Carlyle Creates New Med Oil, Gas Company with $945 mln Energean Deal

A woman walks next to the logo for Carlyle at the company’s offices in New York City, US, June 28, 2022. Picture taken June 28, 2022. REUTERS/Brendan McDermid/ File Photo Purchase Licensing Rights
A woman walks next to the logo for Carlyle at the company’s offices in New York City, US, June 28, 2022. Picture taken June 28, 2022. REUTERS/Brendan McDermid/ File Photo Purchase Licensing Rights
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Carlyle Creates New Med Oil, Gas Company with $945 mln Energean Deal

A woman walks next to the logo for Carlyle at the company’s offices in New York City, US, June 28, 2022. Picture taken June 28, 2022. REUTERS/Brendan McDermid/ File Photo Purchase Licensing Rights
A woman walks next to the logo for Carlyle at the company’s offices in New York City, US, June 28, 2022. Picture taken June 28, 2022. REUTERS/Brendan McDermid/ File Photo Purchase Licensing Rights

Carlyle (CG.O), will form a new Mediterranean-focused oil and gas company led by former BP (BP.L), CEO Tony Hayward after the private equity fund agreed to acquire Energean's (ENOG.L), assets in Egypt, Italy and Croatia for up to $945 million, the companies said on Thursday.

The deal will allow Carlyle to tap into the eastern Mediterranean gas market that has grown rapidly in recent years as gas demand in Egypt soars and Europe seeks alternatives to Russian gas, Reuters reported.

Carlyle International Energy Partners (CIEP), the fund's non-US energy investment arm, said the new company will initially produce up to 47,000 barrels of oil per day in the three countries.

But it will seek to grow output by upgrading existing assets and through other acquisitions in the Mediterranean, CIEP co-head Bob Maguire told Reuters.

"There is plenty of running room for these assets in terms of geology," Maguire said, adding that growing demand for natural gas in Egypt and Italy will underpin future investments.

Energean, whose main production comes from a gas facility offshore Israel, will also look to expand to the wider Europe, Middle East and Africa region, particularly where there is long-term policy support for gas and displacement of coal, CEO Mathios Rigas told Reuters.

"It's a great deal for us, we're selling assets at three times the price we bought them," he said.

Shares of Energean were up 2.7% by 1252 GMT.

Jefferies analysts estimated the net asset value of the resources that Energean is selling to be $1.28 billion, implying a 26% discount in the deal.

London-listed Energean acquired the assets in Egypt, Italy and Croatia through its acquisition of Edison's oil and gas portfolio in 2020.

Energean said the deal would include a cash payment of $504 million after which it will pay a special dividend of $200 million as well as repay in full a $450 million corporate bond.Energean's board expects to redefine its dividend policy following the completion of the deal, which is expected by year-end.

Energean produced 123,000 boed in 2023. For 2024, it expected production in Egypt to rise to 29,000-31,000 boed from around 25,000 boed.

For CIEP's new company, production will come from interests in Cassiopea, Italy's largest gas field in terms of reserves, and Abu Qir, one of the largest gas producing hubs in Egypt.

CIEP has over the past decade acquired, grown and sold several oil and gas companies, including Neptune Energy in the North Sea, Assala Energy in Gabon and SierraCol in Colombia, also led by Hayward. He led BP for more than three years before stepping down in the wake of the 2010 Deepwater Horizon disaster in the Gulf of Mexico.

"This acquisition provides a strong platform to build a standalone regional champion in the Mediterranean, one of the fastest growing natural gas markets in the world," Hayward, chairman designate of the new company, said in a statement.



UK Borrowing Overshoot Underscores Task for New Government

Larry the Cat sits on Downing Street in London, Britain July 19, 2024. REUTERS/Toby Melville
Larry the Cat sits on Downing Street in London, Britain July 19, 2024. REUTERS/Toby Melville
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UK Borrowing Overshoot Underscores Task for New Government

Larry the Cat sits on Downing Street in London, Britain July 19, 2024. REUTERS/Toby Melville
Larry the Cat sits on Downing Street in London, Britain July 19, 2024. REUTERS/Toby Melville

Britain's government borrowed a lot more than forecast in June, according to official data published on Friday that highlighted the big budget challenges facing the new government of Prime Minister Keir Starmer.
Public sector net borrowing, excluding state-controlled banks, was a larger-than-expected 14.5 billion pounds ($18.75 billion) last month. A Reuters poll of economists had pointed to an increase of 11.5 billion pounds.
Dennis Tatarkov, Senior Economist at KPMG UK, said the data showed "the daunting task" for the new government to fund its agenda without worsening the public finances.
"A combination of high levels of spending and weak growth prospects will present uncomfortable choices – deciding between even more borrowing or substantially raising taxes if spending levels are to be maintained," he said.
New finance minister Rachel Reeves is likely to announce her first budget after parliament's summer recess. She and Starmer have ruled out increases in the rates of income tax, corporation tax and value-added tax, leaving her little room for maneuver to improve public services and boost investment.
Reeves has ordered an immediate review of the new government's "spending inheritance", a move that lawmakers from the opposition Conservative Party say could presage increases in taxes on capital gains or inheritances.
"Today's figures are a clear reminder that this government has inherited the worst economic circumstances since the Second World War, but we’re wasting no time to fix it," Darren Jones, a deputy Treasury minister, said after the data was published.
Starmer's government says it will speed up Britain's slow-moving economy - and generate more tax revenues - via a combination of pro-growth reforms and a return to political stability that will attract investment.
The borrowing figure for June was 2.9 billion pounds higher than expected by Britain's budget watchdog whose forecasts underpin government tax and spending plans.
In the first three months of the financial year which began in April, borrowing was 3.2 billion pounds higher than projected by the Office for Budget Responsibility at 49.8 billion pounds.
The Office for National Statistics said June's borrowing was the lowest for the month since 2019, helped by a big drop in spending on interest paid on bonds linked to inflation which has slowed sharply.
But the deficit was made bigger by a 1.2 billion-pound fall in social security contributions compared with June 2023. They were cut by former Prime Minister Rishi Sunak before the July 4 election that swept Starmer's Labour Party to power.