The Banking and Strategy Initiative

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Advantage Dealbook: A giant PE firm in Energy

After staying away from dozens of PE deals in Retail Lifestyle and luxury , with great market growth i China, and a plethora of shale gas deals in 2010 with no KKR presence, KKR jumped int  one of the biggest deals of thee year in Oil & Gas exploration showing a penchant for larger stakes in more robust operating models and sectors that might catch on well.

The dullness in “Silicon Valley” and the drop in availability of Finance, many of the consumption deals and even big M&A deals incl the sell down of EMI, or the big telecom and stock exchange deals that are seeing low interest from PE or the Buyers in the deal  may yet be a spell broken by more value investing mores sooner than later inviting comparisons to Lubrizol or Burlington Santa Fe deals for Warren Buffet.

KKR is spending $7.5 bln on Tulsa, Oklahama based shale producer Samson, joining the shale acquisition boom fueled by buys from Chesapeake, Petronas and Mukesh Ambani in Canada and Texas, the PE deal is only one of 4-5 $5-10 bln deals by PE in a subdued yet more optimistic 2011 as smaller deals made a comeback

Samson has assets on both side of the WTI to Brent OK-Gulf pipeline and as is the ownt in the sector, sale of assets will be made to KKR but all the assets of Samson except in the Gulf will be bought over 100% to KKR control. The gulf assets are excluded as these are offshore and the risk might be over what KKR can play. The financing for the deals is led by JP Morgan with 11 banks funding the $4.5 bln required.

Ex Jefferies bankers fronted the deal for KKR with Jefferies negotiating for Samson’s heir Stacy Schustermann

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.

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This entry was posted on November 24, 2011 by in Dealbook, Mergers etc, Private Equity, US and tagged , , , , , , , .

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