Shares of Edinburgh-based international oil and gas company Cairn Energy rose about 3% on Tuesday after it said it entered into a farm-out agreement for the sale of a 10% interest in the Nova development offshore Norway.

“With effect from 1 January 2019, ONE-Dyas Norge AS shall acquire 10% in the project by paying US$59.5 million plus customary working capital adjustments on completion,” said Cairn in a stock exchange statement.

“Following this transaction Cairn will retain a participating interest of 10% interest in the Nova development and reduce its capital expenditure to the end of 2021 in the Nova area by ~US$110m. 

“Cairn will use the proceeds of the transaction to fund group exploration and development activities.”

Analysts at Peel Hunt wrote: “This morning’s deal is a smart piece of business from Cairn that not only introduces a useful cash injection, but also removes a significant chunk of development capex spend over the next 2-3 years …”

Jefferies International Limited acted as financial advisor to Cairn in connection with the farm out agreement.