As had been widely expected (see Daily GPI, Nov. 23), an investor group led by Kohlberg Kravis Roberts & Co. LP (KKR) has agreed to pay $7.2 billion for Samson Investment Co. of Tulsa, one of the largest privately held exploration and production (E&P) companies in the United States. The group is picking up all of Samson’s assets, including shale play holdings, except for its onshore Gulf Coast and deepwater Gulf of Mexico (GOM) assets.

KKR has been joined in the investor group by Natural Gas Partners (NGP), Crestview Partners and Japan’s Itochu Corp.

Samson owns interests in more than 10,000 wells of which it operates more than 4,000 wells in the United States, with key positions in oil- and liquids-rich plays such as the Bakken, Powder River, Green River, Granite Wash, Cana Woodford and Cotton Valley as well as in the Haynesville and Bossier gas shales.

According to its website, Samson’s asset base is 85% natural gas and the company “continues to profit and expand. In the last three years, we have invested more than $4 billion in new drilling and oil and gas property acquisitions. Annually, we plan to spend in excess of $1 billion on capital expenditures. We continue to seek new drilling and acquisition opportunities.”

Samson is headquartered in Tulsa and maintains offices in Houston, Denver and Midland, TX. The company was founded in 1971 by Charles Schusterman. At the beginning of his career Schusterman had partnered with brother Dan Schusterman to form S&S Pipe and Supply Co. In 1961 he added an operating division called Schusterman Oil Co. and began a program of evaluating, purchasing and reworking marginal producing properties.

“Oil consumption in the United States hit an all time high in the early 1970s. Cheap oil boosted the nation’s economy tremendously and the result rippled inward to Oklahoma,” the Samson history recounts. “On Nov. 23, 1971, [Schusterman] created Samson Resources Co. to assume operations of newly acquired Amerada Hess properties located in California.”

The Schustermans will retain the Gulf Coast and GOM assets not being acquired by the investor group. Upon deal’s closing, Samson COO David Adams will be named CEO and the company will be renamed Samson Resources.

Samson CEO Stacy Schusterman suggested that not much will change at the company following the acquisition. “We had two guiding principles: we wanted a partner who would value both our assets and our people. This group demonstrated its commitment to both. They recognize that maintaining our culture will best enable Samson to retain and build the strong team we have and thereby continue to profitably grow our asset base.”

Samson has nearly 1,200 employees. The investor group has committed to keep the company’s headquarters in Tulsa. “The Schusterman family has built a remarkable company with an extraordinary culture,” said KKR Co-CEO Henry Kravis, a Tulsa native. “For Samson, Tulsa is home. It has always been a Tulsa company, and it will remain a Tulsa company.”

The deal is subject to regulatory approval and customary conditions and is expected to be completed by the end of the year.

KKR has $58.7 billion in assets under management through a variety of investment funds in multiple asset classes. The firm has been involved in numerous energy patch deals, including the star-crossed 2007 buyout of TXU Corp., which post-deal became Energy Future Holdings and has been smothering under billions in debt (see Daily GPI, Sept. 10, 2007).

In 2009 KKR invested $350 million in privately held Marcellus player East Resources Inc. (see Daily GPI, June 10, 2009). The related assets were later sold to Royal Dutch Shell plc (see Daily GPI, June 1, 2010).

One year later KKR said it would 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 of South Texas leased by privately held Hilcorp Energy Co. (see Daily GPI, June 15, 2010). Last June Marathon Oil Corp. agreed to pay $3.5 billion for the KKR-Hilcorp acreage in the Eagle Ford (see Daily GPI, June 2). It was one of the priciest transactions to date in any U.S. shale play.

Also in 2010, KKR and El Paso Corp. formed a joint venture to invest in midstream assets in the Eagle Ford and Marcellus (see Daily GPI, Dec. 8, 2010).

In June Carrizo Oil & Gas Inc. agreed to sell substantially all of its Barnett Shale Tier 1 properties to KKR Natural Resources, a partnership of an affiliate of KKR and Premier Natural Resources, for $104 million. The approximately 13,000 acres included 75 gross (58.5 net) wells currently producing at an approximate gross rate of 15.7 MMcfe/d (8.3 MMcfe/d net). Estimated proved reserves amounted to 122.4 Bcfe, 55% of which are proved undeveloped, as determined by Carrizo’s third-party engineers at year-end 2010.

And in January KKR said it had acquired Barnett Shale properties from ConocoPhillips.

NGP is a $7.2 billion family of investment funds organized to make direct equity investments in private energy enterprises. Crestview is a private equity firm with about $4 billion under management. Itochu is engaged in domestic trading, import/export and overseas trading of various products including energy and metals.

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