets acquired and their respective tax base costs.None of the goodwill is expected to be deductible for income tax purposes.Consideration and costs of acquisitionThe fair value of the 47,662,603 ordinary shares issued as part of the consideration paid for Agora ($256.9m) wasdetermined on the basis of Cairn Energy PLC’s closing share price on 9 May 2012 of £3.39 ($5.39). All otherconsideration was settled in cash.Acquisition costs of $11.2m are included within other expenses. $4.3m relates to the acquisition of Agora with theremaining $6.9m relating to Nautical.Impact on profit for the yearThe Group’s profit has been reduced by the Agora Group loss of $53.7m and reduced by the Nautical Group loss of$4.4m for the period between the respective dates of acquisition and the Balance Sheet date.Had the results of the Nautical and Agora Groups been included in the full year’s results to 31 December 2012, CairnGroup’s profit for the year would have been $60.6m.23
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(Preliminary Results Announcement) PDF 0.71MB - Cairn Energy PLC

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