Kerogen invests $100m in Kurdistan oil developer

The investment, which is structured as a subscription to convertible preference shares issued by HKN Holding, will be used for initial development of the Swara Tika project on the Sarsang block in northern Kurdistan. HKN Energy has a 37% participating interest in the Sarsang block, with the option to buy an additional 5% from the Kurdistan Regional Government (KRG).

HKN Holding is primarily owned by Hillwood International Energy, which was set up by Ross Perot Junior, son of the former US presidential candidate. Maersk Oil has a 30% stake in HKN Energy, having first invested in 2011. Other participating interests in the Sarsang block are held by Marathon Energy and the KRG.

Kurdistan is one of the most attractive proven hydrocarbon basins globally and a number of substantial oil discoveries have been made since 2007. The region has an estimated potential of 40-45 billion barrels, according to the US Geological Survey, of which only 7 billion barrels have been discovered to date. The likes of ExxonMobil, Chevron, Total, the Korean National Oil Company and China's Sinopec are all present.

Swara Tika 1, the first well in the Sarsang block, was drilled in March 2011. A second well was spudded in November 2012 to make a further appraisal of the discovery and testing was completed in January 2013. Commercial production is scheduled to begin in mid-2014.

"HKN represents a unique opportunity for Kerogen to gain exposure to Kurdistan through HKN Energy's interest in the development of Sarsang, a world class block with an existing giant discovery and considerable upside potential," said Ivor Orchard, Kerogen's executive chairman.

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. The HKN investment is part of Fund I's Middle East and North Africa allocation.

In March, Kerogen invested A$30 million ($27 million) in Twinza Oil, which has oil and gas interests in Australia, Papua New Guinea and Thailand.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Expansion
• MENA
• Greater China
• Industrials
• Growth capital
• Kerogen Capital
• Commodities
• energy
• MENA
• China