SM Energy to sell Williston basin, Halff East assets

SM Energy Co., Denver, has entered into two definitive agreements, one for the sale of the company’s remaining assets in the Williston basin in Divide County, ND, and one for the sale of its third-party operated assets known as Halff East in Upton County, Tex., for combined proceeds of $292.3 million. Buyers were not disclosed.

SM Energy Co., Denver, has entered into two definitive agreements, one for the sale of the company’s remaining assets in the Williston basin in Divide County, ND, and one for the sale of its third-party operated assets known as Halff East in Upton County, Tex., for combined proceeds of $292.3 million. Buyers were not disclosed.

The Divide County assets include 119,400 predominantly contiguous net acres, 28.8 million boe net proved reserves as of yearend 2017 (52% PUD), with December 2017 net production of 6,100 boe/d (83% oil). The assets to be sold in Upton County include a 60% working interest in third-party operated assets, 5,400 net acres, 1.6 million boe net proved reserves as of yearend 2017 (0% PUD) with December 2017 net production of 1,025 boe/d (72% oil).

The estimated effect on 2018 production from both transactions is a reduction of 1.2 million boe, 81% oil and 19% natural gas.

In combination with the $500 million divestiture of 112,000 net acres in the Powder River basin to Northwoods Operating LLC, year-to-date, the company has announced expected divestiture of $792 million of noncore assets, SM Energy Pres. and Chief Executive Officer Jay Ottoson said.

“We are committed to our strategy to focus on development of our core top-tier Midland basin and Eagle Ford assets and improving our balance sheet by reducing debt. This is a significant step on both those fronts,” he said.

In a presentation dated Feb. 21, the company highlighted plans for “aggressive growth” in the Midland basin, with a plan to initiate the development stage in western RockStar and continue delineation in central Howard County. Overall in the basin, SM Energy expects to run an average of 8 rigs for the year with 130 net wells drilled and 100 net well completions.

In the Eagle Ford, the company expects to average 1 rig for the year with 17 net wells drilled and 25 net well completions.

The transactions are each expected to close in this year’s second quarter, subject to closing conditions.

Contact Mikaila Adams at mikaila@pennwell.com.

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