Energean's $945 million deal with Carlyle at risk of collapse due to unmet regulatory hurdles

Private equity firm Carlyle's deal to buy assets from Energean for up to $945 million is at risk of collapsing due to unobtained regulatory approvals in Italy and Egypt. Energean said that without an extension, the transaction may be terminated. The deal was reached last June and would allow Carlyle to form a new Mediterranean-focused oil and gas company led by former BP CEO Tony Hayward.

Private equity firm Carlyle Group's planned acquisition of assets from Energean, a London-based energy company, for up to $945 million is at risk of collapsing due to unobtained regulatory approvals in Italy and Egypt [1]. Without an extension, the transaction may be terminated [1]. The deal, announced in June 2022, aimed to establish a new Mediterranean-focused oil and gas company, with Tony Hayward, former BP CEO, serving as Chairman [1].

Carlyle's acquisition of a diverse portfolio of gas-weighted assets in Italy, Egypt, and Croatia, with expected production equivalent to 47,000 barrels of oil per day, was subject to customary regulatory approvals [1]. However, Energean's announcement that the transaction may be terminated due to the lack of approval from regulatory authorities in Italy and Egypt has cast uncertainty over the deal's future.

Italy and Egypt have been actively encouraging new gas development [1]. Carlyle's investment in these countries was expected to play a central role in the energy transition [1]. Despite this, regulatory hurdles have emerged as significant obstacles to the completion of the deal.

Carlyle's track record of successful carve-outs of exploration and production assets, including investments in Neptune Energy, Assala Energy, and SierraCol, positions the firm well to establish a standalone, leading E&P company in the Mediterranean [1]. However, the current regulatory challenges threaten to derail this ambitious plan.

The transaction, which will be funded by Carlyle International Energy Partners, a private equity fund that invests in energy opportunities in Europe, Africa, Latin America, and Asia, has attracted significant attention due to the strategic nature of the assets involved and the potential for growth in the region [1].

As the regulatory situation unfolds, Carlyle and Energean will need to navigate the complexities of the Italian and Egyptian regulatory environments to ensure the successful completion of the deal. The outcome of these negotiations will have significant implications for both companies and the broader energy industry in the Mediterranean region.

References:

[1] Carlyle. (2022, June 13). Carlyle Acquires Portfolio of EP Assets from Mediterranean Energean. Retrieved August 2, 2022, from https://www.carlyle.com/media-room/news-release-archive/carlyle-acquire-portfolio-ep-assets-mediterranean-energean