KKR buys Canadian oil and gas company

KKR’s confidence in Westbrick Energy’s strong management team led the firm to commit C$250m through its 11th North American fund.

Kohlberg Kravis Roberts has closed a deal to invest C$250 million (€196 million; $251 million) in Westbrick Energy, a Canadian oil and gas drilling company, according to a statement.

The firm will invest C$75 million in the company initially, which will go toward Westbrick’s capital programme and acquisition strategy, the firm said. The remaining C$175 million will be committed as a follow-on investment, which will be used to grow the company through acquisitions and the development of its asset base.

The firm was attracted by the prospects of working with Westbrick’s strong management team, which is led by president and chief executive Ken McCagherty. The company operates in the Pembina region of Alberta, which is known for having particularly rich deposits of oil and gas.

KKR funded the deal through its latest vehicle, KKR North American XI Fund. Fund XI had raised at least $6.2 billion on its $10 billion target as of earlier this year.

“We were quite pleased with that first close given the challenging environment for this type of fund,” the firm’s head of global capital and asset management group Scott Nuttall said in a July earnings call. “Our perspective is it’s a great time to be investing in North American buyouts.”

In June, KKR closed its debut global infrastructure fund on $1 billion earlier, bringing its real asset platform to $4 billion. That fund’s strategy included an emphasis on midstream and renewable energy, water, power and gas, with limited exposure to social infrastructure and transportation.

KKR has built up its focus on oil and gas over the past few years, including in non-traditional forms of oil and gas exploration, such as natural gas trapped in shale rock formations. In 2010, the firm sold natural gas exploration company East Resources to Royal Dutch Shell for $4.7 billion, which was reportedly the second largest oil and gas deal that year. KKR had originally invested only $350 million in East Resources in 2009 for a “substantial minority stake”, the firm confirmed at the time.