Kohlberg Kravis Roberts & Co. (KKR) agreed Monday to invest up to $400 million in Hilcorp Resources Inc., a newly formed partnership created to own and develop 100,000 net acres in the Eagle Ford Shale trend of South Texas leased by privately held Hilcorp Energy Co.

Hilcorp would own 60% of the joint venture and would handle the operations, while the private equity company would own 40% of the partnership.

"With more than two decades of history, Hilcorp is a known leader when it comes to exploring for, developing and producing oil and gas, and Hilcorp's management is unparalleled in terms of its experience in the South Texas region," said KKR Managing Director John Bookout. "This partnership is an endorsement of the founding vision of Hilcorp Energy and the strength and experience of its management team."

Hilcorp, which acquired most of the Eagle Ford acreage in the past year, is in the process of beginning the development program and now is running two horizontal drilling rigs in the play. In addition to the development program, the new partnership plans to actively look for opportunities to increase its acreage position in the Eagle Ford through leasing, joint ventures and acquisitions, KKR said.

Headquartered in Houston, Hilcorp has operated in South Texas since 1998 and is said to be the largest producer of conventional oil in the region.

KKR has been investing in the energy sector for more than 20 years, beginning with a United Texas Petroleum transaction in 1985. Its recent energy sector investments include Energy Future Holdings (Texas), Texas Genco (Texas), ITC Transmission (Michigan) and, most recently, East Resources Inc. in Pennsylvania.

Last month Royal Dutch Shell plc agreed to pay $4.7 billion to acquire East Resources' principal subsidiaries, in which KKR had invested $350 million (see Daily GPI, June 1; June 10, 2009).

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