Carlyle Group Buys Sterling Resources’ Romanian Gas Fields

Carlyle International Energy Partners (CIEP) announced plans to purchase Sterling Resources’ Romanian gas fields. The news comes just a few days after the private equity fund announced it had raised $2.5 billion to purchase global energy assets.

With the slump in oil prices hammering Sterling’s revenue streams, the deal allowed Carlyle to snap up at least four license blocks in the Black Sea. CEIP will pay Sterling $42.5 million at the deal’s completion. The sale features license blocks 13 Pelican, 15 Midia, 25 Luceafarul and 27 Muridava, structured as a corporate sale of the Sterling’s wholly-owned subsidiary Midia Resources SRL.

The deal will likely close at the end of Q2 2015, assuming it meets typical transactions conditions and receives Romanian regulatory approval.

The Sterling deal is the fourth that more than CIEP investors have backed. The fund’s managing director Marcel van Poecke expects to invest into up to 12 projects within the next two to three years.

“A large part of the investments will be done this year and next year because of the market conditions. Most will be invested in upstream in Europe, Africa, Southeast Asia, and Latin America,” Van Poecke told Reuters.

Meanwhile, Sterling is expected to focus on its operations in the North Sea or seek a buyer as it faces increased debt.

‘Sterling has had a presence in the Romanian Black Sea since 1997. As operator, we discovered the Ana gas field in 2007 and built up further contingent and prospective resources through further drilling, seismic acquisition and interpretation, and gaining new licences,” said Jake Ulrich, Sterling’s Chief Executive Officer.

“While we believe firmly in the significant future potential of these assets, we face material ongoing well commitments on our licences and potentially very material development costs which are inappropriate for a company of our size. We believe that the full value can only be realized by a company with much greater financial strength and with a longer term investment horizon,” he continued. “We have therefore decided to sell in order to focus our financial resources on the UK North Sea. Our team in Romania have served Sterling well and we wish them every success for the future under CIEP’s ownership. The sale will leave Sterling as a predominantly UK business focused on the high quality Breagh field, plus contingent resources with very minor ongoing costs in the Netherlands. We expect that this refocusing and simplification of our portfolio will make the company a more attractive candidate for a merger or corporate sale, benefitting all stakeholders.”

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