Cairn expects Vedanta deal to be approved

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Tue Mar 22, 2011 7:56am GMT

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* Says it believes Vedanta deal will be approved by India

* Cairn to sell up to 51 pct in Cairn India to Vedanta

* FY pretax profit $577 mln vs $27 mln loss in 2009

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LONDON, March 22 (Reuters) - Cairn Energy (CNE.L: Quote) expects to receive Indian approval for a long-delayed deal to sell a stake in its Indian unit, the UK explorer said on Tuesday, as it announced a swing to annual profit.

Cairn agreed seven months ago to sell up to 51 percent in Cairn India (CAIL.BO: Quote) to Vedanta Resources (VED.L: Quote) for up to $9.6 billion.

"Cairn continues to believe the necessary approvals to complete the Vedanta transaction will be received and is working with the Government of India in a positive and constructive manner," Chief Executive Bill Gammell said in a statement.

Cairn moved to a full-year pretax profit of $577 million, after it started oil production in India, compared with a loss of $27 million in 2009.

The consensus forecast for pretax profit was for $665 million from a range of $522 million to $928 million, according to a Thomson Reuters I/B/E/S poll of 18 analysts.


Cairn earlier in March said it hoped to complete the closely watched Indian divestment by April 15. [ID:nDEL000225]

The deal, which has been delayed by issues around royalty payments, is part of Cairn's plan to return cash to shareholders and pay for exploration in Greenland, where it hopes to open up a new oil province. [ID:nLDE70T0FW] [ID:nLDE6950NR]

Cairn is also looking to add new opportunities to its portfolio, said Gammell, adding that the company was planning to drill four wells in Greenland in 2011.

Shares in Cairn closed at 419.7 pence on Monday valuing the company at 5.9 billion pounds ($9.6 billion).