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KKR Buys Barnett, Arkoma Properties from WPX

Kohlberg Kravis Roberts & Co. LP (KKR) and affiliates have agreed to pay $306 million to acquire Barnett Shale and Arkoma Basin properties from WPX Energy.

The Barnett properties include about 27,000 net acres, interests in 320 wells and 91 miles of pipeline. The Arkoma properties include about 66,000 net acres, interests in 525 wells and 115 miles of pipeline, WPX said. The Barnett Shale properties have current net production of about 67 MMcf/d, KKR said.

The transaction, which is expected to close by the end of June, is being made through KKR Natural Resources (KNR), KKR's partnership with Premier Natural Resources to pursue investments in North American oil and gas properties. It is KNR's third acquisition in the Barnett Shale. Premier currently operates a portfolio of assets in the Barnett Shale, the Texas Gulf Coast, the Permian Basin, Louisiana and Mississippi.

"We see attractive opportunities to invest behind the development of domestic energy resources and remain excited about the opportunity to grow our natural resources platform by continuing to acquire noncore oil and gas properties from high-quality operators and allowing them to reinvest the proceeds in their attractive growth opportunities," said Jonathan Smidt, head of KNR.

The properties in the latest transaction represent less than 5% of the WPX's year-end 2011 proved domestic reserves. "We're receiving good value for assets that are not core to our strategy of growing our primary operations in the Bakken Shale, Piceance Basin and Marcellus Shale," said WPX CEO Ralph Hill. "This strengthens our balance sheet, reflects our strong commitment to running our business in a disciplined manner and provides funds we could use to further expand the oil and natural gas liquids components of our business."

In the Marcellus Shale, WPX is among the most active companies in Westmoreland County, PA (see Shale Daily, March 20).

KNR has acquired more than $900 million of assets since its inception, including more than $600 million of assets to date this year, and now operates more than 150 MMcfe/d net. With $1 billion of capital available for investment, KNR has the capacity to purchase more than $2 billion of additional properties and said it plans to acquire high-quality, producing assets both within and outside its core operating areas over the next few years.

Late last year a group led by KKR agreed to pay $7.2 billion for Samson Investment Co. of Tulsa, one of the largest privately held exploration and production companies in the United States (see Shale Daily, Nov. 28, 2011).

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