Carlyle agrees to invest up to $200 mln in Discover Exploration

The Carlyle Group has agreed to invest up to $200 million over three years in oil and gas exploration company Discover Exploration Limited. The investment will fund existing operations in New Zealand and the Union of the Comoros as well as new opportunities. The investment represents the first investment from CIEP, a fund that focuses on oil and gas exploration and production, midstream, oil field services and refining and marketing in Europe, Africa, Latin America and Asia.

Press Release

Global alternative asset manager The Carlyle Group (NASDAQ:CG) today 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 Comoros as well as new opportunities. This is the first investment by CIEP, a fund that focuses on oil and gas exploration & production, midstream, oil field services and refining and marketing in Europe, Africa, Latin America and Asia. CIEP is headed by Managing Director Marcel van Poecke, an industry veteran and a seasoned investor in the energy sector.
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.

Discover’s strategy is to deliver value through participation in exploration and appraisal programmes focusing on deep-water petroleum systems. The Company concentrates on young and emerging basins, de-risked through 2D and 3D seismic surveys, and aims to participate in multi-well drilling programmes through farm-ins, farm-outs and M&A activity.

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

In addition, Discover will seek early value creation through participation at ground floor level in targeted areas, where large interests are available. The Company has solid industry relationships and works with reliable, well-financed and proven partners to build a balanced portfolio of exploration assets with both oil and gas potential.

Discover’s current exploration portfolio:
§ 10% participation in the PEP38451 permit in the Taranaki basin, offshore New Zealand, operated by Anadarko Petroleum 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 approval by 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.

Michael Blaha, Executive Chairman of Discover, said:
“We are delighted that CIEP has agreed to support the Company with significant investment funding to allow us to acquire these two New Zealand opportunities and to capture other future opportunities that are available to us from host Governments and our international peers in the oil and gas industry. We are confident of using the success we enjoyed with Cove Energy as a bridgehead to our new endeavours. We see the respective skills of the management team and CIEP as providing an excellent and dynamic combination.”

John Craven, CEO of Discover, commented:
“This investment by CIEP will enable us to continue on-going discussions with several parties with regard to developing or gaining access to a number of deep water turbidite plays worldwide. Furthermore, I am very pleased Discover is entering the Taranaki and Canterbury basins in New Zealand with a near-term drilling programme and with Anadarko as the operator. These two licenses fit perfectly with our strategy of pursuing prospective, deep water petroleum systems in emerging basins.”

Marcel van Poecke, Managing Director, and Head of CIEP said:
“Discover is an outstanding company and offers an exciting opportunity to combine its international oil and gas experience with the resources we have available in Carlyle’s global energy platform. Our investment will fund Discover’s exploration activities and enable the acquisition of additional concessions in frontier exploration geographies.”

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