SM Energy Announces Sale Of Non-Operated Eagle Ford Assets For $800 Million

SM Energy Announces Sale Of Non-Operated Eagle Ford Assets For $800 Million

SM Energy Company (NYSE: SM) today announced that it has entered into a definitive agreement with a subsidiary of Venado Oil and Gas, LLC , an affiliate of KKR, for the sale of the Company’s third party operated assets in the Eagle Ford, including its ownership interest in related midstream assets, for a purchase price of $800 million (subject to customary adjustments).

President and Chief Executive Officer Jay Ottoson comments: “We are pleased to announce the signing of this agreement as we kick off 2017. This sale supports SM’s strategy to be a premier operator of top tier assets.  Our 2017 capital program will focus on our top tier oil position in the Midland Basin , consisting of approximately 87,600 net acres, and our top tier operated natural gas and NGL position in the Eagle Ford, consisting of approximately 161,500 net acres.  The proceeds from this sale will provide us with additional flexibility to pursue aggressive growth from our Midland Basin assets, with related capital expenditures in excess of cash flow over the next few years, while at the same time improving our debt metrics and maintaining strong liquidity.”

The assets expected to be sold include approximately 37,500 net acres in the Maverick Basin /Eagle Ford area of south Texas and a 12.5% interest in the Springfield Gathering System. As of year-end 2015, net proved reserves associated with these assets were 65 MMBoe (38% oil, 31% natural gas and 31% NGLs).  In the third quarter of 2016, these assets produced approximately 27,260 net Boe per day (33% oil, 33% natural gas and 34% NGLs.)  The transaction is expected to close in the first quarter of 2017, with an effective date of November 1, 2016 , and the purchase price will be subject to certain closing price adjustments. The transaction is subject to the satisfaction of customary closing conditions, and there can be no assurance that the transaction will close on time or at all.

Scotia Waterous served as the Company’s financial advisor in this transaction.

SOURCE:  http://phx.corporate-ir.net/phoenix.zhtml?c=90687&p=irol-newsArticle&highlight=true&ID=2233249

Leave a Reply

Your email address will not be published. Required fields are marked *