Tuesday, April 3, 2012

KKR Continues Buying Spree

Private equity investor KKR continued its natural gas property buying spree yesterday, agreeing to a deal to purchase acreage in the Barnett Shale and Arkoma Basin from WPX Energy, which was spun out of the Williams Companies.  The acquisition will be made through KKR's subsidiary KKR Natural Resources (KNR), which will pay $306 million for 27,000 net acres in the Barnett ant 66,000 net acres in the Arkoma.  The Barnett acreage is currently producing 67 MMcf/day. KNR will partner with Premier Natural Resources in the acquisition, as it has done in most past deals.

While natural gas fans hate low gas prices, deep pocketed buyers like KKR see it as a huge opportunity to buy low/sell high.  KNR has spent about $900 million on gas properties since the company was founded two years ago, and I don't expect the spending spree to end any time soon.  Much of the targeted acreage will look good in a few years but now is dead weight on a publicly traded producer's balance sheet.

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