Carlyle- and GS-backed Cobalt eyes $1bn listing

The oil and gas exploration platform, created in 2005 by a consortium including Carlyle, Goldman and First Reserve, hopes to fund its exploration activities despite having ‘no proved reserves’.

Cobalt International Energy, a gas and oil exploration company backed by the Carlyle Group, Goldman Sachs and other firms, is expected to try to raise about $1 billion Tuesday in an initial public offering.

The company, created by funds controlled by Carlyle, Riverstone Holdings, First Reserve, KERN Partners and Goldman in 2005 with initial funding of $500 million, is selling 63 million shares it wants to price between $15 and $17 per share. Credit Suisse, Goldman Sachs and JPMorgan are lead underwriters for the IPO.

The firms will continue to control the company after the IPO, according to a filing with the US Securities and Exchange Commission.

Deep water

The maximum amount Cobalt could raise at the share price range is about $1.2 billion, but about $3.5 million will be used to pay fees and expenses associated with the filing. The company hopes to collect $955 million in proceeds from the offering after fees, which will be used to fund capital expenditures specifically for the drilling and exploration programme through 2011.

A source in Cobalt’s offices said a team is in New York working on the IPO, and the company is expected to price the offering Tuesday.

The additional money will be useful because Cobalt has not yet actually discovered oil in its target areas, which include deepwater portions of the Gulf of Mexico and offshore Angola and Gabon in West Africa. The company’s business so far is based on “available seismic and geological information that indicates the potential presence of oil.

“We have no proved reserves,” Cobalt said in the filing. “To date there has not been commercially successful production in the [area]. We may not be successful in developing commercially viable production in this [area].”

Cobalt has identified 132 prospect sites, with 47 in the Gulf and 85 offshore of Angola and Gabon.

In April, Cobalt signed a joint venture agreement with the Country of Angola to open up oil interests offshore of the African nation. Under the agreement, Sonangol, Angola’s national oil company, will hand over a 40 percent working interest in two offshore sites offshore Angola, and Cobalt will assign 25 percent of its interests in 11 Gulf deepwater leases.

Private equity firms have increasingly been accessing the public markets for fundraising and exits as the global economy has swung upwards from the downturn. The Blackstone Group’s Team Health Holdings will commence a public offering Tuesday and Kraton Performance Polymers, a TPG portfolio company, will sell shares on Wednesday, according to a Bloomberg report.

Several companies backed by Carlyle's Asian growth fund have gone public, raising a combined $780 million. However, the Asian investment arm will maintain its stakes in China Forestry and Kaisa Group, which listed on the Hong Kong Stock Exchange, as well as in New York Stock Exchange-listed Concord Medical Services.