Petroleum Equity, an alternative investment firm focused on upstream oil and gas, primarily in Europe, and leading European exploration and production (“E&P”) business Rohöl-Aufsuchungs Aktiengesellschaft (“RAG”) announce their acquisition of German E&P business Kimmeridge GmbH from the US private equity firm Kimmeridge Energy. The transaction will be executed by RDG GmbH & Co. KG (“RDG”), the onshore investment platform established by Petroleum Equity and RAG in 2015 to pursue investment opportunities in the onshore European oil & gas market, with an initial focus on Germany.
The acquisition broadens RDG's existing portfolio in Germany, providing it with four additional licences in Germany's main oil province, the Lower Saxony Basin (2,406 sq. km). The licences have significant redevelopment potential as they include conventional oil fields that previously produced, but were decommissioned more than 25 years ago due to the low oil price and technological limitations at the time.
Over the past four years Kimmeridge GmbH has conducted extensive pre-development work and acquired and evaluated a significant amount of historical data on the fields, which has been used to identify high grade prospects and prepare them for development. The licences complement RDG's technical and operational skillset, with RDG planning to use modern E&P techniques and technologies to target low risk, undrained areas that have been identified.
The transaction is structured to allow Kimmeridge Energy to retain a portion of the upside in the fields as RDG continues to develop them and extract their full value.
Bernhard Schmidt, Chairman and Founding Partner at Petroleum Equity, commented: “Kimmeridge has done an excellent job screening and acquiring prime redevelopment assets and has identified significant potential, which we now plan to bring to production. Kimmeridge GmbH is a perfect fit for our onshore European investment strategy. We are excited about its potential to help generate strong returns for our investors as we develop RDG into a leading player of significant scale in the European upstream onshore oil and gas market.”
Neil McMahon, Managing Director of Kimmeridge Energy, commented: “This divestment to a known re-development specialist creates the opportunity for these old fields to produce again given their low recovery factor. We received interest from a number of parties but felt that RDG was the best-placed operator to realise the value in Kimmeridge’s German licences. We look forward to watching their progress.”
Petroleum Equity was established in 2012 to address the significant lack of alternative capital providers focused on upstream oil & gas investment opportunities outside North America. Its senior industry team has deep and specialist expertise in oil & gas investments, with an average of 27 years’ experience in the sector. The firm’s Chairman, Bernhard Schmidt, also adds significant oil & gas experience and deep networks, especially in Germany through his previous role as Head of E&P at Wintershall, the largest German oil & gas company.
Petroleum Equity is also currently invested in Alpha Petroleum, a UK North Sea Operator with interests in four producing gas fields and the major development asset Cheviot, one of the largest undeveloped oil fields containing P50 resources of 75 mmboe on the UK Continental Shelf. The Cheviot Oil Field achieved a key milestone in September 2015 when a Field Development Plan was submitted to the Oil and Gas Authority in the UK.