Wednesday, November 2, 2011

Samson and KKR?

Samson Investment has entered into exclusive negotiations with LBO firm KKR to acquire a majority of Samson's oil and gas assets (Bloomberg; Financial Times).  Word is that KKR is proposing a $5 billion investment for majority control of the company, but it would need selling shareholders to provide additional financing in the form of retaining a minority share for the deal to work.  Reports have suggested a valuation of $8-10 billion for these assets.

This deal is in KKR's sweet spot and the deal.  If the deal is consummated, it might might work out very well for the selling Schusterman family as well, giving them two bites at the proverbial apple.  KKR has made several acquisitions of shale assets and turned around to resell them at a higher price in a short time frame, usually to a major producer (i.e. East Resources to Shell, Hilcorp to Marathon).  By my count, KKR is sitting on some Barnett Shale assets.  Might there be some form of packaging to create a larger follow-on deal?  KKR also has a midstream joint venture with El Paso.  Hey, isn't El Paso's E&P business for sale too? Hmmm.

So far, KKR has exhibited a golden touch.  Let's see if that hot streak continues.

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