A subsidiary of Venado Oil & Gas LLC, an Austin-based affiliate of private equity firm KKR & Co. LP, has agreed to acquire nonoperated Eagle Ford assets owned by SM Energy Co., Denver, for $800 million.
The assets cover 37,500 net acres in the Maverick basin-Eagle Ford area of South Texas and 12.5% interest in the Springfield gathering system. As of yearend 2015, net proved reserves associated with the assets were 65 million boe, of which 38% was oil, 31% natural gas, and 31% NGLs. In third-quarter 2016, the assets produced 27,260 boe/d net, of which 33% was oil, 33% natural gas, and 34% NGLs.
The deal, effective Nov. 1, is expected to close in this year’s first quarter.
“The proceeds from this sale will provide us with additional flexibility to pursue aggressive growth from our Midland basin assets, with related capital expenditures in excess of cash flow over the next few years, while at the same time improving our debt metrics and maintaining strong liquidity,” explained Jay Ottoson, SM Energy president and chief executive officer.
SM Energy’s first deal of 2017 follows a 2016 in which the firm spent about $2.5 billion to boost its position in the Midland basin with moves that were, in part, funded by asset divestitures, including its sale of 55,000 net acres in the Williston basin to Oasis Petroleum Inc. for $785 million (OGJ Online, Oct. 18, 2016).
The firm’s Midland expansion comprised a $980-million purchase of 24,783 net acres in Howard County, Tex., from private equity firm Riverstone Holdings LLC (OGJ Online, Aug. 8, 2016); and $1.6-billion purchase of 35,700 net acres in Howard and Martin counties of West Texas from a portfolio company of EnCap Investments LP and a related entity (OGJ Online, Oct. 18, 2016).
SM Energy has 87,600 net acres in the Midland basin.
Contact Matt Zborowski at [email protected].
