US private equity firm Kohlberg Kravis Roberts & Co (KKR) has agreed to participate in Texas energy company Comstock Resources’ future development of its Eagle Ford shale acreage in Atascosa, Frio, Karnes, LaSalle, McMullen and Wilson Counties in South Texas.
As part of the deal, KKR will have the right to participate for one-third of Comstock’s working interest in wells drilled on Comstock’s 28,000 net acres in exchange for paying $25,000 per acre through a drilling carry for the net acreage being acquired by KKR.
Comstock said it expects to ultimately develop most of its acreage based on spacing units of approximately 80 acres. KKR has committed to providing drilling carry equivalent to $25,000 per acre for the next 100 wells drilled on Comstock’s Eagle Ford shale acreage and said it can continue to participate in additional wells drilled on the acreage for the same drilling carry.
M Jay Allison, Comstock’s chairman, president and CEO, said, “We are excited to partner with KKR, one of the premier energy investment firms, in developing our leasehold in the Eagle Ford shale. This transaction will provide the capital necessary to accelerate drilling of this exciting oil play, while still allowing us to have the capital to develop our Wolfbone properties in West Texas.”
David Rockecharlie, managing director at KKR, said, “As an experienced participant in the early development of the Eagle Ford shale, we are excited to continue in the play’s evolution by providing drilling capital for Comstock’s Eagle Ford position. We believe Comstock has developed an attractive inventory of drilling locations, and we look forward to participating as a non-operating working interest partner.”
KKR has been investing in the energy sector for more than 20 years, starting with its investment in Union Texas Petroleum in 1985. KKR’s energy & infrastructure arm invests across the entire energy supply chain and multiple asset classes. Recent examples include the firm’s acquisition of Samson Resources; acquisitions for 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, Hilcorp Resources and El Paso Midstream.
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