US-based private equity major Carlyle has committed to invest up to a maximum of $500 million in newly-formed Magna Energy, which aims to develop oil and gas assets in India and nearby countries.
Magna Energy is betting big on a sector which has mostly grappled with regulatory constraints with hopes of tapping India’s energy potential.
“The initial commitment to invest will be of $250 million, subject to approval from Carlyle’s board of directors, with an option to invest the remaining if required,” said Bob Maguire, managing director of Carlyle International Energy Partners, a new fund from the Carlyle stable, mandated to invest in oil and gas assets outside of North America.
Founded by oil industry veterans Mike Watts and Jann Brown, who were with Cairn India earlier, Magna Energy is a new company that is targeting acreage positions in the Indian sub-continent to create a full-cycle oil and gas company. This will be done by participating in licensing rounds and acquisitions.
“Magna’s primary focus will be development and production with a secondary focus on exploration. The timing is right to unlock the value of unconventional oil assets in India as the prospects look good,” co-founder Mike Watts said in a conference call with journalists.
Magna is a minority shareholder in Oilex that is focused on onshore unconventional opportunities in Cambay in Gujarat.
Unconventional oil is typically petroleum produced by using techniques other than the oil well methods and includes oil shales, oil sands-based synthetic crudes and derivative products, coal-based and biomass-based liquid supplies and liquids from chemical processing of gas.