SM Energy Company has announced that it has entered into two definitive agreements, one for the sale of the Company's remaining assets in the Williston Basin located in Divide County, North Dakota, and one for the sale of its third-party operated assets known as Halff East located in Upton County, Texas for combined proceeds of US$292.3 million (subject to certain agreed upon closing price adjustments). The buyers are not disclosed.
President and CEO Jay Ottoson comments: "We are committed to our strategy to focus on development of our core top tier Midland Basin and Eagle Ford assets and improving our balance sheet by reducing debt. This is a significant step on both those fronts. In combination with the recent divestiture of our non-core Powder River Basin assets, year-to-date we have announced the expected divestiture of approximately US$792 million of non-core assets, which results in an expected reduction in net debt pro forma for year-end 2017 by 30%."
The assets expected to be sold in Divide County include approximately 119 400 predominantly contiguous net acres, 28.8 million boe net proved reserves as of year-end 2017 (52% PUD), with December 2017 net production of approximately 6100 boepd (83% oil). The assets expected to be sold in Upton County include a 60% working interest in third-party operated assets, approximately 5,400 net acres, 1.6 million boe net proved reserves as of year-end 2017 (0% PUD) with December 2017 net production of approximately 1025 boepd (72% oil). The transactions are each expected to close in the second quarter of 2018, and each have an effective date of January 1, 2018. The purchase price of each transaction will be subject to certain agreed upon closing price adjustments. Each transaction is subject to the satisfaction of required closing conditions, and there can be no assurance that either transaction will close on time or at all. The Company plans to use the expected sale proceeds for general corporate purposes, including debt reduction.
The estimated effect on 2018 production from both transactions is a reduction of 1.2 million boe, 81% oil and 19% natural gas. Also as recently announced, the Company will no longer record production associated with its Powder River Basin divestiture as of the second quarter of 2018.
RBC Richardson Barr served as exclusive financial advisor to the Company in the Halff East divestiture and Tudor, Pickering, Holt & Co. served as exclusive financial advisor to the Company in the Divide County divestiture.
Read the article online at: https://www.oilfieldtechnology.com/special-reports/06042018/sm-energy-announces-agreements-to-sell-additional-non-core-assets/