Item 1.01 Entry into a Material Definitive Agreement.
Common Stock Underwriting Agreement
On December 1, 2016, SM Energy Company (the
Company
) entered into an underwriting agreement (the
Common Stock Underwriting Agreement
) with J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC, acting as representatives of the several underwriters named therein (the
Underwriters
), providing for the issuance and sale by the Company, and the purchase by the Underwriters, of 10,925,000 shares (including 1,425,000 shares to be sold pursuant to their option to purchase additional shares) of common stock of the Company, par value $0.01 per share (the
Common Stock
), at a price to the public of $38.25 per share of Common Stock (the
Stock Offering
). The Stock Offering was registered under the Securities Act of 1933, as amended (the
Securities Act
), pursuant to a registration statement on Form S-3 (Registration No. 333-203936), as amended (the
Registration Statement
), filed with the Securities and Exchange Commission (the
Commission
), as supplemented by a prospectus supplement dated December 1, 2016, filed by the Company with the Commission on December 5, 2016 pursuant to Rule 424(b)(5) of the Securities Act (the
Prospectus Supplement
). Pursuant to the Common Stock Underwriting Agreement, the Company granted the Underwriters a 30-day option to purchase up to an additional 1,425,000 shares of Common Stock at the public offering price (the
Over-Allotment Option
), less the underwriting discount, which option was exercised by the Underwriters in full on December 2, 2016. The Stock Offering closed on December 7, 2016.
The Company intends to use the net proceeds from the Stock Offering, as described in the Prospectus Supplement under the caption Use of Proceeds, to acquire approximately 4,100 net acres of additional oil and gas assets in the Midland Basin, to reduce indebtedness, and for general corporate purposes.
Pursuant to the Common Stock Underwriting Agreement, the Company agreed, among other things, to indemnify the
Underwriters against certain liabilities, including liabilities arising under the Securities Act, or to contribute to payments the Underwriters may be required to make in respect of those liabilities. A copy of the Common Stock Underwriting Agreement is filed as Exhibit 1.1 hereto and is incorporated by reference herein. The foregoing description of the terms of the Common Stock Underwriting Agreement is qualified in its entirety by reference to this exhibit. A copy of the legal opinion and consent of Holland and Hart LLP relating to the Common Stock issued and sold in the Stock Offering is filed as Exhibit 5.1 hereto.
Certain of the Underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, var
ious commercial banking, financial advisory, investment banking and other services for the Company and its affiliates in the ordinary course of their business for which they received or will receive customary fees and expense reimbursement. Affiliates of each of the Underwriters are lenders under the Companys Fifth Amended and Restated Credit Agreement.