Samson Investment Company and Buyout Activity in the Oil and Gas Industry

by Jonathan Parker

  • 24 Nov 2011
  • PE
  • NR

This week, a consortium of investors announced the acquisition of Samson Investment Company, an oil and gas exploration and production company based in Tulsa, Oklahoma. The deal, which is expected to close by the end of 2011, is valued at $7.2bn, making it the largest buyout since 2007. It is also the second largest buyout in the Oil and Gas industry in the period 2006-2011, after Carlyle Group, Goldman Sachs Merchant Banking Division, AIG and Riverstone Holdings’ $22.4bn public to private acquisition of Kinder Morgan, Inc., in August 2006.

Interestingly, the Samson deal comes amid global economic uncertainty and tightening credit markets, with banks and investors seemingly anxious about backing the sort of mega-sized deals that were prevalent throughout the buyout boom years of 2006 and 2007. In 2006, 21 buyout deals were valued at $5bn or more. The following year saw the same number, before a remarkable drop to just one deal in 2008 that was valued at over $5bn. Each of the following two years again saw only one deal valued over $5bn, while there have been two such private equity-backed buyout deals in 2011. The other such sized buyout deal in 2011 was the acquisition of Kinetic Concepts, Inc. by Apax Partners, CPP Investment Board and the Public Sector Pension Investment Board. The transaction, valued at $6.3bn, was announced in July, and closed earlier this month.

The acquisition of Samson Investment Company takes the total value of buyout deals in the Oil and Gas industry to $17.7bn in 2011. In comparison, the total values recorded in 2009 and 2010 were each around $5.4bn. The 2011 total is now also higher than the $9.2bn recorded in 2008, and $12.9bn in 2007; however, the 2006 total is far higher as a result of the Kinder Morgan deal, at more than $27bn.

Another recent notable private equity-backed buyout deal in the oil and gas industry is the acquisition of Frac Tech Holdings by a group of investors including Chesapeake Energy Corporation, CPP Investment Board, RRJ Management and Temasek Holdings. This deal was closed in May 2011, and valued at $3.5bn.

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