KKR to invest $400 million in Hilcorp's Eagle Ford Shale

With shale gas properties in North America becoming hot asset, private equity firm and leveraged buyout specialist, Kohlberg Kravis Roberts (KKR) is reportedly investing $400 million in a joint venture with Hilcorp Energy to develop shale gas in the US.

The Wall Street Journal reported yesterday, citing people familiar with the deal, that New York City-based KKR, which has approximately $50 billion assets under management will invest $400 million in a joint venture with Houston-based Hilcorp Energy to develop the Eagle Ford Shale in South Texas.

Hilcorp Energy, the fourth-largest privately held exploration and production company in the US, which will run the operations, will contribute about 100,000 acres to the partnership with ownership of 60 per cent of the joint venture.

Eagle Ford, which is about 50 miles wide and 400 miles long, has become one of the most valuable shale gas assets in the US because of its low break-even cost and high liquids content compared to other shale resources.

Companies like Conoco Phillips, Petrohawk Energy, St. Mary Land & Exploration, Rosetta Resources, Anadarko Petroleum, Lucas Energy, and Enterprise Products Partners have huge acreages in Eagle Ford.

Shale gas, which has huge potential as an unconventional gas source, is expected to contribute over 20 per cent of overall gas production of the US over the next decade and many energy giants have been frantically making huge investments in shale gas assets.