CAIRN Energy has confirmed plans to pay out around $250m to investors as crude prices hit the highest levels since the start of the coronavirus pandemic.

The Edinburgh-based oil and gas firm said it expects to pay a special dividend worth 32p per after moving closer to completing the sale of its Senegal business for up to $400m.

READ MORE: Scottish oil firm sells stake in giant find off West Africa in $400m deal

The company made the announcement yesterday after receiving all the official approvals required for the disposal of its Senegal operation to Australia’s Woodside.

The Senegal business has a stake in the giant Sangomar oil find which Cairn made in 2014. Sangomar is expected to be brought into production in 2023.

The sale allowed Cairn to realise a return on the investment it has made in Senegal and to avoid having to make the hefty investment required to fund is share of the cost of developing Sangomar.

Cairn has a global portfolio, which includes a significant North Sea business.

READ MORE: Cairn eyes North Sea acquisitions as slump sees 'multiple packages' put up for sale

Cairn is set to get $300m on completion of the deal, which is expected before the end of the year.

It will get up to a further $100m depending on the timing of first oil from Sangomar and the average Brent oil price during the first six months of production.

In July Cairn agreed to sell its 36.4 per cent stake in the Senegal business to Russia’s Lukoil. The following month Woodside exercised its right to pre-empt the deal with Lukoil by acquiring the assets on the same terms. Woodside has partnered Cairn in its work off Senegal for some years.

Cairn negotiated the deal with Lukoil amid the turmoil in the market triggered by the coronavious crisis, which sent demand for oil and gas plunging.

The price of Brent crude fell to an 18-year low of less than $16 per barrel in April, from around $70/bbl in January. It has rallied amid hopes that effective coronavirus vaccines will be made widely available in coming months.

Yesterday morning the price rose above $51.70 per barrel, the highest level recorded since early March, when the World Health Organisation said the coronavirus outbreak had become a pandemic.

The oil price rally will be welcomed in the North Sea. Oil and gas firms operating in the area have slashed spending in response to the fall in commodity proces this year leaving the supply chain under intense pressure.

READ MORE: North Sea oil services heavyweight steps up cost cutting amid uncertainty facing sector

Cairn is due to be refunded $225m the company has spent this year on the assets it is selling to Woodside.

Cairn said it will pay the 32p per share special dividend on January 25, to those on the share register on January 8.

The company's chief executive, Simon Thomson, has 1,345,922 shares in the firm, putting him in line for a total special dividend payment of around £430,000.

The UK corporate governance code encourages directors of listed companies to accumulate long term holdings in their shares to help ensure their interests are aligned with those of investors.

Pension funds hold Cairn shares.

Shares in Cairn Energy closed up 5.2p at 172.6p

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