Wednesday, June 1, 2011

KKR Scores Again with Marathon Purchase of Eagle Ford Acreage

Today, Marathon Oil announced that it had purchased 141,000 acres in the Eagle Ford Shale for $3.5 billion from Hilcorp Resources Holding, a joint venture of Hilcorp Energy and private equity firm KKR.  News outlets report that it  works out to be around $21,000 per acre for the land itself.  Including the production, the price per acre is around $24,800.  Quite a score for the sellers and a record transaction for the play.  Most of the acreage is in the "liquidy" section of the play, helping justify the valuation.

KKR joined Hilcorp last year in forming the joint venture, investing $400 million for a 40% interest.  That investment netted the company $1.13 billion - not bad for a year's work.  It is another big success in the shale gas industry for KKR, which scored big with its brief investment in East Resources and recently invested in some Barnett Shale acreage and a midstream venture with El Paso.

1 comment:

Raphousi said...

The difference between $21,000/acre & the $24,800/acre is the value of the 7,000 barrels of daily oil production. Pretty nice project for KKR.