Thursday, April 28, 2011

KKR Buys More Barnett Property

Private equity investor Kohlberg Kravis Roberts & Co. (KKR) yesterday announced that it had agreed to purchase parcels of property productive in the Barnett Shale from Carrizo Oil & Gas.  KKR's subsidiary KKR Natural Resources (KNR) will pay $104 million for 122.4 Bcf net proven reserves and current net production of 8.3 Mcf/day from 58.5 net wells in and around Parker Co., TX.  The sale represents only a portion of Carrizo's Barnett holdings.

KKR has been focused on the "gas space" for a few years, most notably successfully investing in and subsequently flipping Marcellus Shale producer East Resources to Shell.  Natural gas has been getting the stink eye from investors and the media for the past couple of years, but the Smart Money thinks it's a worthy investment.

Keep an eye on KNR.  Parent KKR is neither a long-term buy-and-hold investor nor a collector of dividends.  They have an exit strategy in mind and a timeline for that exit.  My question is whether this will simply be a property play or if they will pick up a producer along the way.

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