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Private equity roll-ups bet energy transition will go slow

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By illuminem briefings

· 2 min read

illuminem summarizes for you the essential news of the day. Read the full piece on Financial Times or enjoy below:

🗞️ Driving the news: Carlyle Group is launching a new oil and gas company in the eastern Mediterranean, led by former BP CEO Tony Hayward, with an initial $945 million deal to acquire Energean's assets in Egypt, Italy, and Croatia
• This move signals Carlyle's strategy to invest in traditional energy as other buyers hesitate due to the energy transition

🔭 The context: The energy transition has made many investors cautious about oil and gas assets, fearing backlash from shareholders concerned with upstream production
• Carlyle is capitalizing on this hesitancy by purchasing assets at low prices, potentially yielding high returns despite the sector's uncertainty

🌍 Why it matters for the planet: Investing in fossil fuels during a critical period of energy transition could slow down the shift to renewable energy sources
• This strategy underscores the complexities and challenges of reducing global reliance on oil and gas

⏭️ What's next: Carlyle aims to generate significant EBITDA from these assets and potentially exit through a trade sale or merger
• However, the unpredictable pace of the energy transition and evolving policy landscapes may impact future buyer interest and market dynamics

💬 One quote: “Carlyle is rushing in where others fear to tread,” highlighting the firm’s bold move in a cautious market

📈 One stat: Carlyle is acquiring assets at about $5.4 per proven and probable barrel, which is below the net present value of the reserves

Click for more news covering the latest on energy transition

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