DENVER, April 4, 2018 /PRNewswire/ -- SM Energy
Company (the "Company") (NYSE: SM) today 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 $292.3 million
(subject to certain agreed upon closing price adjustments). The
buyers are not disclosed.
President and Chief Executive Officer 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 $792
million of non-core assets, which results in an expected
reduction in net debt pro forma for year-end 2017 by
30%."(1)
The assets expected to be sold in Divide County include approximately 119,400
predominantly contiguous net acres, 28.8 MMBoe net proved reserves
as of year-end 2017 (52% PUD), with December
2017 net production of approximately 6,100 Boe per day (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
MMBoe net proved reserves as of year-end 2017 (0% PUD) with
December 2017 net production of
approximately 1,025 Boe per day (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 MMBoe, 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.
FORWARD LOOKING STATEMENTS
This release contains
forward-looking statements within the meaning of securities laws.
The words "anticipate," "budget," "estimate," "expect," "forecast,"
"guidance," "plan," "project," "will" and similar expressions are
intended to identify forward-looking statements. 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, expected use of divestiture
proceeds, timing and expected use of funds from pending
transactions, the effect of pending transactions on production
guidance, and consummation of pending divestitures. 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; 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 2017 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
(1) Net debt as reported at the end of the fourth quarter
of 2017 was $2.7 billion. Pro forma
for $792 million in expected proceeds
from divestitures year-to-date, net debt would have been
$1.9 billion.
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