SM Energy Co (NYSE:SM) To Sell Non-Core Assets For $292 Million, Coring Up And Bringing Down Net Debt


SM Energy Co (NYSE:SM) has announced entering into two definitive agreements.  One of the agreements will entail the sale of its remaining assets in the Williston Basin situated in Divide County, North Dakota. The second agreement will involve the sale of Half East located in Upton County, Texas. This asset is operated by a third party. The two transactions are expected to generate combined proceeds of $292.3 million the company is however yet to reveal the buyers.

Jay Ottoson, the President and Chief Executive Officer SM Energy Co said the company is fully committed to implementing its strategy of developing the top tier Midland Basin and Eagle Ford assets as well as paying its debts so as to improve its balance sheet.  He adds that in addition to the recent divestiture of the non-core Powder River Basin assets, the company is expecting divestiture of around $792 million of non-core assets.  This will result in a 30% reduction in debt.

Some of the assets that the company is selling include around 119,400 net acres and 28.8 MMBoe net proved reserves. The assets which are up for sale in Upton County include working interest in third party assets of 5,400 net acres. Additionally, there are .6 MMBoe net proved reserves which are to be sold from the county.

The company has announced that it expects the two transactions to be closed by the second quarter of 2018. Both have an effective date of January 1, 2018. The price for each transaction will be determined subject to adjustments in the closing price. Additionally, each transaction will be completed after meeting all the closing conditions laid down. Proceeds from the transaction will be used to finance the company’s general corporate purposes including serving its debts.

The overall effect of the two transactions is an 81% reduction in oil production and 19% reduction in natural gas production. As announced recently, the company will stop keeping record which are associated with Powder River Basin divestiture starting from the second quarter of 2018.

SM Energy Co went up 2.62% to close the Wednesday session at $17.23


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