Carlyle Spends $587M for Shell’s Gabon Assets

The Carlyle Group is investing $587 million from two of its funds to acquire international oil major Royal Dutch Shell’s onshore assets in Gabon. The transaction is being executed through Assala Energy, an oil and gas exploration and production company established by Carlyle in 2016 to focus on energy-related opportunities in sub-Saharan Africa. Up to an additional $150 million could be paid in the transaction subject to agreed commodity price and performance production factors.

As part of the deal, Assala Energy will be assuming Shell’s asset-related liabilities which include a loan of $285 million. The capital for the investment will be deployed from two of Carlyle’s funds—the $2.5 billion Carlyle International Energy Partners fund which focuses on oil and gas businesses in Europe, Africa, Latin America and Asia and Carlyle’s Sub-Saharan Africa Fund, a $698 million vehicle that targets buyout and growth opportunities across the continent. The deal is expected to complete during the summer of 2017.

The assets’ net production capacity runs at approximately 40,000 bopd (barrels of oil per day) from five Shell-operated fields and four non-operated fields. From the outset of the acquisition, Assala Energy management’s focus will be on continuing to operate the assets along its current parameters. In time, it’s expected that the company will look for new growth and expansion opportunities as well as play an important role in the future development of Gabon’s energy sector.

“Assala Energy will build on Shell’s 55-year legacy in Gabon by continuing to deliver responsible operations through best-in-class safety, environmental and social performance and transparent stakeholder partnerships,” commented David Roux, Assala’s CEO in the statement announcing the deal. “We are committed to ensuring long-term, sustainable growth and creating value. Assala Energy will invest responsibly to secure and increase production levels as well as oilfields’ life. We look forward to working with the Government of Gabon, the Gabon staff and our partners on this exciting opportunity.”

The deal represents one of the largest foreign direct investments in Gabon and marks the first energy investment for Carlyle’s Sub-Saharan Africa fund. Since it closed 2014, the fund has deployed over $300 million backing eight businesses across several industry sectors. Investments made by Carlyle International Energy Partners. the second fund involved in this transaction, include Varo Energy, Discover Exploration HES international, Black Sea Oil & Gas and Mazarine Energy, a Tunisian up-stream oil and gas company which was backed in 2016