New Oil Rush? Private Equity Starts To Buy Into Energy Assets

New Oil Rush? Private Equity Starts To Buy Into Energy Assets
A slump in oil prices has spurred activity among private equity investors around the world hoping for their own bumper returns by scooping up assets on the cheap.

Reuters

BERLIN, Feb 24 (Reuters) - Earning $7 on the dollar is any investor's dream. Buyout group Apollo has shown with its investment in oil exploration and production company Athlon Energy that such reveries can become reality.

A slump in oil prices has spurred activity among private equity investors around the world hoping for their own bumper returns by scooping up assets on the cheap.

"Clearly what you're seeing in the energy market with the cataclysmic fall in oil prices - halved in such a short period - I think you will have haves and have nots," said Leon Black, founding partner at Apollo.

"We along with others in our industry are dusting off (opportunities)," added Black, speaking at the annual private equity SuperReturn conference in Berlin.

Global crude prices almost halved to around $60 a barrel in the past 12 months, slashing company values, forcing budget cuts and putting more than $150 billion of oil and gas exploration projects in jeopardy this year.

The time may look right for investments now, but what if oil prices continue to fall or fail to rebound for years?

Indeed, despite the Athlon deal, the value of Apollo's overall portfolio suffered in the final three months of 2014 because of a markdown in the equity value of some other energy-related companies, or their loans and bonds.


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