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East Resources Inc., which has operations in 21 West Virginia counties, has received an investment of about $350 million from Kohlberg Kravis & Roberts Co., according to The Wall Street Journal.
The development comes less than a week after Morgan Stanley Private Equity announced it had taken a majority stake in Charleston-based Triana Energy Investments. The dollar amount of that investment was not disclosed.
East Resources Inc. is a privately owned oil and natural gas exploration and production business headquartered in Warrendale, Pa. East Resources also owns a gas utility by the same name.
The company did not disclose the amount of Kohlberg Kravis & Roberts Co.'s cash infusion, other than to say it is a "significant investment." East Resources did say that as a result of the transaction, Kohlberg Kravis & Roberts "will have the ability in the future to hold a minority equity position in the company, with East Resources' management and employees continuing to be responsible for the ongoing day-to-day operations."
East Resources' exploration and production business has land holdings over 1.25 million acres and owns and operates more than 2,400 producing oil and gas wells in New York, Pennsylvania, West Virginia and Colorado. The firm also has exploratory drilling programs underway in Wyoming.
The utility side of the business began operation in 1937 as a division of Pennzoil Co. East Resources acquired some of the former Pennzoil assets from Devon Energy Corp. in 2000. The utility is headquartered in Parkersburg. It serves more than 5,000 customers in Boone, Cabell, Calhoun, Clay, Doddridge, Gilmer, Harrison, Kanawha, Lewis, Lincoln, Logan, Marion, Marshall, Monongalia, Putnam, Ritchie, Roane, Tyler, Wetzel, Wirt and Wood counties.
East Resources has about 230 employees, including about 107 in West Virginia. There are 70 unionized workers in the Mountain State plus 17 employees in Parkersburg and 20 stationed at offices at Mannington, Spencer and Yawkey.
Kohlberg Kravis & Roberts Co. is a major global investment firm. It has funds that invest in private equity, fixed income and other assets. It has made a number of investments in the energy sector in recent years, including the 2007 purchase of Texas power utility TXU Corp. for $32 billion.
East Resources said in a prepared statement that the investment by Kohlberg Kravis & Roberts Co. will be used to strengthen East Resources' balance sheet through the repayment of all outstanding balances under the company's credit facility. East Resources said the investment also will enable it to better manage its leasehold relationships; support the company's long-term oil and gas exploration and development activities focused, in particular on the Marcellus shale; and allow it to invest in new energy infrastructure.
Terrence Pagula, East Resources' founder, president and chief executive officer, said in a prepared statement, "Given the increased competition in the Appalachian Basin's Marcellus shale region from a number of well-capitalized publicly traded oil and gas companies, we chose a capital provider that has both relationships and skills that could add value to East Resources."
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