Riverstone Said to Join Galuccio for Global Energy VentureBy
Energy fund said in discussions to secure additional financing
Opportunities seen in Mexico’s reformed oil and gas sector
Riverstone Holdings Ltd., the biggest global energy-focused private equity firm, is joining forces with oil executive Miguel Galuccio to launch a global venture, according to a person with knowledge of the partnership.
Representatives of Galuccio and Riverstone are in talks with large global investors and sovereign-wealth funds that may want to explore opportunities in the energy sector, according to the person, who asked not to be named as the talks are private. The plan is to pursue energy investments, particularly in attractive markets such as Mexico.
Riverstone, led by founders Pierre Lapeyre and David Leuschen, has raised more than $34 billion since its start in 2000 for buyout and growth investments in energy and power companies across nine private funds and three listed vehicles. Galuccio, with more than 25 years of energy experience across five continents, was nominated last month to become a member of the board of Schlumberger Ltd., the world’s largest oil and gas services company, for which he previously worked.
Riverstone is already an active player in Mexico’s emerging energy market. According to its last earnings call, the company has deployed 17 percent of its capital in the Gulf of Mexico through companies such as Sierra Oil & Gas S de RL de CV and Fieldwood Energy LLC, the largest operator in the shallow Gulf of Mexico shelf, producing more than 85,000 barrels of oil equivalent per day. Riverstone has also raised more than $750 million from local pension funds.
The bet comes as the Mexican government is pushing ahead with a reform of the energy sector that is attracting interest from around the world. After 75 years of monopoly under Petroleos Mexicanos, known as Pemex, the market has abundant oil and gas reserves to be developed through technology and processes used in other parts of the world, say industry analysts.
The 48-year-old Galuccio was until April 2016 chief executive officer at Argentina’s YPF SA. There he was known there for his work in converting Argentina into the world’s largest shale producer outside the U.S. by initiating the exploitation of Vaca Muerta deposit, using partnerships forged with Chevron Corp., Dow Chemical Corp. and Petroliam Nasional Bhd. He was also a key member of talks with Repsol SA to compensate the Spanish company after nationalization of its holdings by Argentina in 2012.
Galuccio previously spent 13 years at Schlumberger, creating a successful production model -- tested first in Latin America -- that tied customer pay to how much the company boosted output. At Schlumberger in Mexico, he spearheaded the introduction of new incentivized services contracts, known as CIEP, a first step toward the opening of Mexico’s vast oil and gas sector to private capital.
Mexico’s first competitive deep-water oil auction in December surpassed expectations as eight of 10 blocks were awarded to oil companies including Total SA, CNOOC Ltd., Chevron Corp. and Exxon Mobil Corp. The government is hoping this signals the beginning of a new era for Latin America’s second-largest economy, as it counts on an influx of foreign investment to help reverse 12 years of oil-production declines.