Warburg Pincus to fund $600 mn to Rahul Dhir's Delonex Energy

London: An investor consortium led by private equity firm Warburg Pincus on Monday agreed to provide USD 600 million in equity capital to Delonex Energy, the firm floated by former Cairn India chief executive Rahul Dhir.

Dhir, who after quitting Cairn India in August last year had put together a new Africa-focused oil and gas explorer, said Delonex Energy is looking at taking over oil properties in Central and East Africa.

"The region has similar geology as the region we operated in India," he said from Nairobi. "We will concentrate on central and east Africa where there had been several world-class oil and gas discoveries in recent years but we find the area has remained massively unexplored."

Delonex would seek new licences as well as look for opportunities to partner companies that had already taken early-stage exploration positions. "We are looking at farm-in opportunities as well as operating positions," he said.

"...An affiliate of Warburg Pincus, a global private equity firm focused on growth investing, has agreed to lead an investment of up to USD 600 million in the company," Delonex said in a statement.

Dhir said Delonex is examining rift systems in east Africa running from the Red Sea through Ethiopia, Kenya, Uganda, Tanzania to Mozambique along with the coastal margins of east Africa and the central African rift system running via Chad and South Sudan.

"Delonex Energy plans on accessing opportunities in these areas through farm-in and direct awards from host governments," he said.

He aims to leverage on the experience gained in operating Barmer basin oilfields as well as Cambay basin oil and gas fields of Cairn India.

Delonex, he said, will focus on onshore and shallow water exploration in Central and East Africa, where only 600 wells have been drilled so far.

The firm will avoid the deep water exploration that has driven some of the excitement over the region’s potential to emerge as a leading supplier of oil and liquefied natural gas.

Rahul said Delonex's technical team sits in London and it has offices in Nairobi and New Delhi. David Ginger, who was Cairn India's exploration head, has joined him and is Director of Exploration and Subsurface.

Delonex is the latest in a long line of energy sector ventures backed by Warburg Pincus. Over the past two decades, the private equity group has committed USD 6 billion of equity to companies such as Kosmos Energy, the Texan explorers who led the discovery of Ghana's offshore Jubilee field in 2007.

Other companies in Warburg Pincus's portfolio of investments include Antero Resources, a pioneer in US shale gas production, and North Sea explorers Fairfield Energy and Explora Petroleum.

Dhir said he would be launching an African E&P company with backing from Warburg Pincus.

"There is significant, under-explored resource potential in Central and East Africa, and our team has the experience, technology and capital to unlock these hydrocarbon resources and create value for our host governments," he said.

Warburg's support to energy companies across the world as well as its expertise in emerging markets help Delonex, he said.

Warburg Pincus Managing Director Somit Varma said the Delonex management team has "pioneered innovative applications of technology and brings a strong focus on disciplined execution and low-cost operations."

"Along with their knowledge of Africa and a successful track record in similar basins around the world, we believe this team is well positioned for exploration success in Central and East Africa. We look forward to supporting the company as it seeks new opportunities in this important part of the world," Varma said.

As chief executive at Cairn India, Dhir helped lead the company's spin off from parent Cairn Energy in a USD 2 billion initial public offering in 2007.

Under his leadership, Cairn India increased its market value to close to USD 13 billion, with an operated production of more than 200,000 barrels of oil equivalent per day.

He quit the company after helping mining group Vedanta Resources complete buyout of Edinburg-based Cairn Energy's interest in Cairn India.

Dhir, was also recently an Executive-In-Residence at Warburg Pincus, where he worked in close collaboration with the firm over the past several months to formulate Delonex's business plan.

PTI