--Cairn, in consortium with Cheiron, has agreed to acquire Shell's oil-and-gas portfolio in the Western Desert of Egypt for $646 million upfront and up to $280 million in contingencies

--The group has also agreed a $460 million asset disposal in the U.K., and said it is "taking all necessary steps" to realize the $1.2 billion Indian damages award

--Cairn's 2020 net loss came in at $394 million

By Jaime Llinares Taboada

Cairn Energy PLC on Tuesday said that its consortium with Cheiron Petroleum Co. has agreed to acquire Royal Dutch Shell PLC's Western Desert assets in Egypt for $646 million.

The FTSE 250 energy company said Western Desert will expand and diversify its producing asset base, as the deal is expected to add 33,000-39,000 barrels of oil equivalent a day in 2021--of which 66% is gas. Cairn will acquire 50% of the assets and pay 50% of the price.

There is an additional contingent consideration of up to $280 million if certain requirements are met. Cairn and Cheiron plan to finance the acquisition with a new joint reserve-based lending facility of up to $350 million, a joint junior debt facility of $100 million, and existing cash. Completion is expected in the second half of 2021, and is subject to shareholder consent.

"The portfolio offers low cost production, near-term development and exploration potential, provides immediate operating cash flow contribution and adjusts our overall hydrocarbon split towards gas," Cairn said.

In addition, the company said it has agreed on the sale of its 20% interest in the Catcher field and 29.5% stake in the Kraken field, U.K., for $460 million to Waldorf Production Ltd. This deal also includes a contingent consideration which depends on oil prices and production performance between 2021 and 2025.

The group said the disposal strengthens its balance sheet and provides flexibility to sustain and prolong its producing asset base. Completion is also expected in the second half of 2021.

The company added that it is taking all necessary steps to ensure access to the $1.2 billion damages award payable to Cairn by India's government.

"Cairn is extremely confident that satisfaction of the award will be achieved either by negotiated settlement or by enforcement against Indian assets (with potential financing and risk-sharing options available to accelerate access to cash recovered through enforcement)," it said.

The company reported a net loss of $393.8 million for 2020 swinging from a $93.6 million net profit a year earlier. Lower production and energy prices hurt its performance during the year.

At 0919 GMT, shares in Cairn were down 3.5% at 191.7 pence. Shell was up 1.7% at 1,572.2 pence.

Write to Jaime Llinares Taboada at jaime.llinares@wsj.com; @JaimeLlinaresT

(END) Dow Jones Newswires

03-09-21 0436ET