Carlyle, a prominent private equity fund, is set to establish a new Mediterranean-focused oil and gas company under the leadership of former BP CEO, Tony Hayward. This initiative comes after Carlyle’s agreement to acquire Energean’s assets in Egypt, Italy, and Croatia for a staggering sum of up to $945 million. The move is strategically aimed at tapping into the burgeoning eastern Mediterranean gas market, driven by escalating gas demand in Egypt and Europe’s quest for alternatives to Russian gas.

The newly formed company, spearheaded by Carlyle International Energy Partners (CIEP), is poised to kick off operations by producing an estimated 47,000 barrels of oil per day across the three countries. However, the company’s ambitions extend beyond its initial production capacity as it plans to bolster output through asset upgrades and further acquisitions within the Mediterranean region. Bob Maguire, co-head of CIEP, highlighted the vast potential for growth in these assets, citing the increasing demand for natural gas in Egypt and Italy as key drivers for future investments.

On the other hand, Energean, known for its gas production offshore Israel, envisions expanding its footprint to encompass a broader geographical scope including Europe, the Middle East, and Africa. CEO Mathios Rigas emphasized the company’s strategic move to regions with sustained policy backing for gas and a shift away from coal. Rigas expressed satisfaction with the deal, noting the substantial premium at which assets are being divested compared to their acquisition cost.

Following the announcement, Energean’s stock surged by 2.7% by 1252 GMT, reflecting investor optimism towards the strategic realignment. Analysts at Jefferies estimated the net asset value of the resources involved in the transaction, underscoring the significance of the deal for both Carlyle and Energean in navigating the evolving energy landscape.