Frack it: KKR buying Samson for $7.2 billion

November 23, 2011, 7:10 PM UTC

KKR again bets big on shale.

Kohlberg Kravis Roberts & Co. (KKR) this morning announced the largest leveraged buyout of 2011, agreeing to acquire privately-held oil and gas company Samson for $7.2 billion. KKR is being joined on the deal by Crestview Partners, Natural Gas Partners and Japan’s Itochu Corp.

Under terms of the agreement, KKR and its partners will acquire all of Tulsa, Okla.-based Samson’s assets, with the exception of its onshore Gulf Coast and offshore Gulf of Mexico assets — which will continue to be owned by the founding Schusterman family. That means at least partial interests in more than 10,000 wells in the U.S., plus operations of over 4,000 wells in such areas as Bakken shale fields.

The announcement does not mention debt financing, but Fortune has learned that it will be used (under 50% of total purchase price).

The deal is expected to close by year end, at which the company will be renamed Samson Resources and led by current COO David Adams.

This is not the first time that KKR has bet big on oil shale. Last year, it invested $400 million as part of a partnership with Hilcorp to buy properties in Texas’ Eagle Ford shale fields — and this year nearly tripled that investment via a sale to Marathon Oil Marathon Oil . Last year it sold its minority stake in a Marcellus Shale play called East Resources at an enterprise value of $4.7 billion to Royal Dutch Shell (RDS).

Overall, Thomson Reuters reports that there has been $440 billion of global M&A in the energy sector this year — an increase over $418 billion in 2010 (albeit from about 200 fewer deals). KKR’s purchase of Samson is the leveraged buyout market’s largest transaction of 2011 — besting Apax Partners snaring Kinetic Concepts for $6.1 billion — but it doesn’t even make the top 10 for energy M&A. The fill list is below:

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