Carlyle forms new Med oil and gas firm after $945M Energean acquisition

Carlyle Set to Establish New Mediterranean Oil and Gas Company

In a significant strategic move, Carlyle, a prominent private equity fund, has announced its plan to create a new Mediterranean-focused oil and gas enterprise. This initiative follows Carlyle's acquired assets from Energean in Egypt, Italy, and Croatia for a sum that could reach up to $945 million. This transaction positions Carlyle to tap into the eastern Mediterranean gas market, which has surged recently due to soaring gas demand in Egypt and Europe's quest for alternatives to Russian gas supplies.

According to Carlyle International Energy Partners (CIEP), the non-U.S. energy investment arm of Carlyle, the new company will initially produce up to 47,000 barrels of oil per day across the three countries. However, there are plans to enhance this output by upgrading existing assets and pursuing further acquisitions in the Mediterranean, as shared by CIEP co-head Bob Mcguire. Mcguire emphasized the ample geological opportunities and the rising demand for natural gas in Egypt and Italy, which would drive future investments.

Energean, the seller in this deal, primarily produces from a gas facility offshore Israel. The company is looking to expand into the broader Europe, Middle East, and Africa regions, especially in areas with long-term policy support for gas and a move away from coal. Mathios Rigas, CEO of Energean, celebrated the deal, highlighting that they are selling these assets at three times the price they originally paid. Following the announcement, Energean’s shares saw a 2.7% increase by mid-day trading.

The deal's financial specifics reveal that Energean will receive a cash payment of $504 million, enabling the company to distribute a special dividend of $200 million and fully repay a $450 million corporate bond. This transaction follows Energean’s acquisition of the assets in Egypt, Italy, and Croatia through their purchase of Edison's oil and gas portfolio in 2020. It's projected that Energean will redefine its dividend policy after the deal, expected to finalize by the end of the year.

In terms of production projections, Energean produced 123,000 barrels of oil equivalent per day (boed) in 2023, with an expected increase in Egypt’s output to 29,000-31,000 boed in 2024 from around 25,000 boed. CIEP’s new company will source its production from significant assets like Italy's Cassiopea gas field and Egypt's Abu Qir gas hub.

Over the past decade, CIEP has successfully acquired, developed, and divested multiple oil and gas entities, including Neptune Energy in the North Sea, Assala Energy in Gabon, and SierraCol in Colombia. Tony Hayward, who is set to chair the new company, brings over three years of experience as BP’s former CEO. Hayward emphasized that this acquisition offers a robust platform to establish a standalone regional leader in the Mediterranean, one of the world's fastest-growing natural gas markets.