KKR, Chesapeake team on energy investments in U.S. oil and gas

Posted March 7, 2012

Associated Press

HOUSTON - Investment firm Kohlberg Kravis Roberts & Co. and Chesapeake Energy Corp. are teaming up to invest in U.S. oil and gas fields.

The companies said Tuesday that they will pool together $250 million to buy new resources. KKR, which has invested in the energy sector for two decades, will contribute 90 percent of the money for the partnership. Chesapeake, the second-largest natural gas producer in the U.S., will contribute 10 percent.

"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," KKR director Robert Antablin said in a statement. Antablin leads the New York company's royalties investment strategy.

The announcement underscores Chesapeake's interest in expanding its footprint in the U.S., where new drilling techniques have allowed companies to tap vast areas of underground shale oil and gas. Chesapeake, which ran up more than $1 billion in long-term debt last year to acquire new properties, has since been pushing to get access to more oil, which has become much more profitable to produce.

The price of oil in January and February is up an average 13 percent from the same two months last year. Natural gas, meanwhile, has dropped near 10-year lows.

Investment firms are playing a bigger role in the oil and gas sector, as Cheniere Energy said last week that it will receive $2 billion in financing from The Blackstone Group to fund the construction of a natural gas export plant in Louisiana. El Paso Corp. also said last month that it will sell its exploration and production business for $7.15 billion to a group of buyers including Apollo Global Management LLC and Riverstone Holdings LLC.

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