First Reserve backs oil and gas company with $500m

The investment gives the US-based firm a 99% stake in KrisEnergy, which intends to acquire a portfolio of exploration, development and production assets in Southeast Asia.

Energy-focused private equity firm First Reserve Corporation has invested $500 million for a 99 percent stake in KrisEnergy, a newly-established oil and gas company.

Based in Singapore, KrisEnergy aims to build a portfolio of exploration, development and production assets across Southeast Asia. KrisEnergy’s founders and key management hold the remaining 1 percent stake in the company. 

“Southeast Asia has a huge deal flow in terms of production to exploration assets. It is a part of the world that consumes way more oil and gas than it produces, in fact, the region is a net importer of oil and gas. We believe that there is a large amount of undiscovered resources here,” Richard Lorentz, a KrisEnergy business development director, said in an interview.

The capital will be used to fund acquisitions, the exploration of prospective acreages and general and administrative works, according to Lorentz.

The investment was made out of First Reserve’s Fund XII, which closed on $9 billion this April. While the fund’s final close fell short of its $12 billion target, its close came less than a year after it was launched in May 2008.

With this fund, First Reserve will focus more on oil producing assets and less on the renewable sector, as it adjusts its strategy slightly to benefit from drops in commodity prices, Cathleen Ellsworth, a managing director and head of investor relations at the firm, told sister website www.privateequityonline.com this April.

In October 2008, Fund XII invested $350 million in Reliant Energy, a public traded Texas electricity provider. First Reserve’s previous investments in Southeast Asia include mining services company Connect Resources Services and coal mining company Southern Cross Coal Holdings, both based in Australia. 

Fund XII’s predecessor closed on $7.8 billion in 2006, more than triple the size of Fund X, which closed on $2.3 billion in 2004.