June 17, 2013 / 12:00 PM / 4 years ago

Warburg Pincus to back new African oil and gas explorer

NAIROBI, June 17 (Reuters) - Private equity company Warburg Pincus is leading an investment of up to $600 million in Delonex Energy, a newly formed oil and gas exploration and production company planning to tap into the central and east African hydrocarbon boom.

The region has become hot property for energy investors after gas discoveries in Mozambique and Tanzania, and other hydrocarbon finds in Uganda and Kenya. However, progress towards production, notably in Uganda, has taken years.

Delonex Energy, headed by former Cairn India CEO Rahul Dhir, plans to target onshore regions and shallow coastal waters rather than deep-water areas.

Its exploration region includes Ethiopia, Kenya, Uganda, Tanzania, Mozambique, South Sudan and Chad.

The company, which was formally launched on Monday, estimates that it will need $600 million for early exploration and to establish whether finds are commercially viable, drawing down cash as it is required, Dhir said from Addis Ababa.

“My guess is that this is a five-year type of time frame,” he said of the timetable for using the cash. “With the right opportunities, we can do it (with) less, we could do it faster.”

Warburg Pincus, which has more than $40 billion in assets under management, will lead the investment in Delonex and will have one other partner, Dhir said, adding that it is still working to identify and evaluate potential investors.

Dhir said that Delonex would seek “material stakes” in oil or gas blocks. He did not give specific numbers, though such stakes typically involve owning a third or more.

Dhir believes that the region is still under-explored and pointed out that about 600 wells have been drilled in the central and east African area, compared with more than 2,000 in established African producer Gabon.

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