KKR and Chesapeake Energy Corporation Form Partnership to Invest in Mineral Interests and Overriding Royalty Interests
March 06 2012 - 6:00AM
Business Wire
Kohlberg Kravis Roberts & Co L.P. (together with its
affiliates, “KKR”) and Chesapeake Energy Corporation (“Chesapeake”)
(NYSE:CHK) today announced the formation of a partnership to invest
in mineral interests and overriding royalty interests (together,
“royalties”) in key oil and gas basins in the United States.
“Chesapeake has been the world’s leading discoverer and
developer of oil and gas shale plays, which are revolutionizing
energy exploration worldwide. We hope that today’s partnership is
just the beginning; we have long admired Aubrey and the Chesapeake
team and we look forward to broadening our relationship over the
years ahead,” said Marc Lipschultz, Head of KKR’s Global Energy
& Infrastructure business.
Under the terms of the arrangement, KKR and Chesapeake will make
an initial combined $250 million commitment to the partnership.
Chesapeake will contribute 10% of the total commitment and will
receive a promoted ownership in the partnership. KKR and Chesapeake
will jointly oversee the partnership while Chesapeake will source,
acquire and manage the royalty investment opportunities.
“Driven predominantly by the recent advancements in
unconventional oil and gas technology, we continue to see
attractive opportunities to invest behind the domestic exploration
and production of oil and gas. Royalties represent an important
extension of this opportunity set and offer an attractive
risk/reward for our investors in the current environment,” said
Robert Antablin, a Director at KKR who leads the firm’s royalties
investment strategy.
Aubrey K. McClendon, Chief Executive Officer of Chesapeake,
said, “As the largest oil and gas leasehold owner and most active
driller in the U.S., we are uniquely well positioned to leverage
our operating footprint to pursue profitable and related business
opportunities. We are delighted to partner with KKR, a leading
investor and partner to the energy industry, to expand our royalty
acquisition business. During the past 10 years, we have acquired
approximately $900 million in royalties, and now we look forward to
accelerating the pace of our acquisition of royalties by combining
our unparalleled acquisition skills and unique information base
with KKR’s capital and business structuring expertise.”
KKR has been investing in the energy sector for more than 20
years, starting with its investment in Union Texas Petroleum in
1985. Acquiring royalties is just one of many ways KKR is investing
behind the oil and gas industry. The KKR Global Energy &
Infrastructure business invests across the entire energy supply
chain and multiple asset classes. Recent examples include oil and
gas investments such as the firm’s acquisition of Samson Resources,
one of the largest privately held oil and gas companies in the
U.S., formation of the KKR Natural Resources platform, a
partnership with Premier Natural Resources to acquire producing oil
and natural gas assets, and recently exited investments in East
Resources and Hilcorp Resources. A complete list of KKR’s energy
investments is available on KKR.com.
KKR is making this investment through its affiliates and KKR
Financial Holdings LLC.
ABOUT KKR
Founded in 1976 and led by Henry Kravis and George Roberts, KKR
is a leading global investment firm with $59.0 billion in assets
under management as of December 31, 2011. With offices around the
world, KKR manages assets through a variety of investment funds and
accounts covering multiple asset classes. KKR seeks to create value
by bringing operational expertise to its portfolio companies and
through active oversight and monitoring of its investments. KKR
complements its investment expertise and strengthens interactions
with investors through its client relationships and capital markets
platform. KKR is publicly traded on the New York Stock Exchange
(NYSE: KKR). For additional information, please visit KKR's website
at www.kkr.com.
ABOUT CHESAPEAKE
Chesapeake Energy Corporation (NYSE:CHK) is the second-largest
producer of natural gas, a Top 15 producer of oil and natural gas
liquids and the most active driller of new wells in the U.S.
Headquartered in Oklahoma City, the company's operations are
focused on discovering and developing unconventional natural gas
and oil fields onshore in the U.S. Chesapeake owns leading
positions in the Barnett, Haynesville, Bossier, Marcellus and
Pearsall natural gas shale plays and in the Granite Wash,
Cleveland, Tonkawa, Mississippi Lime, Bone Spring, Avalon,
Wolfcamp, Wolfberry, Eagle Ford, Niobrara and Utica unconventional
liquids plays. The company has also vertically integrated its
operations and owns substantial midstream, compression, drilling,
trucking, pressure pumping and other oilfield service assets
directly and indirectly through its subsidiaries Chesapeake
Midstream Development, L.P. and Chesapeake Oilfield Services,
L.L.C. and its affiliate Chesapeake Midstream Partners, L.P.
(NYSE:CHKM) Further information is available at www.chk.com where
Chesapeake routinely posts announcements, updates, events, investor
information, presentations and news releases.
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