Private equity giant Kohlberg Kravis Roberts & Co. LP (KKR) and Chesapeake Energy Corp. Tuesday said their new partnership will invest in key natural gas and oil basins in the United States.

The companies plan to invest $250 million in minerals interests and overriding royalty interests, with KKR providing 90%, or $225 million, of the initial funding. Chesapeake, the second largest natural gas driller in the United States, would provide $25 million as well as source, manage and acquire the projects.

No details were provided on where investments would be made.

“As the largest oil and gas leasehold owner and most active driller in the U.S., we are uniquely well positioned to leverage our operating footprint to pursue profitable and related business opportunities,” said Chesapeake CEO Aubrey K. McClendon.

“Chesapeake has been the world’s leading discoverer and developer of oil and gas shale plays, which are revolutionizing energy exploration worldwide,” said KKR’s Marc Lipschultz, who heads global energy and infrastructure. “We hope that [the] partnership is just the beginning; we have long admired Aubrey and the Chesapeake team and we look forward to broadening our relationship over the years ahead.”

Robert Antablin, who directs KKR’s royalties investment strategy, said because of the advancements in unconventional technology, “we continue to see attractive opportunities to invest behind the domestic exploration and production of oil and gas. Royalties represent an important extension of this opportunity set and offer an attractive risk/reward for our investors in the current environment.”

The private equity industry, including KKR, has expanded its interest in the U.S. energy industry, over the past few years. Last November a consortium led by KKR agreed to buy privately held independent Samson Investment Co. for close to $7.2 billion in one of the biggest leveraged buyouts since the financial meltdown (see Daily GPI, Nov. 28, 2011).

Last month El Paso Corp.’s exploration and production unit, EP Energy Corp. was sold for close to $7.15 billion to a group of private equity firms led by Apollo Global Management LLC and Riverstone Holdings LLC (see Daily GPI, Feb. 27). And affiliates of private equity firm Blackstone last month took a stake in Cheniere Energy Partners LP’s liquefied natural gas export terminal on the U.S. Gulf Coast (see Daily GPI, Feb. 28).

Tudor, Pickering, Holt & Co. analysts said the transaction wasn’t a “needle mover” for Chesapeake but it would leverage the company’s “expertise in acquiring/managing mineral and overriding royalty interests across North American basins.” It also adds to its “opportunity set within basins by acquiring minerals/royalty interests rather than acquiring acreage outright.”

Chesapeake today has one “active” royalty trust — Chesapeake Granite Wash Trust (CHKR) — but it is “completely different” from the KKR transaction, said Michael D. Kehs, vice president of Strategic Affairs and Public Relations. He told NGI that CHKR is a publicly traded trust, which was sold to the market. Chesapeake owns 50% of the trust units, and it retained 50% of the assets sold into the trust.

The KKR transaction “is simply a partnership…to pursue buying minerals,” Kehs said.

©Copyright 2012Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.