Kerogen makes Asia oil and gas play, eyes Fund II

The deal is structured as a new share subscription and it will give Kerogen an up to 29% stake in Twinza. The company is controlled by the Clough family, founders of Clough Engineering, which provides engineering, construction and support services for resource projects in Australia and Papua New Guinea.

This is likely to be the first of several investments by Kerogen in Twinza projects as the assets move towards production. Given the amount of capital required for oil and gas developments, other parties - including larger energy players - are also expected to come on board.

Twinza was founded in 2004 by Bill Clough, who previously worked for Clough Engineering and has been involved in creation of several listed mining companies such as Mirabela Nickel and Serabi Mining. The management team is headed by Huw Evans, formerly vice president for exploration and new ventures with Premier Oil Asia.

The Twinza portfolio currently comprises a 100% operating interest in the Cooper Eromanga Basin in Queensland, an oil and gas shale play; a 90% interest in a shallow water gas and condensate appraisal project in Papua New Guinea; and a 50% interest in two onshore exploration blocks in an extension of a gas-producing basin in north-central Thailand.

The Papua New Guinea project is the most developed of the three. There has been considerable interest in the country's gas reserves with an Exxon Mobil-led $19 billion liquefied natural gas project in the Gulf of Papua that is on course to begin sales in 2014 and generate attractive returns.

"Twinza represents an ideal platform for the execution of the fund's Southeast Asia strategy, given management's operational and business development track record as well as established regional relationships," said Ivor Orchard, executive chairman of Kerogen, in a statement.

The private equity firm was set up by executives from J.P. Morgan's Asia energy and natural resources team who subsequently moved to Indonesia's Ancora Capital. It reached a final close in excess of $1 billion for its debut fund in July 2012.

Kerogen provides growth and development capital to junior upstream oil and gas companies that focus on global emerging oil and gas basins and unconventional assets. It primarily bets on Asian demand, particularly in geographies of strategic importance to China. According to the International Energy Agency, China is expected to account for over 50% of the net increase in world oil demand over the next 25 years.

Previous investments include: AJ Lucas Group, a drilling services company in Australia that has exposure to European shale gas; NewAge, which focuses on emerging basins for oil and gas discoveries within sub-Saharan Africa and Kurdistan; and Buried Hill Energy, an upstream oil and gas company with its core asset in Turkmenistan.

Kerogen was targeting $1.5 billion for Fund I and still has a strong pipeline of deals, with 50-60 companies tracked on a weekly basis. Fund II is likely to be of similar size to Fund I, according to a source familiar with the situation.

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• Topics
• Industrials
• Southeast Asia
• Australasia
• Expansion
• Kerogen Capital
• Commodities
• energy
• Asia
• Growth capital
• Thailand
• Australia
• Southeast Asia