DENVER, March 26, 2018 /PRNewswire/ -- SM Energy Company
(the "Company") (NYSE: SM) today announced that it completed the
previously announced sale of the majority of its assets in the
Powder River Basin for $500 million
($491.5 million net cash proceeds,
subject to final purchase price adjustments). Assets sold include
approximately 112,200 predominantly contiguous net acres with
average December 2017 net production
of approximately 2,200 Boe per day (51% oil, 18% NGLs and 31%
natural gas). The buyer is Northwoods Operating LLC, a portfolio
company of certain funds managed by affiliates of Apollo Global
Management, LLC. The effective date of the transaction is
October 1, 2017. The Company plans to
use proceeds from this divestiture for general corporate purposes,
including debt reduction.
ADDITIONAL UPDATES:
- 1Q18 Production: Based on the first two months of the quarter,
Permian Basin production exceeded plan as new completions came on
stronger than expected. Higher Permian Basin production performance
was partially offset by downtime at a third party pipeline system
in the Eagle Ford. As a result, first quarter production is
expected to be closer to the upper end of original guidance
(9.5-10.0 MMBoe), with the oil percentage estimated to meet or
exceed 40%.
- 1Q18 Total Capital Spend: Based on the first two months of the
quarter, total capital spend guidance is reiterated at $350 million, which includes an expected 18 net
completions in the Midland Basin and five net completions in the
Eagle Ford, as well as costs associated with the construction of
water handling systems in the RockStar area. Total capital spend
for 2018 is expected to approximate $1.27
billion, with higher expenditures in the first half of the
year.
- 2Q18 Production Preview: Production associated with the Powder
River Basin asset sale is removed from net production as of
April 1, 2018. During the second
quarter, planned flowing completions are expected to increase from
the first quarter; however, the vast majority of Permian Basin, and
all Eagle Ford, completions are scheduled to come on-line during
May and June. Therefore, expected production growth from new wells
is primarily projected for late in the quarter and into the
third quarter (i.e. capital intensive with most of the
production benefit in 3Q18).
- 2019 Plan Projections: As previously reported, the Company
expects to align cash flow and total capital spend by mid-year
2019. The Company's plan includes a reduction in total capital
spend in 2019 compared to the 2018 total capital spend guidance (by
approximately 15%), while delivering significant production growth.
The 2019 plan projects a similar number of well completions in 2019
compared with 2018 and a similar Permian Basin DUC count at
year-end 2019 compared with 2018. 2019 total capital spend
projections include expected lower facilities and sand costs, as
well as expected lower drilling and completion costs associated
with several wells drilled in 2018 that are expected to come
on-line in early 2019.
- President and Chief Executive Officer Jay Ottoson is scheduled to present at IPAA in
New York on Monday, April 9, 2018, at 2:05 p.m. Eastern time. The presentation will be
audio webcast and accessible from the Company's Investor webpage at
http://ir.sm-energy.com/. An updated investor presentation will be
available on the Company's Investor webpage prior to the
presentation.
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, financial
and operational performance guidance, expectations about future
cost inflation, expected lower costs for facilities and sand, and
the expected benefits from joint venture arrangements. 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.
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