Comstock - KKR Eagle Ford Partnership Agreed at $25,000/acre

Comstock Resources Eagle Ford Map
Comstock Resources Eagle Ford Map

Comstock and KKR (Kohlberg, Kravis, Roberts & Co) have signed a participation agreement in the Eagle Ford. KKR will have the right to participate for 1/3 of Comstock's interest in 28,000 net acres across Atascosa, Frio, Karnes, La Salle, McMullen, and Wilson counties. In exchange, KKR will pay the equivalent of $25,000 per acre through a drilling carry for each acre acquired. Comstock plans for development with spacing of 80-acres per well.

KKR has committed to the drilling carry equivalent of $25,000 per acre for the next 100 wells in Comstock's planned development. The private equity partner will have the ability to participate in additional Comstock wells under the same terms.

Check my math, but if KKR participates across all of Comstock's acreage:

28,000 net acres x 33% x $25,000/acre = ~$233 million

While there is potential for as much as a $233 million dollar investment, the announcement indicates KKR has the "right" to participate. I assume that means they are not "obligated" to participate. If you consider the next 100 wells,

100 wells x 80-acres/well x 33% x $25,000/acre = $66 million

It sounds like KKR has committed to spending $66 million and will have an option on participating on additional acreage that could increase the company's commitment up to $230+ million.

Check my math and let me know your thoughts on the deal in the comments below.