DENVER, Jan. 9, 2018 /PRNewswire/ -- SM Energy Company
(the "Company") (NYSE: SM) today announced that it has entered into
a definitive agreement for the sale of a majority of the Company's
Powder River Basin assets for a
cash purchase price of $500 million
(subject to customary closing price adjustments).
President and Chief Executive Officer Jay Ottoson comments: "We are very pleased to
announce the signing of this agreement. Divestiture of these assets
is consistent with our strategy of focusing on development of our
top tier Midland Basin and Eagle Ford assets and improving our
balance sheet by reducing debt. Pro forma for this transaction, as
of the end of the third quarter 2017, net debt is reduced by
approximately 20% and net debt:EBITDAX is reduced to less than 3
times."(1)
The assets to be sold include approximately 112,200
predominantly contiguous net acres located in northwest
Converse County and portions of
southeast Johnson and southwest
Campbell Counties, Wyoming. These assets represent approximately
80% of the Company's current Powder
River Basin acreage position. Net production as of
December 2017 was approximately 2,200
Boe/d (51% oil, 18% NGLs and 31% natural gas) and preliminary
estimates of proved reserves for year-end 2017 are 4.2 MMBoe (82%
PDP). The transaction is expected to close in the first quarter of
2018, with an effective date of October 1,
2017. The purchase price will be subject to certain closing
price adjustments. The transaction is subject to the satisfaction
of required closing conditions, and there can be no assurance that
the transaction will close on time or at all. The Company plans to
use the expected sale proceeds for general corporate purposes,
including debt reduction.
FORWARD LOOKING STATEMENTS
This release contains forward-looking statements within the
meaning of securities laws. These statements involve known and
unknown risks, which may cause SM Energy's actual results to differ
materially from results expressed or implied by the forward-looking
statements. Forward-looking statements in this release include,
among other things, consummation of pending divestitures, expected
benefits and likelihood of completing divestitures, and
expectations regarding the proceeds, timing and expected use of
funds from pending asset sales. General risk factors include the
availability of and access to capital markets; the availability,
proximity and capacity of gathering, processing and transportation
facilities; the volatility and level of oil, natural gas, and
natural gas liquids prices, including any impact on the Company's
asset carrying values or reserves arising from price declines;
uncertainties inherent in projecting future rates of production or
other results from drilling and completion activities; the
imprecise nature of estimating oil and natural gas reserves;
uncertainties inherent in projecting future drilling and completion
activities, costs or results, including from pilot tests; the
uncertainty of negotiations to result in an agreement or a
completed transaction; the uncertain nature of acquisition,
divestiture, joint venture, farm down or similar efforts and the
ability to complete any such transactions; the uncertain nature of
expected benefits from the actual or expected acquisition,
divestiture, joint venture, farm down or similar efforts; the
availability of additional economically attractive exploration,
development, and acquisition opportunities for future growth and
any necessary financings; unexpected drilling conditions and
results; unsuccessful exploration and development drilling results;
the availability of drilling, completion, and operating equipment
and services; the risks associated with the Company's commodity
price risk management strategy; uncertainty regarding the ultimate
impact of potentially dilutive securities; and other such matters
discussed in the "Risk Factors" section of SM Energy's 2016 Annual
Report on Form 10-K, as such risk factors may be updated from time
to time in the Company's other periodic reports filed with the
Securities and Exchange Commission. The forward-looking statements
contained herein speak as of the date of this announcement.
Although SM Energy may from time to time voluntarily update its
prior forward-looking statements, it disclaims any commitment to do
so except as required by securities laws.
NON-GAAP MEASURES
Net debt as reported at the end of
the third quarter of 2017 was $2.5
billion. Pro forma for $500
million in proceeds, net debt would have been $2.0 billion.
(1) EBITDAX for the trailing
twelve months as of the end of the third quarter of 2017 was
$676 million. Please refer to the
Company's prior 10-Q filings for the reconciliation of EBITDAX to
GAAP financial measures.
ABOUT THE COMPANY
SM Energy Company is an independent energy company engaged in
the acquisition, exploration, development, and production of crude
oil, natural gas, and natural gas liquids in onshore North
America. SM Energy routinely posts important information
about the Company on its website. For more information about SM
Energy, please visit its website at www.sm‑energy.com.
SM ENERGY CONTACTS
INVESTORS - Jennifer Martin
Samuels, jsamuels@sm-energy.com, 303-864-2507
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SOURCE SM Energy Company