SM Energy to acquire North Dakota assets from Baytex

SM Energy Co., Denver, has agreed to acquire 61,000 net acres in Divide and Williams Counties, ND, from Baytex Energy Corp., Calgary, for $330.5 million, effective July 1. The deal is expected to close toward the end of the third quarter.

The properties, 90% operated, produced 3,200 boe/d in the second quarter, and, as of Dec. 31, 2013, held proved plus probable reserves of 53.5 million boe, 81% of which is oil and natural gas liquids.

SM Energy will receive interests in 126 drilling spacing units, 81 of which will be operated by the company. Working interest for operated spacing units is expected to range 37.5–50%.

SM Energy says it has seen improvements in its Three Forks program, directly adjacent to the acquired assets, due to faster drilling times and improved completions, with results indicating that recent wells have higher sustained production rates than older wells.

Baytex made the divestiture to pay down debt incurred during its $2.6-billion acquisition of Aurora Oil & Gas, which gave the company 22,200 net contiguous acres in Sugarkane field in the Eagle Ford shale of South Texas (OGJ Online, Feb. 7, 2014).

The company previously sold North Dakota assets to Bakken Hunter LLC, a subsidiary of Magnum Hunter Resources Corp. for $312 million (OGJ Online, May 23, 2012). Baytex says it will continue to assess the market for future divestitures.

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