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Weekly Update: KKR furthers natural gas bet with acquisition of Samson Investment

Kohlberg Kravis & Roberts Co. confirmed rumors that have been circulating since the start of November this week, when they announced that in partnership with three other companies they are acquiring one of the largest private oil and gas companies in the United States, Samson Investment, for $7.2 billion.

The consortium will include fellow private equity companies, Crestview Partners and Natural Gas Partners and Japanese trading house Itochu Corp. It has been reported that Apache was beaten into second place in the bidding for the company after a suppressed share price meant it was unwilling to use equity to fund the large purchase price.

Samson Investment is the owner of a varied portfolio in the United States including 4,000 operated wells and interests in 10,000 wells in total. The KKR consortium will not be acquiring the Gulf Coast assets of Samson as part of the deal, but they will still gain assets in both developed and emerging shale plays including the Bakken, Granite Wash, Powder River, Cana Woodford, Cotton Valley and Haynesville-Bossier. The assets are weighted 80% towards gas and will continue KKR’s strategy of investing in shale gas plays during the US gas price slump, as it has done for the past 2 years.

As part of the deal, Itochu will obtain off-take agreements from the acquired assets totaling 1 million tons per annum to be exported via LNG. Although the peak production rate isn’t due until 2015, the West Coast of the United States currently has no export capacity and the only currently planned export capacity on the west coast of North America is in British Columbia in Canada, very far from Samson’s current operations.

The largest gas producer in the North Sea, Centrica, added to its portfolio of assets in the region via a $1.5 billion deal with Statoil, marking the largest acquisition for the company since its acquisition of Venture Production in 2009. The move will increase Centrica’s production by 25% and will include interests in four producing assets, including the Kvitebjorn field and 4 discoveries all in the Norwegian sector of the North Sea. The assets are weighted 70% towards gas and the acquisition metrics equate to $13.33 per proven and probable boe and $46,000 per flowing boe of production.

The acquisition comes as part of a larger co-operation agreement that will result in Statoil supplying 50 billion cubic metres of gas per year to Centrica for a ten year period. The supply is set to start upon the ending of Centrica and Statoil’s current supply agreement in 2015 but will be 10 times larger in size and will be sufficient to meet 5% of the UK’s gas demand.

Seaview Energy Corp., a company with a market cap of $30 million, made a transformational deal that included the acquisition of three private companies for a combined total of $113 million (net of surplus working capital). The companies include Charger Energy Corp., Silverback Energy and Sirius Energy and will give Seaview Energy an additional 2.8 million boe of 1P reserves and 1,600 boe/d of production weighted 50% between oil and gas.

In the oil services sector, UK-based The Weir Group acquired Seaboard Holdings, a specialist in unconventional assets in North America. The $675 million acquisition cost equated to an EBITDA multiple of 7.2 based on predicted income for 2011.

Looking for previous deals? Check out the Weekly Updates page for archives.

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