Mining giant Vedanta enters oil biz with $9.6 bn Cairn deal

New Delhi, Aug 16 (PTI) London-listed mining group
Vedanta Resources on Monday entered the oil business by
clinching a USD 9.6 billion deal for a 60 per cent stake in
Cairn India, the owner of India's largest oilfield.
Vedanta Resources and its group firm Sesa Goa will
acquire 40 per cent stake from Edinburgh-based Cairn Energy
Plc for USD 6.65 billion and make an open for to acquire
another 20 per cent from Cairn India's other stockholders,
Vedanta Resources Chairman Anil Agarwal told PTI over phone.
Cairn Energy, the parent firm of Cairn India, will make
up for any shortfall in the open offer, he said. "This deal
will give us the world-class Rajasthan oilfields."
Vedanta will pay Cairn Energy Rs 405 per share, a 32 per
cent premium to Cairn India's average closing price, over 90
days. This includes a Rs 50 per share non-compete premium to
Cairn Energy Plc for not entering into oil and gas business in
India, Pakistan, Bhutan and Sri Lanka.
The open offer will, however, be made at Rs 355 (offer
price minus the non-compete fee).
The process will take about three months to complete,
Cairn Energy Finance Director Jann Brown said.
The acquisition will give Vedanta access to the Mangala
oilfield, which is currently producing 125,000 barrels per day
but has potential to go up to 150,000 bpd (7.5 million tons a
year).
The Rajasthan block, where Cairn India has 70 per cent
interest, has the potential to go up to 240,000 bpd or
equivalent to the 12 million tons per annum output from ONGC's
prime Mumbai High fields.
Vedanta's deal will be contingent on government approval,
as Cairn's three producing oil and gas assets, including the
Rajasthan fields and seven exploration blocks, either have
explicit provisions for seeking prior approval before transfer
of interest or gives pre-emption, or the right of first
refusal (ROFR), to partners like ONGC.
"Whatever approvals are required, we will take it. We are
a law abiding company and will do what is required in the
law," Agarwal said.
Cairn Energy Chief Executive Bill Gammell said his firm
expects government and regulatory approvals as only ownership
of Cairn India was changing while it would be business as
usual for the India listed firm.
Gammell is visiting New Delhi this week to meet Oil
Minister Murli Deora, besides other senior officials.
Oil Secretary S Sundareshan said on Monday the contract
for the blocks Cairn India has provision for transfer of part
or whole ownership but neither Cairn Energy nor Vedanta has
approached it so far.
Cairn India, 62.37 per cent held by Cairn Energy Plc, is
valued at about USD 14.4 billion and the Scottish explorer is
expected to continue to hold a residual interest of between
10.6 per cent and 21.6 per cent. PTI SCV
RBT


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