The ability to navigate through complex transactions and integrate
acquisitions has secured Cairn Energy plc the Finance Team of the Year: Business
accolade at the 2008 Accountancy Age Awards.
Cairn invests risk capital in oil and gas exploration wells in areas which
generate a higher average rate of return for shareholders.
In 2004, after a series of small-scale discoveries in South Asia, came a
momentus oil find occurred in India’s Rajasthan Desert.
The business was subsequently floted on the Indian Stock Exchange three years
thereafter, raising $2bn for the sale of 31%.
The IPO presented huge challenges after transfering responsibility for India
to Delhi, prompting redundancies in Edinburgh. The key Challenge was to use a
$300m pot retained in the UK to build a new exploration portfolio.
The real challenge was to then apply that financial base to securing a
portfolio of exploration acreage.
The establishing of Capricorn Oil arose from the need to distinguish the new
business activities from those in India.
The finance team then worked closely with the technical division in
undertaking necessary due diligence on more than 70 screened companies, before
concluding negotiations with the legal team.
In 2007, Cairn Energy became the first company to launch bids for two listed
companies on the same day in the UK market – both of which yielded success and
with neither party learning of the other deal.
A third deal, for extra funding, was also completed at the same time adding
to the challenge for the finance team.
According to the awards judges, the business has reinvented itself supported
by strong client appraisals. ‘They’ve delivered a huge transformation and been
able to tell a fascinating story with strong testimonials,’ they said.
The finance team uses a three-pronged approach in streamlining processes and
securing business deals. It seeks to ensure commercial terms and structures are
operating at optimum levels, whether it is in assessing terms for a new acreage
bid or determining tax structures. Focus is driven toward ensuring cash
resources are directed into more profitable investments and the
attention-to-detail in reporting such activity.
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