Oiling the deals

John McKeon, Circle Oil:JOHN McKEON acquired a new passport less than a year ago, but already the Circle Oil co-founder has notched up "40 or 50" border stamps on its pages, writes Arthur Beesley

The rapid accumulation of visas and air miles came good for the exploration company in recent days, when it secured a £19 million (€23.66 million) investment from a Libyan fund set up by Col Muammar Gadafy, raised another £10 million from Icelandic bank Kaupthing, and farmed out the bulk of a concession in Namibia to Dubai-based investor Petroholland.

With gas production about to get under way in Morocco and a $30 million (€21.23 million) convertible loan from Kuwaiti group KGL Petroleum in the can since the middle of last year, McKeon has been mightily busy.

If the ardent hopes of many an Irish investor expired ignominiously in the troubled exploration companies of old, McKeon confidently asserts that the new investments set Circle up to follow in the successful path of Aidan Heavey's Tullow Oil.

It's clearly a long way from the Alternative Investment Market, where Circle listed in 2004, to the blue-chip FTSE 100, where Tullow resides. However McKeon and his colleagues believe the company has clear potential to follow the start of gas production in the Rharb basin in Morocco next Monday with demonstrable success in short order from other prospects. Further drilling projects are under way in Morocco and Egypt.

Before Circle's annual meeting yesterday, the company said it had started drilling on a prospect in northern Tunisia with its local partner. "We've gone through the birth by fire; now we've become a teenager and an adult very quickly," McKeon says.

McKeon, an affable man who readily acknowledges being "really skint twice" in his varied career, is, according to his official title, business development and marketing director for Circle. As such he is Circle's "roving ambassador", engaging in upfront dialogue with officials, royalty and oil executives in the far-flung countries in which it has energy prospects and investors.

Circle has concessions in Oman, as well as the interests in Namibia, Morocco, Tunisia and Egypt.

A former stockbroker in the London market who ultimately became something of a freelance financier, McKeon teamed up in 2003 with former Ivernia West chief David Hough to buy a Namibian concession from businessman Jack Keyes.

He and Hough were old friends, having done business together in the 1980s. They sealed their agreement in the snug of South's pub in Limerick - a part of the bar known locally as the Circle. Hence the company name.

Hough is chief executive. Tom Anderson of cinema operators Ward Anderson is non-executive chairman. Prof Chris Green, former principal geophysicist with Shell and adviser to the oil major, is a non-executive director.

"I'm not a manager; I don't manage things," McKeon says.

More dealmaker than oil whizz, he is endowed with a vigorous "trading mentality" and considerable charm. This he deploys with enthusiastic aplomb in his many dealings with businessmen in the Middle East, where the commercial culture demands protracted contact over long periods before progress can be made.

So what's the secret of doing business in an environment far removed from the Anglo-American culture of the western world?

"My father was a cattle dealer," he says promptly, pointing out that the Irish are well liked in the Middle East given the absence of colonial baggage.

"America has been in existence for 300 years as we know it. The indigenous Americans were there for a long time before it, trading and buying and selling things. The Arabs have been around for thousands of years, buying and selling and trading.

"As a friend of mine made the comment: in the 1980s the Arabs had a lot of oil wealth which came from nowhere and they were the hunted. Now in the noughties they have some of the best advisers in the world and they are now the hunters, backed up by their sovereign funds and their substantial oil wealth with cash . . . They've been very clever and they're cash rich. And now they're hunting and we're very happy to be hunting with them."

McKeon held a stake of almost 10 per cent in Circle and was its second-largest shareholder until the investment by Libya Oil Holdings and Kaupthing closed a couple of days ago. Circle raised a total of £33 million in a share placing through which the Libyans acquired 29.66 per cent of Circle and Kaupthing acquired 15.61 per cent. Circle's market capitalisation was £47 million before the deal was made public so the investment significantly adds to its firepower.

McKeon's shareholding drops by roughly half as a result, but he is unperturbed. "I don't mind diluting and getting £33 million in the bank for the company."

The Libyan deal was in gestation for a year. Time was, of course, when Libya was a pariah state with well-publicised connections to the Provisional IRA. Does he have any discomfort with that?

"No, the Libyans have come in from the cold, as we know. As I said to somebody recently, when [US secretary of state] Condoleezza Rice arrived, we had already been. They have made peace with everyone," he says.

"Col Gadafy is a very astute player on the international market. He's very capable, as you can see with the deal he has just done with [Italian prime minister Silvio] Berlusconi.

"Libya is open for business and Libya is a major oil player going forward. There's a lot of undiscovered resources there and we look forward to working with them, maybe in Libya in the future with their assistance. They have a very good technical team. The Libyan oil company is very well run. Their state investment funds are active in north Africa and the Middle East. They have invested all over Africa and are well respected."

The transaction is in keeping with Circle's strategy of engaging with local representatives "generally of very high standing", as McKeon puts it. "Anywhere we work, there is infrastructure. There are the right people on the ground. They're generally very well-off and they're politically well connected, which is what's important."

All of that is a far cry from McKeon's dog days in London, where he still lives. Having incurred big losses in the 1987 stock-market crash, he had little choice but to live in the back of a warehouse in north London at one stage. To get by, he worked as a postman and as a chef. In a later period, he sold photocopiers for six months. That experience was soul-destroying, he recalls.

McKeon's luck turned in the mid-1990s, when colleagues from his pre-crash time in stockbroking asked him to work with them. It was a fortuitous move. He went from being penniless one December to buying an apartment in South Kensington the following April. Now he lives in Chelsea.

Along the way, he was a principal in the European buyout of some $600 million in infrastructure assets formerly owned by Metromedia Fibre Network, and was involved in the subsequent reverse takeover of those assets by a listed Singaporean group.

Personal investments include a stake in Wheb Ventures, a "green" private equity fund backed by Ben Goldsmith, son of the late billionaire Jimmy Goldsmith. He is also on the committee of the Ireland Fund of Great Britain.

"I've been really skint twice but I've never gone bust," he says. "Now I think I'm comfortably safe."

ON THE RECORD

Name:John McKeon.

From:Dublin.

Age:49.

Job:Business development and marketing director, Circle Oil.

Why he is in the news:Circle is starting gas production in Morocco. In the past week, it has concluded deals with a Libyan fund set up by Col Muammar Gadafy and Icelandic bank Kaupthing.

Something you might expect:As a businessman of considerable means, he has a fondness for fast cars.

Something you might not expect:Down on his luck in London in the late 1980s, he slept for a time in the back of a warehouse.