Warburg in $500m oil deal

The investment comes as Warburg is gearing up to raise $12bn for its next buyout fund

Warburg Pincus, a US-based private equity firm, has agreed to back Independence Resources Management, a start-up oil and gas exploration and production company.

Warburg will invest up to $500 million into the company, according to a statement.

IRM plans to target onshore oil and gas acquisitions in known producing basins in the mid-continent and Rockies regions of the United States, with an initial focus on the Anadarko Basin.

The company will focus on plays with large amounts of hydrocarbons in place and low recovery factors, where advanced drilling and completion techniques can create “compelling risk-adjusted returns”, Warburg said.

IRM’s management team holds more than 120 years of collective industry experience with a proven track record of successfully building organisations from inception, including developing new play concepts and operating large-scale development operations, according to Warburg.

The equity for the investment is coming from Warburg Pincus Private Equity XI, an $11.2 billion 2013-vintage and Warburg Pincus Energy, which closed on $4 billion last year.

Since inception, Warburg has invested or committed more than $10 billion across more than 50 energy investments around the world involved in oil and gas exploration and production, midstream, power generation, oilfield technology and related-services, mining and alternative energy development.

The investment comes as Warburg is currently gearing up to come to market with its next fund, which will have a $12 billion target, according to a market source. Warburg declined to comment.