Carlyle's Assala Energy to Takeover Shell Gabon

Bloomberg reported:

Royal Dutch Shell Plc has agreed to sell its onshore oil assets in Gabon to a unit of Carlyle Group LP for $587 million.  Carlyle will buy all of Shell’s onshore oil and gas operations and related infrastructure in Gabon.

Carlyle’s unit Assala Energy Holdings Ltd. will also take on $285 million of debt from Shell’s Gabon unit and will make an additional payment of as much as $150 million depending on production performance and commodity prices
 
Assala Energy will be funded by Carlyle International Energy Partners, a $2.5 billion fund, and Carlyle Sub-Saharan Africa Fund, which has $698 million under management.

Assala Energy's website states:

"Our purpose is to provide positive returns on investment to our shareholders (two Carlyle Group funds) and our host countries"

Africa is renowned for corruption and bribery.  Carlyle has a history of hiring government insiders and using political power.  A number of Carlyle affiliates crossed the legal line, ARINC--procurement violations, Synagro--bribery and Carlyle itself-NY pension fund pay to play settlement.

The Securities and Exchange Commission investigated Carlyle's Cobalt Energy for its oil dealings in Angola.   Carlyle's ordeal ended last month.  FT reported:

US prosecutors have dropped their corruption investigation into Cobalt International Energy five years after the Houston-based oil explorer’s local partner in an Angolan deal was revealed to have been secretly owned by top officials from the African nation.

Houston Business Journal stated:

The U.S. Department of Justice recently closed an investigation into Houston-based Cobalt International Energy Inc. (NYSE: CIE), the company and its law firm, Houston-based Baker Botts LLP, announced Feb. 9.

The DOJ was conducting a Foreign Corrupt Practices Act investigation into Cobalt’s operations in Angola. 

Carlyle took Cobalt public so concerned shareholders also had the opportunity to take action.

Back to Gabon, a fellow OPEC country with Angola.  Gabon is north of Angola and both sit on the West Coast of Africa.

Gabon had a hotly contested Presidential election last year/  The Guardian reported:

The Bongo family will extend its 50-year rule over Gabon after the country’s constitutional court ruled Ali Bongo was the rightful winner of last month’s contested election.

The court said it had retallied all the votes from the poll, though it could not do a full recount because all the votes were burned immediately after they were counted at the polling stations. 

Each night since the election, the internet has been shut down, something the communications minister put down to mere “disruptions” in the network. Twitter, Facebook and WhatsApp have also been blocked.

This is the stable political environment that enables Carlyle to make grand returns on Gabon oil. The election aftermath includes:

With another seven years of Bongo family rule secured, progress on reducing Gabon’s income inequality is unlikely.

Time may show how Carlyle's profiteering aids government officials.  Then again, it may not.

Update 1-7-19:  A coup attempt in Gabon failed.  Ironically Gabon's President is in Morocco recovering from a stroke.  Carlyle's Gabon investment appears safe for now even as it pursues payment for Carlyle's massive losses in a Moroccan oil refinery.

Update 10-12-22:  Carlyle is ready to cash in on Assala.  Sell high.

Update 8-15-23:  Sold to Maurel and Prom!  Reuters reported:

Private equity fund Carlyle Group has agreed to sell its Gabon-focused oil and gas company Assala Energy to French producer Maurel & Prom for $730 million.

Another Carlyle cash in (with closing expected in Q1 2024.

Update 2-17-24:  A military coup changed the deal.  The new buyer is Gabon's state run oil company.