The energy funds of private equity firm The Carlyle Group have underperformed the Pitchbook private equity benchmark, and its NGP funds all posted negative returns as of 4Q2020. Carlyle’s extensive exposure to oil and gas assets resulted in losses in 1Q20. For example, Chesapeake Energy filed for bankruptcy shortly after Carlyle dumped its stake after losing most of its value.
Carlyle is seeking new capital commitments for its latest flagship fund, while it continues to pursue fossil fuel investments. As investors evaluate committing to the new fund, they have the opportunity to pose questions to Carlyle about how it accounts for the risks and impacts of its fossil fuel investments.
Despite disappointing performance and expectations that oil demand won’t fully recover from 2020, Carlyle and its subsidiary NGP continue to pursue energy deals that may prove risky including in drilling royalties and more oil exploration in the troubled Permian Basin.
For nearly a decade, private equity energy fund returns have lagged broader private equity returns by significant margins. Carlyle is currently seeking new capital commitments for its flagship fund.
Carlyle is facing calls from environmental groups to account for its climate impacts and move to eliminate pollution in its energy portfolio. Carlyle has not responded to our outreach to discuss its fossil fuel investments.
Recent investments by the Carlyle Group and its portfolio companies in fossil fuels and fossil fuel infrastructure include:
- Panda Liberty Power Project (gas-fired power plants) – Feb 2021
- Varo Energy (refineries) – Feb 2021
- Arrow Exploration LLA-23 Block (oil exploration) – Dec 2020
- Occidental Columbia oil exploration assets – Oct 2020
- AVAD Energy Partners II (oil and gas exploration) – Aug 2020
- Eagle Mountain Energy Partners (oil and gas exploration) – Jan 2020
- Springbok Energy Partners mineral and royalty interests – Jan 2020