Carlyle/Riverstone, Goldman launch new energy platform

Carlyle/Riverstone and Goldman Sachs Capital Partners plugged $500 million into the launch of Cobalt International Energy, a new oil and gas exploration and production company. The investors recruited a number of Unocal executives to spearhead the effort.

Less than a month after Carlyle/Riverstone held a $2.45 billion interim close on its latest fund, the group has announced a $500 million (€427 million) investment to fund the launch Cobalt International Energy, a new oil and gas exploration and production company. Carlyle/Riverstone has linked up with Goldman Sachs Capital Partners for the investment.

Private equity has been in hot pursuit of oil and gas deals.

The investors have tapped former Unocal president and chief operating officer Joseph Bryant to run Cobalt and assume the title of chairman and CEO. The group also recruited Mobil Corp. and Unocal vet Samuel Gillespie to serve as vice chairman and Unocal’s former executive vice president of exploration James Painter to serve in the same capacity at the new company.

Cobalt, based in Houston, will initially target opportunities in the Deepwater Gulf of Mexico, but will look at other global basins as well. The management has underscored technology as a part of its strategy. In describing the thesis behind the deal, Cobalt’s Bryant noted, “Oil and natural gas prices are high because of strong growth in demand. Exploration needs to keep pace with future growth…This makes Cobalt’s concentrated, technology-focused exploration all the more timely.”

Carlyle/Riverstone was launched in 2000, when Carlyle teamed up David Leuschen to invest in the energy sector. The partnership is currently raising its third fund, having closed on $2.45 billion, according to SEC documents. The firm did not disclose which fund the Cobalt investment is coming from.

Goldman, meanwhile, is currently investing out of its fifth buyout fund, the $8.5 billion GS Capital Partners V, which closed this spring.
The oil and gas exploration space has seen a flurry of activity among private equity groups. Most recently, Warburg Pincus exited its investment in Gryphon Exploration through a $297 million sale to Woodside Petroleum. Warburg also teamed up with The Blackstone Group last year to fund Kosmos Energy, which is pursuing opportunities in West Africa, and this summer Wendel Investissement gained an indirect interest in a North Sea oilfield through the purchase of Edinburgh Oil & Gas.