Kerogen Buys Half of Energean Israel

Hong Kong and London-based private equity fund Kerogen Capital is to spend $50mn on a stake in Energean Israel, a subsidiary of Energean, ahead of the planned $1.3bn development of the Karish and Tanin gas fields, offshore Israel, Energean said February 15.

Energean Israel is the operator of, and holds a 100% interest in, each of the Karish and Tanin licences, acquired from Delek Group in December 2016 for an upfront consideration of $40mm as well as $108.5mm in contingent payments.

Proceeds from Kerogen’s investment in Energean Israel will finance the acquisition and key workstreams to investment sanction, including front-end engineering and design studies and the field development plan being prepared with TechnipFMC.

Kerogen’s investment is subject to government approval, after which Kerogen will own a 50% interest in Energean Israel with Energean holding the balance.

It is intended that Kerogen board member and former BP geologist Roy Franklin -- appointed chairman of UK shale producer Cuadrilla Resources in April 2015, who is also a non-executive director of both Statoil and Australia's Santos -- will become the non-executive chairman of Energean Israel. Kerogen is an investor in AJ Lucas, a Cuadrilla shareholder. 

Energean CEO Mathios Rigas said that Energean has already started negotiations with potential gas consumers in Israel and expects to submit the field development plan by May with the intention of taking the final investment decision by end-2017.

Energean's areas of activity

(Credit: Energean)

Franklin praised Energean’s track record with the Prinos complex in Greece, increasing reserves and production substantially. "Kerogen intends to collaborate with Energean to deliver a successful development of the Karish and Tanin fields in Israel," he said. "This investment provides Kerogen with exposure to a large-scale, low break-even discovered gas resource located within an OECD country, which, as a near-term development, can benefit from today’s deflationary cost environment.”

On January 31, Kerogen Capital said it would make an initial commitment of $100mn to Pandion Energy, formed in Norway to buy out some of Tullow's upstream assets there; Kerogen said it and partners may commit up to $300mn to Pandion as its portfolio develops.

In mid-2016 when it closed its Kerogen Energy Fund II, Kerogen had funds under management exceeding $2bn. An earlier $1.5bn fund launched in 2011 by Kerogen was more than half subscribed by Chinese state upstream investor, China National Offshore Oil Corporation.

William Powell