Carlyle’s $945 mn deal for Energean’s oil and gas assets collapses over regulatory hurdles

The acquisition was a key part of Carlyle’s plan to ramp up production from 34,000 to 50,000 barrels of oil equivalent per day (boe/d) and pursue further acquisitions across the Mediterranean. The new entity was to be chaired by former BP CEO Tony Hayward, who also leads Carlyle’s Colombia-focused oil firm SierraCol.

Carlyle’s $945 million acquisition of oil and gas assets from London-listed Energean has fallen through after the private equity firm failed to secure key regulatory approvals in Italy and Egypt. The collapse marks a setback for Carlyle’s strategy to build a Mediterranean-focused energy company amid growing industry caution around upstream fossil fuel investments, according to the Financial Times.

The deal, announced in June, had a Thursday deadline for completion. Energean confirmed in a Friday statement that the parties could not agree on an extension after Carlyle failed to satisfy certain regulatory conditions.

A spokesperson for Carlyle said the firm made “significant and extensive efforts in good faith to close the transaction but ultimately was not able to satisfy all of the conditions.”

Regulatory barriers halt expansion plans

Carlyle had agreed to pay $820 million guaranteed for the portfolio, which included producing assets in Egypt, Italy, and Croatia. The deal involved $504 million in upfront cash, with the remainder linked to performance milestones.

The primary obstacle arose in Italy, where regulators required Carlyle to provide financial guarantees for the Italian subsidiary set to own the assets, according to people familiar with the process.

The acquisition was a key part of Carlyle’s plan to ramp up production from 34,000 to 50,000 barrels of oil equivalent per day (boe/d) and pursue further acquisitions across the Mediterranean. The new entity was to be chaired by former BP CEO Tony Hayward, who also leads Carlyle’s Colombia-focused oil firm SierraCol.

Despite the deal’s collapse, sources say Carlyle remains interested in acquiring additional oil and gas assets in the region.

Energean maintains growth focus

Energean, whose flagship project is the Karish gasfield offshore Israel, said the failed transaction does not affect its long-term strategy. Karish began production in 2022 and reached output of 112,000 boe/d in 2023.

“While I am disappointed that Carlyle was unable to obtain the necessary approvals in Italy and Egypt… I want to reaffirm that this outcome does not change our strategic direction or our commitment to growth and shareholder returns,” said Energean CEO Mathios Rigas.

Energean’s shares rose 5 percent in Friday morning trading, reflecting investor relief that the company remains focused on its operational and financial objectives despite the failed deal.