Gabon closes pre-emption deal for Carlyle's $1.3 bil Assala oil assets

Gabon's national oil company has completed its $1.3 billion acquisition of Carlyle Group's oil assets in the country, the US private equity firm said.

The audacious deal for the 45,000 b/d Assala Energy assets marked Gabon Oil Company's successful pre-emption of Carlyle's sale of the business to France's Maurel & Prom, which sources familiar with the purchase expected to collapse due to shaky financing.

However, on June 24 two sources told S&P Global Commodity Insights that Gunvor, the Geneva-based trading house, provided financing for the deal. Gunvor did not respond to requests for comment and the potential conditions for such a loan are not known.

"Carlyle is pleased to announce the completion of the sale of Assala Energy, an upstream oil exploration and production company in Gabon, to Gabon Oil Company," it said June 21. "This follows GOC exercising its right of pre-emption."

Writing on Twitter, Mays Mouissi, Gabon's economy minister, said: "We did it! We have completed the acquisition of Assala Energy. Gabon will now operate alone, produce and market a significant part of its oil. Our country is now the second largest producer of oil extracted on its territory."

Carlyle did not provide details on the terms of the sale to GOC, which has no experience managing a major field and was believed to be short of cash.

Sources said GOC had held discussions with trading houses and oil companies in a bid to secure financing for the deal, but the outcome of those talks was unknown.

It is common for traders to provide financing in return for the opportunity to market crude, although that can lead to issues if oil prices fall. In 2014 Swiss trader Glencore lent Chad $1.4 billion in a cash-for-crude deal to help it buy Chevron's assets, but the 2014-2016 oil price crash left Chad struggling to meet its repayments. A decade on, Chad still owes Glencore hundreds of millions of dollars.

Pre-emption rights are also common in African oil and gas deals, but are rarely used.

Spokespeople for Pertamina-backed M&P and Gabon's government did not immediately respond to requests for comment.

Ambitious deal

Carlyle bought the assets from Shell in 2017 for $587 million and pumped millions of dollars into them, boosting oil output by a third. Assala controls a significant share of Gabon's key Rabi crude, which is medium-sweet and popular among refineries in Europe, Israel and Asia, according to data from S&P Global Commodities at Sea.

The projects include seven onshore production licenses -- six of them operated -- as well as a pipeline network and the Gamba export terminal, which is used by other oil companies to export crude.

M&P first agreed to buy Assala from Carlyle in August 2023 for $730 million and a $600 million debt facility, however GOC opted to pre-empt the transaction in November following a military coup in Gabon, which unseated the Bongo family after decades in power.

New president Bruce Oligui Nguema cast the pre-emption as an effort to claw back sovereignty over the oil sector.

Gabon produced 220,000 b/d of crude in May, according to the monthly Platts OPEC Survey from S&P Global Commodity Insights. Oil production accounts for a major chunk of government revenue but has stagnated in recent years due to underinvestment.

In mid-February, Carlyle and GOC signed a share purchase agreement for the assets, although well-placed sources expressed concern about GOC meeting the high transaction cost.

"They have agreed a few months to raise the financing," one source said in February. "Yes, they can borrow money, but unlikely the total amount needed."

Apart from the financial risk, the NOC also lacks experience managing a major asset, which requires significant investment and operational skill to keep production stable.

Prior to the pre-emption, GOC produced less than 1,000 b/d from the Mbouma field, according to Commodity Insights data.