Kohlberg Kravis Roberts & Co. (KKR) and Hilcorp Energy Company (Hilcorp), a privately owned oil and gas exploration and development company based in Houston, Texas, today announced the signing of a definitive agreement for KKR to invest up to US$ 400 million in Hilcorp Resources, LLC, a newly formed partnership created to own and develop Hilcorp's oil and gas properties located in the Eagle Ford Shale trend of South Texas.
The company will develop certain acreage within the Eagle Ford, located in an approximately 200 mile long area in South Central Texas, southeast of San Antonio. The partnership combines a capital commitment from both parties as well as the contribution of a 100,000 net acre Eagle Ford position from Hilcorp. Upon close, Hilcorp will hold 60% and KKR will hold 40% of the company, with Hilcorp's management and employees running the day-to-day operations. "With more than two decades of history, Hilcorp is a known leader when it comes to exploring for, developing and producing oil and gas, and Hilcorp's management is unparalleled in terms of its experience in the South Texas region," said John Bookout, Managing Director of KKR.
The Eagle Ford represents a promising energy development. Comprised of a layer of rock found at depths of 7,000 - 14,000 ft, with a thickness of approximately 250 ft, the Eagle Ford is richly deposited with hydrocarbons and is estimated to contain over 80 billion bbls equivalent of original oil in place. One of the newest shale plays in the country, the Eagle Ford has become an increasingly attractive area of interest for oil and gas companies given that it benefits from a favourable (oil-weighted) commodity profile and is located proximate to existing oil and gas infrastructure and liquids product markets.
Over the past year, Hilcorp has assembled approximately 100,000 net acres in the Eagle Ford, in some of the most attractive areas of the play, substantially all of which is operated by Hilcorp. Hilcorp is in the process of commencing its Eagle Ford development programme and is currently running two horizontal drilling rigs in the play. In addition to the development programme, the company will actively look for opportunities to increase its acreage position in the Eagle Ford through leasing, joint ventures and acquisitions. Going forward, the company intends to be creative in structuring future transactions as it expands its Eagle Ford position and believes that it can offer a strong value proposition to landowners and operators in the trend.