KKR And The (Dismal) State Of Samson Resource’s Oil And Gas Production

The following is excerpted from an article PetroNerds published at SeekingAlpha.com on Samson Resources following the acquisition by private equity firm KKR. The full article can be accessed here: http://seekingalpha.com/article/3762266-kkr-and-the-dismal-state-of-samson-resources-oil-and-gas-production

Private equity firm KKR (NYSE:KKR) announced the purchase of the bulk of oil and gas producer Samson Investment Company’s onshore US assets in a 2011 deal for $7.2 billion. The acquisition occurred during a shale asset frenzy of sorts, when oil prices were near $100 per barrel, and small independent shale oil producers were being acquired despite PE ratios that were often above 50 and little to no positive cash flow…. Samson, now called Samson Resources Corporation under KKR’s ownership, has filed for bankruptcy and is currently undergoing restructuring. The August 2015 announcement that Samson would be entering Chapter 11 in the following month precipitated a drop in KKR’s stock price of nearly 40%…

Samson’s production of both oil and gas has been in decline for almost a year and shows few if any signs of turning around. The company currently has no rigs operating in the US and has not brought a new well into production since May of this year. If Samson has undrilled acreage that must be held by production, it is possible that they risk forfeiting some of this acreage in coming months. Furthermore, the company has filed for only 18 new drilling permits in the past 90 days, all of them in the Powder River basin, and only 40 total permits (across the US) in the past six months. PetroNerds estimates that Samson’s daily liquids production has already dropped below 11,000 bbls/d and that gas production has fallen under 200,000 mcf/d. Combined oil and gas production has fallen by one-third from 2014/2015 highs.