Is this good news or bad news for NW Louisiana and Northeast Texas?

 

KKR agrees to buy Samson for $7.2 billion

KKR (KKR) & Co. agreed to acquire most of Samson Investment Co., a family-owned oil and natural-gas producer, for $7.2 billion in the largest corporate leveraged buyout of the year.

A KKR-led investor group will buy all of Samson’s assets with the exception of its onshore Gulf Coast and deep-water Gulf of Mexico assets, the companies said today in a statement. The Gulf assets will continue to be owned by the Schusterman family, which founded the Tulsa, Oklahoma-based company in 1971.

The deal is the biggest company takeover by a private- equity firm announced this year and a record for an oil and gas producer, according to data compiled by Bloomberg. The KKR group — including private-equity firms Natural Gas Partners and Crestview Partners and Japanese trading company Itochu Corp. (8001) — lined up $4.5 billion in committed financing from 11 lenders led by JPMorgan Chase & Co., according to a person familiar with knowledge of the matter.

KKR found a good opportunity to buy a “big” family-owned exploration and production company, Allen Brooks, a managing director at PPHB LP, an energy investment bank in Houston, said today in a telephone interview. “A $7 billion deal, even though they had to bring in partners, is commensurate with what they need and what I think their strategy is.”

10,000 Wells

Samson owns interests in more than 10,000 wells, including 4,000 that it operates in the U.S., according to the statement. Among its holdings are oil-producing properties in North Dakota’s Bakken region, where crude output has almost doubled in two years, and the Powder River in the northwest U.S. It has shale-gas fields in Haynesville in Texas and Louisiana, and Bossier in Louisiana. In some cases, it extracts oil and gas from rock formations where the company injects chemicals and sand to free tight reserves.

The decision to exclude the Gulf of Mexico properties from the purchase makes sense for a private-equity buyer, Brooks said.

“It’s a lower risk being onshore than offshore, less capital intensive,” he said.

KKR, the New York-based firm run by Henry Kravis and George Roberts, beat out oil and gas companies to enter exclusive talks with Samson. New York investment bank Jefferies Group Inc. worked with Samson to seek buyers or joint-venture partners.

Tulsa Connection

Samson was founded by petroleum engineer Charles Schusterman, who died in 2000. His daughter, Stacy Schusterman, became co-chief executive officer in 1999 and assumed full control in 2005, according to the company’s press releases.

The company’s chief operating officer, David Adams, will become CEO after completion of the deal, which the companies expect by Dec. 31. The company will be renamed Samson Resources and its headquarters will stay in Tulsa, where Kravis was born.

KKR fell 2.4 percent to $11.52 at 10:13 a.m. in New York trading as U.S. stocks declined. Its shares have lost 19 percent this year, compared with the 7 percent drop in the Standard & Poor’s 500 Index.

The private-equity firm earlier this month hired Claire Scobee Farley and David Rockecharlie, energy-industry bankers from Jefferies & Co., as managing directors focusing on its oil and gas investments. Farley and Rockecharlie founded Houston- based RPM Energy LLC, which helps manage those investments.

Deal Advisers

Financial advisers for KKR, Natural Gas Partners and Crestview were Bank of America Merrill Lynch, Barclays Capital, BMO Capital Markets, Citigroup Global Capital Markets, Credit Suisse, RBC Capital Markets, Tudor, Pickering, Holt & Co. and Wells Fargo.

Mizuho and Evercore Partners acted as financial advisers to Itochu.

Simpson Thacher & Bartlett LLP served as legal counsel to the investor group and the Dallas office of Jones Day served as legal counsel to Samson. Natural Gas Partners was also advised by Latham & Watkins LLP.

U.S. oil and gas producers have announced $57 billion in mergers, sales and joint ventures in 2011 as small companies raise cash to fund drilling operations and large, international companies seek to buy into U.S. oil and gas fields, according to Bloomberg data.

Pennsylvania Shale

The value of private-equity deals in the energy industry this year has climbed 80 percent to $26 billion compared with a year earlier, Bloomberg data show. The surge included the $3.5 billion agreement in June by KKR and Hilcorp Energy Co. to sell oil and gas leases in southern Texas to Marathon Oil Corp. (MRO) The deal almost tripled the value of KKR’s $400 million investment in a year.

KKR made a fourfold return on its first shale-gas investment, in Warrendale, Pennsylvania-based East Resources Inc., when the company was sold to Royal Dutch Shell Plc (RDSA) in May 2010. KKR has attracted more than $1 billion for its natural- resources fund, exceeding its target, a person familiar with the matter said last month.

KKR did one of its first oil- and gas-production deals in 1985, buying a 50 percent stake in Allied Corp.’s Union Texas Petroleum unit for about $250 million, according to “The New Financial Capitalists” by George Pierce Baker.

From 1992 to 2007, Samson spent at least $885 million buying oil and natural-gas assets in the U.S. and Canada, according to Bloomberg data. Since then, it sold non-U.S. assets and has spent $4 billion on drilling and acquisitions, according to its website.

 

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very good.  a lot to take in.  will need to read a couple more times... hopefully it will sink in.  jhh

 

I found the bare bones press release yesterday.  One thing I noted:  KKR has bought then sold O&G companies they acquire . (Marathon)   for profit ...so will they keep these interests and develop wells or flip the purchase?  It says RRK was most interested in the shale oil.  Is there that much going on in the HS with the oil?  I think this sale is good news for me as Samson owns the lease on my land.                                                                                                                                          (

I've heard the same thing.  They buy and then sell... flipping assets for a big payoff.  If KKR is interested in shale oil... hopefully they'll develop it around here.  The company is paying a big chunk of money for something!?!?

 

I read that thing (well the parts I could kind of grasp) from the KKR guy ...it was in depth about China and its potential for economic growth.

 

Would a Japanese company Icachun? take on china as a partner?

 

So is it a conspiracy nut (me)  that maybe it woudl be flipped to China for big profits for KKR?

 

Could it be that a sale directly to China would be blocked?  I don't think that the Schustermans would do anything that would not be kosher.  Everything I have ever read about that family (owners of Samson) has been positive.

 

Hope KKR bought it and will develop the oil reserves.

 

Is there a LOT of shale oil being brought up in Haynesville?  The news release stated it was the oil reserves KKR was interested in.

There were a mess of rumors about oil a while back.  then it got real quiet... almost too quiet. Maybe we'll have to wait until 212 to see if anything develops.

You mean like in the olden days ..find a source and put lid on it til you have the control?  Or to lay low and try to stay out of Obama's radar?

i was thinking maybe like the olden days... but now you have me thinking "fly below the radar".  if they find anything... the guvment will shut it down for 6 months for study.

Well I am going to be /feel encouraged for at least the Holiday Weekend..needed some good news around here.

 

I am sitting here with a really nice 2200 foot road to nowhere, a 5 acre pad and two deep pits and an nice metal gate to entrance to land..would really like to see a drilling rig moved in...

very good.  a rig and producing oil well would be excellent!

January 1, 2012

Well the third quarter passed, the 31st passed, and so far not one work on business news or any other source regarding the KKR deal and Samson.

The announcements, mostly reported Nov 23 and 25th stated would finalize by 31st or end of last quarter.

Does anyone know the status of this deal?

No didn't read about a price jump.  Just that Itochu was buying in for 25%  but that was in initial news releases.  Price jumped and gas price at record low for 2 years at 2.97  ..go figure.

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