Cairn to Return $3.5 Billion to Shareholders

Cairn to Return $3.5 Billion to ShareholdersNew Delhi: UK’s Cairn Energy on Thursday said it would return to shareholders $3.5 billion or two-thirds of the proceeds from the majority stake sale of its Indian arm to mining giant ‘Vedanta Resources’. The new majority shareholder in Cairn India, in the meantime, said it would strive to double the energy firm’s current capacity. Cairn India now operates the largest on-shore oil field in the country located in Rajasthan and has contracts to sell 1,55,000 barrels a day of crude from there.Cairn Energy said the return of cash is expected to be made in a manner that will give shareholders an element of choice as to when and in what form they receive the cash.This could cheer the Edinburgh explorer’s shareholders who were last month told that the company failed to make a commercial hydrocarbon discovery in Greenland in the first exploration phase but was encouraged by evidence of future success. The company spent about £400 million so far this year on Greenland exploration.With Cairn India, Vedanta expands its significant presence in Rajasthan, where it operates Hindustan Zinc, the world’s largest zinc-lead producer“I am delighted to announce completion of this transaction. It crystallises the very significant value creation that we have delivered from our Indian business and allows us to return around three and a half billion dollars to shareholders,” a Cairn Energy statement said quoting CEO Simon Thomson.Discussion Questions:1. Which objective of Cairn energy is being met by returning the $ 3.5 billion to shareholders?2. What strategy has Cairn energy adopted to create value from the Indian business?