It’s on to the next one for SM Energy Co. (NYSE: SM), as the Denver-based company continues to core-up following its summer blockbuster deal in the Midland Basin.
SM Energy said Oct. 3 it’s shopping about 54,500 net Williston Basin acres, including its Raven/Bear Den acreage, with help by Petrie Partners, which is advising on the sale. The company is stepping away from all of its Williston acreage outside of Divide County, N.D.
The assets are expected to be worth about $450 million to $500 million, according to Tudor, Pickering, Holt & Co. (TPH), which views the sale as an “opportunity for a pure-play Bakken producer to bolt-on additional acreage.”
The Williston divestiture would leave SM Energy with about 120,000 net acres in the Bakken/Three Forks in Divide, where the company is running one rig. The company has driven down capital costs per lateral foot on its Divide assets by 25% compared to early 2015, according to a June company presentation.
The announcement trails the closing of SM’s sale on Oct. 3 of New Mexico, North Dakota, Montana and Wyoming assets for about $186.7 million. The properties produced about 3,300 net barrels of oil equivalent per day (boe/d).
SM shifted to consolidation mode after its $980 million purchase of 24,783 net acres in Howard County, Texas, within the Midland Basin. The deal will expand the company’s Midland position to 46,750 net acres.
The company is also shopping its Eagle Ford nonoperated assets, which includes 27,350 boe/d (2Q 2016) and associated midstream assets. The sale could be worth about $750 million, according to Gabriele Sorbara, senior equity analyst for The Williams Capital Group LP.
John Freeman, Raymond James energy analyst, said SM Energy’s divestiture doesn’t indicate the company is having trouble selling its nonoperated Eagle Ford asset.
“Rather, SM is simply looking for ways to bring cash flows forward on assets they do not plan to drill in the near- to mid-term,” Freeman said.
The Williston divestiture combined with a potential nonop Eagle Ford sale in 2017 could bring $1.3 billion to $1.5 billion of total proceeds, “which could be used to either bolt-on or accelerate activity in the Permian to bring forward value,” TPH said.
SM is marketing 8,213 net acres in the Eagle Ford/Austin Chalk Badger prospect in Lee, Fayette and Washington counties in South Texas. The position includes 64 possible Eagle Ford laterals and 32 possible Austin Chalk laterals, according to The Oil & Gas Asset Clearinghouse, which is handling the negotiated transaction.
Bids for the Eagle Ford acreage are due Oct. 4. For information visit ogclearinghouse.com or contact Denna Arias, vice president of business development with Clearinghouse, at 832-601-7605.
For information about SM’s Williston divestiture visit petrie.com or contact Andy Rapp at 303-953-6768.
Emily Moser can be reached at emoser@hartenergy.com.
RELATED:
A&D Fall Preview: On The Prowl In The Permian
SM Energy Discards New Mexico, Williston Assets For $173 Million
SM Energy Doubles Midland Footprint With $980 Million Acquisition
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