Item 1.01 Entry into a Material Definitive Agreement.
On August 6, 2018, SM Energy Company (the
Company
) entered into an underwriting agreement (the
Underwriting Agreement
) with Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC and J.P. Morgan Securities LLC acting as representatives of the several underwriters named therein (the
Underwriters
) providing for the issuance and sale by the Company (the
Offering
) of $500 million in aggregate principal amount of the Companys 6.625% Senior Notes due 2027 (the
Notes
). The 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. 333-226597), as amended (the
Registration Statement
) filed by the Company with the Securities and Exchange Commission (the
Commission
) on August 6, 2018, as supplemented by a prospectus supplement dated August 6, 2018, filed by the Company with the Commission on August 7, 2018 pursuant to Rule 424(b)(5) of the Securities Act (the
Prospectus Supplement
).
Pursuant to the 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 Underwriting Agreement is attached hereto as Exhibit 1.1 and is incorporated by reference herein. The foregoing description of the terms of the Underwriting Agreement is qualified in its entirety by reference to this exhibit.
Some of the Underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory, commercial banking and investment banking services for the Company and its affiliates, for which they received or will receive customary fees and expense reimbursement. Affiliates of certain of the Underwriters are lenders under the Companys credit facility, and an affiliate of one of the Underwriters is the trustee under the Companys indenture. Certain of the Underwriters and/or their affiliates may hold certain of the Tender Offer Notes (as defined below) and, as a result, may receive a portion of the net proceeds from the Offering. One of the Underwriters is acting as the sole dealer manager and solicitation agent for the Tender Offer (as defined below).
The Company intends to use the net proceeds from the Offering, as described in the Prospectus Supplement under the caption Use of Proceeds, to fund the concurrent cash tender offer (the
Tender Offer
) to purchase (i) any and all of its 6.500% Senior Notes due 2023 (the
2023 Notes
) and (ii) up to an aggregate principal amount not to exceed $85,000,000 of its 6.125% Senior Notes due 2022 (the
2022 Notes
and together with the 2023 Notes, the
Tender Offer Notes
).