Carlyle energy fund makes two first investments

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Carlyle energy fund makes two first investments

Carlyle International Energy Partners (CIEP) has completed two transactions during the month of December related to oil and gas exploration & production, midstream, oil field services and refining and marketing.

On December 19th, CIEP and the Vitol Group of companies announced a transaction intended to establish Varo Energy B.V. as a major midstream energy business in north-west Europe.

 Vitol and CIEP will each own 50% of an enlarged Varo Energy Group. AtlasInvest will sell its shareholding in Varo Energy to CIEP while Vitol will reduce its current stake to enable each party to own 50%.

On completion of these transactions, the Varo Energy business will comprise three core areas; refining wholesale distribution and storage, with a combined refining capacity of 160k bbl/d, sales of 10MM m3 per year and 1.7 MM m3 of storage capacity.

On December 16th, CIEP announced it has made a majority investment in Discover Exploration Limited. The equity investment of up to $200 million over the next three years will fund existing operations in New Zealand and the Union of the Comorosas well as new opportunities.

Discover is an unlisted, geology-led oil and gas exploration company headquartered in London. The company was founded by the same management team responsible for the successful creation of Cove Energy plc in 2009 and its eventual sale three years later for £1.2bn. Led by Executive Directors Michael Blaha, John Craven and Michael Nolan, the team has strong technical expertise in deep-water hydrocarbon plays, solid industry reputations and continuing relationships with major oil companies.

This investment will fund Discover Exploration's near-term, high-impact drilling programme offshore New Zealand with operating partner Anadarko Petroleum Corporation, and will provide working capital for its stake in offshore the Comoros and to grow the business.

Discover's current exploration portfolio:

  • 10% participation in the PEP38451 permit in the Taranaki basin, offshore New Zealand, operated by AnadarkoPetroleum Corporation- the first exploration well spud on November 25,2013;
  • 10% participation in the PEP38264 permit in the Canterbury basin, offshore New Zealand, operated by Anadarko - the first exploration well is expected to spud in early 2014;
  • 60% participation in a Production Sharing Contract covering c. 18,000 km2 offshore the Comoros, currently awaiting approvalby the National Assembly - license area is on trend with the major Rovuma delta gas discoveries (gas-in-place approaching a combined 175 trillion cubic feet) made by Anadarko and ENI S.p.A (BIT:ENI NYSE:E), offshore Northern Mozambique.

Investec Bank plc acted as financial adviser and Lawrence Graham LLP acted as legal adviser to Discover.

These transactions are the first and second investments by CIEP, a fund that focuses on oil and gas exploration & production, midstream, refining & marketing and oil field services in Europe, Africa, Latin America and Asia. Each of the transactions described above are subject to regulatory approvals and other customary closing conditions. These transactions are expected to close before or during the first half of 2014.

Carlyle's CIEP fund is currently being raised with a target of $1.5 billion. According to sources, the fund had already reached a first close and was heading towards a third close shortly.

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