Magna Energy to get $500 million Carlyle funding

The upstream oil and gas start-up plans to invest in marginal fields

Global alternative asset manager Carlyle Group announced on Monday  an equity line-up of $500 million in Magna Energy, an upstream oil and gas start-up by Mike Watts and Jann Brown, both of whom worked with Cairn Energy till a year ago.

Magna is eyeing opportunities in marginal fields of Oil and Natural Gas Corporation. The government is planning to bid out marginal fields, which are small discoveries that do not offer economy of scale but become viable only when oil prices are stable. It has 45 per cent interest in Oilex’s Cambay block.  The company is targeting the building of acreage positions in the Indian subcontinent, particularly India and Bangladesh, with the objective of creating a full-cycle oil and gas company through acquisitions and local licensing rounds. Magna’s primary focus will be development and production with a secondary focus on exploration, Watts said in a conference call on Monday.

INDIAN SUBCONTINENT-CENTRIC COMPANY

• Magna eyes opportunities in ONGC’s marginal fields as the govt plans to bid out those fields, which are small discoveries that do not offer economy of scale
• It is targeting the building of acreage positions in  India and Bangladesh  
• Its objective is to create a full-cycle oil and gas company through acquisitions and local licensing rounds

“The new government has hit the ground running,” Watts said, adding the Indian economy has strong potential. Funding for the investment will come from Carlyle International Energy Partners (CIEP), a fund that focuses on oil and gas exploration & production, midstream, and refining and marketing in Europe, Africa, Latin America and Asia. This investment is led by CIEP’s Managing Director and Head Marcel van Poecke and Managing Director Bob Maguire.

The Carlyle Group is a global alternative asset manager with $193 billion of assets under management across 130 funds and 156 fund of funds vehicles as of March 31, 2015. Maguire said the investment would be made in two phases of $250 million after its team analyses the value of assets being acquired by Magna.

At present, Carlyle invests across four segments – Corporate Private Equity, Real Assets, Global Market Strategies and Investment Solutions – in Africa, Asia, Australia, Europe, West Asia, North America and South America. It has also launched a broad-based energy investing platform (currently with over $10 billion in capital to deploy) offering investment opportunities, including international energy investing in oil and gas exploration and production, mid and downstream, refining and marketing and oil field services.

Established in May 2013, the CIEP team focuses on oil and gas exploration and production mid and downstream, refining and marketing and oil field services in Europe, Africa, Latin America and Asia. CIEP current investments include Varo Energy, a Swiss-based refining, storage and distribution business operating in Germany and Switzerland; Discover Exploration, an oil and gas exploration company based in the UK that focuses on Africa, Latin America and Asia; Midia Resources, a Romanian based gas production group; Neptune Oil & Gas which focuses on large-scale oil and gas opportunities in the North Sea, North Africa & South-East Asia and HES International, a European liquids, dry-bulk storage and handling business.

Magna is a private, value-focused energy company founded initially as a passive investment vehicle by Mike Watts and Jann Brown in 2013. Watts has a career history of nearly 50 oil and gas discoveries (in Pakistan, Thailand, Myanmar, Bangladesh, and India), cumulatively resulting in 500,000 barrels of oil equivalent per day of production, to which recent Cairn discoveries in Senegal (2014) will eventually be added.

In addition to Shell, he worked with Burmah Oil, Premier Consolidated Oilfields, Holland Sea Search, Command Petroleum, Snyder Oil International and Cairn Energy Plc throughout South Asia and the Far East.