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KKR-led investor group makes big bet on Samson

by Claire Poole in Houston | Published November 23, 2011 at 12:40 PM

As expected, private equity firms Kohlberg Kravis Roberts & Co. LP, Natural Gas Partners and Crestview Partners and Japanese trading giant Itochu Corp. have agreed to buy Samson Investment Co. for $7.2 billion, the parties announced on Wednesday, Nov. 23.

The price is higher than those cited in reports over the past few weeks but less than original estimates of $10 billion for the entire company.

The transaction, the largest corporate leveraged buyout of the year, will give the investor group all of Samson's assets except for its onshore Gulf Coast and offshore deepwater Gulf of Mexico assets, which will continue to be owned by the Schusterman family.

A source indicated that the equity portion will be larger than $3.3 billion, as The Deal Pipeline reported earlier. J.P Morgan Chase & Co.'s Larry Landry helped assemble the debt package.

Tulsa, Okla.-based Samson, founded in 1971, is one of the largest private exploration and production companies in the country. It owns interests in 10,000 wells, 4,000 of which it operates, and in oil and liquids-rich plays such as the Bakken, Powder River and Green River. It has 1,200 employees.

"We are very excited to support the continued growth of Samson," KKR co-founder and CEO Henry Kravis said in a statement. "The Schusterman family has built a remarkable company with an extraordinary culture. We feel very fortunate to have the opportunity to carry on their commitment to employees, to communities and to the safe and profitable development of domestic energy resources."

Samson CEO Stacy Schusterman, who took over the company when her founding father passed away, said in a statement the family had two guiding principles when selling the company: a partner who would value its assets and its people. She said the group demonstrated its commitment to both. "They recognize that maintaining our culture will best enable Samson to retain and build the strong team we have and thereby continue to profitably grow our asset base," Schusterman said.

The investor group will keep the company's headquarters in Tulsa, where Kravis grew up. "It has always been a Tulsa company, and it will remain a Tulsa company," Kravis said. "Samson is truly a special company with a highly experienced and talented team of managers and employees with a stellar track record of success."

Stacy and Lynn Schusterman are not staying with the company but COO David Adams will become CEO of the newly renamed Samson Resources.

Pending regulatory approvals, the deal is expected to close by year's end.

Marc Lipschultz, Jonathan Smidt and Claire Farley led the deal for KKR.

Bank of America Merrill Lynch, Barclays Capital's Brad Hutchison and Greg Pipkin, BMO Capital Markets Corp.; Citigroup Global Capital Markets Inc.; Credit Suisse Group, RBC Capital Markets; Tudor, Pickering, Holt & Co. LLC and Wells Fargo Securities LLC advised the buyers. Mizuho Bank Ltd. and Evercore Partners Inc. assisted Itochu.

Simpson Thacher & Bartlett LLP's Andrew Smith, Andy Calder, Brian Steinhardt, Robert Rabalais, Ed Tolley and Nancy Mehlman counseled the investor group, with Latham & Watkins LLP's Charles Carpenter and Michael Chambers assisting NGP.

Jefferies & Co.'s Ralph Eads, Joe Gladbach and Ajay Khurana advised Samson, which tapped Jones Day's Scott Cohen and Jeff Schlegel for legal counsel.

-- David Carey contributed to this story.

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