Petroleum Equity and RAG create €300m energy vehicle

Upstream oil and gas specialist Petroleum Equity has teamed up with European exploration and production company Rohöl-Aufsuchungs Aktiengesellschaft (RAG) to create RAG Deutschland (RDG).

RDG will aim to invest €300 ($337.4) million of equity over the next few years in upstream assets. It will seek to capitalise on the prevailing low oil price to pick up attractively valued assets in the onshore European oil and gas market, with a specific focus on Germany, Petroleum Equity said.

As part of the new partnership agreement, RAG is transferring all of its existing German licences and concessions, as well as its technical and operational team into the new entity.

The group said the focus would initially be on mature fields and redevelopments, echoing a previously successful strategy in Austria. Once fully established in Germany, RDG said its intention was to source deals in other European countries.

Petroleum Equity was founded in 2012 to invest in upstream oil and gas opportunities in the Europe, Middle East and Asia regions. Its chairman, Bernhard Schmidt, was previously head of E&P at Wintershall, the largest oil and gas company in Germany.

He commented: “Today’s announcement is a significant step forward in Petroleum Equity’s strategy of investing in the large pool of attractive opportunities that currently lie in the European onshore oil & gas market.”

Markus Mitteregger, CEO of RAG, said: “We have known the Petroleum Equity team for years and they have proven expertise in executing deals in the very specialist European upstream oil and gas market. We look forward to joining their investment capabilities with our strong existing position on the ground.”

Petroleum Equity’s existing investments include in Alpha Petroleum, a UK North Sea operator with interests in four producing gas fields and two development assets.

The new partnership follows the announcement in June that CVC Capital Partners and The Carlyle Group had teamed up to form a $5 billion vehicle, Neptune Oil & Gas, targeting energy assets in the North Sea, North Africa and South East Asia, as reported by Private Equity International. 

Energy and oil and gas has been a dominant focus for sector-specific private equity buyout firms over the past few years. Data from PEI Research & Analytics reveals that between the first quarter of 2009 and the end of the third quarter 2015, energy and oil and gas accounted for $75.56 billion of capital raised, out of a total of $181.4 billion raised in global sector–specific funds over the period.

This is almost twice as much as the next biggest sector, TMT, which accounted for almost $38 billion of funds raised.