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Private Equity Hunting For Oil & Gas Assets In South-East Asia

Oil Industry

Companies backed by private equity firms and former executives at Big Oil are seeking to buy oil and gas assets across Southeast Asia, as lower current valuations and oil majors selling assets to raise much-needed cash offer investment opportunities for those with cash in hand.

Private equity-backed companies see Southeast Asia—a region expected to grow rapidly, and a region that is home to cheap and small fields nearing production start—as an opportunity to invest now and resell the assets in a few years, Reuters reports, citing industry sources and lawyers.

The potential investors are ready to invest US$100 million-$200 million per asset in production or almost in production, and plan to divest said asset in five to ten years, Reuters quoted oil and gas lawyers as saying.

“(They) are coming in particular as some of the oil majors are going through downsizing and selloffs and they (private equity firms) are looking for the right sized pieces to pick up,” Michael Arruda, a partner in Baker Botts law firm in Hong Kong, told Reuters.

Multinational private equity firms KKR and The Carlyle Group, for example, are supporting companies willing to invest in oil and gas in Southeast Asia. In addition, at least six former senior managers at oil and gas groups have joined buyout firms or founded their own firms to invest in assets, according to industry sources.

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Bill Lafferrandre, who just left ConocoPhillips after 31 years and whose last position there was Vice President, Asia Pacific Business Development, co-founded Sea Dragon Resources, a Singapore-based startup company seeking to build a balanced portfolio of E&P assets in SE Asia. According to Reuters, Lafferrandre seeks to buy E&P oil and gas assets in countries such as Indonesia, Vietnam and Thailand.

Oil majors, on the other hand, are in desperate need of cash in the lower-for-longer world, and are looking to divest “non core” assets. Since the majors usually opt for spending whatever money they do have on investment opportunities that increase oil production (greenfield), rather than opportunities that just maintain it (brownfield), their mature assets in Southeast Asia are an obvious choice for this divestment.

By Tsvetana Paraskova for Oilprice.com

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