Kerogen Capital acquires UK-based Zennor Petroleum

The energy-focused private equity firm has extended its reach into the UK North Sea by investing in an exploration and production company focused on the area.

Kerogen Capital (Kerogen) announced in a statement the first investment from its third managed fund, Kerogen Energy Fund II. The fund has made an initial commitment of $100 million in Zennor Petroleum (Zennor) to help it develop its existing assets and build an attractive portfolio.

Kerogen, together with its limited partners, may commit up to a total of $400 million to Zennor during the course of its ownership.

Proceeds from Kerogen’s investment will be used to fund the development of Zennor’s existing assets and expand the portfolio by way of new acquisitions, farm-ins and licensing rounds.

Previously named MPX E&P, Zennor is a private E&P company based in Guildford, UK, with an existing portfolio of licences which includes a 100 percent interest in the Finlaggan gas-condensate discovery in the Central North Sea. Kerogen points out that Finlaggan is an attractive low-cost conventional appraisal and development project, and underpins its investment in Zennor.

“Kerogen is attracted to the UK North Sea given recent market dynamics, combining attractive pricing for assets, substantial reductions in operating cost structures, and an increasingly favourable fiscal environment. Unlike many other asset markets, funding distress and a lack of liquidity has resulted in many immediately actionable investment opportunities. Kerogen will continue to focus on commercialisation of discovered resources by progressing assets up the value curve,” said Jason Cheng, Kerogen Capital’s co-founder and managing partner, in a statement.

Following the investment, Kerogen will become the majority shareholder alongside Zennor management.

Established in 2007, the London- and Hong Kong-based independent private equity fund manager focuses on the international oil and gas sector with approximately $1.6 billion in invested and committed capital. Its founders, Jason Cheng and Ivor Orchard, worked in J.P. Morgan’s energy and natural resources group in Asia, and the team includes operational and technical industry specialists.