SM Energy Announces Closing of Previously Announced Non-Operated Eagle Ford Carry Agreement
December 05 2011 - 7:30AM
Business Wire
SM Energy Company (NYSE: SM) today announces the closing of the
previously announced Acquisition and Development Agreement (the
“ADA”) related to SM Energy’s conveyance to Mitsui E&P
Texas L.P. (“Mitsui”), a wholly owned subsidiary of Mitsui &
Co., Ltd., of a 12.5% working interest in its non-operated Eagle
Ford shale acreage position. SM Energy will retain a working
interest of approximately 14.5% in these properties. The ADA
provides that SM Energy will be carried for 90% of certain
drilling and completion costs, until Mitsui has expended $680
million for the Company’s benefit. The Company expects the carry
amount will be expended in approximately four years. Additionally,
Mitsui reimbursed SM Energy a total of approximately $101 million
at closing. Of this amount, approximately $73 million represents
reimbursement for capital and operating expense outlays, net of
revenues, for the period between the effective date of March 1,
2011, and the closing date. This reimbursement amount will be
applied to the remaining 10% of SM Energy’s non-operated Eagle Ford
shale drilling and completion costs, effectively carrying the
Company 100% until this reimbursement amount is exhausted. The
remainder of the reimbursement amount represents 50% of
SM Energy’s investment in related mid-stream assets, in which
Mitsui has also acquired a 12.5% interest. The carry amount and the
reimbursement amounts are subject to post-closing adjustments,
which the Company expects to be completed within 180 days of
closing.
ABOUT THE COMPANY
SM Energy Company is an independent energy
company engaged in the exploration, exploitation, development,
acquisition, and production of natural gas, natural gas liquids,
and crude oil. 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.
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