Edinburgh-based oil and gas company Cairn Energy said on Wednesday it agreed to dispose of Capricorn Norge AS, its subsidiary in Norway.

“With effect from 1 January 2020, Solveig Gas Norway AS shall acquire all of the shares in Capricorn Norge AS by paying US$100 million (m) plus customary working capital adjustments on completion (including an adjustment for the tax receivable related to historical exploration activity),” said Cairn.

“Following this transaction, Cairn will have disposed of all of its assets in Norway and will reduce its committed exploration and development capital expenditure by ~US$100m.”

Cairn said it will use the proceeds of the transaction to fund its ongoing business.

Cairn CEO Simon Thomson said: “This is a further attractive transaction for Cairn shareholders in line with our consistent strategy to realise value and redeploy capital within our portfolio.

“We continue to have a material business in the UK North Sea where production performance of the Kraken and Catcher assets remains strong.  

“We wish all of the team in Stavanger every success in the future.”

The transaction is expected to complete in early 2020 and remains subject to written consent by the Norwegian Ministry of Petroleum and Energy, partner and third-party approvals.

Cairn added: “The gross asset value of the interests being transferred (as per Cairn’s Half-Year Report issued on 10 September 2019) was US$207.4m, the net asset value was US$80.1m.

“Capricorn Norge AS made a loss of US$6.5m for the period ending 30 June 2019.”