SM Energy to sell non-operated Eagle Ford assets for $800m

US petroleum and natural gas exploration company SM Energy has agreed to sell its third party operated assets in the Eagle Ford to a subsidiary of Venado Oil and Gas for $800m.

The transaction also includes SM Energy’s ownership interest in related midstream assets.

SM Energy president and CEO Jay Ottoson said: “We are pleased to announce the signing of this agreement as we kick off 2017. This sale supports SM's strategy to be a premier operator of top tier assets. 

“Our 2017 capital programme will focus on our top tier oil position in the Midland Basin, consisting of approximately 87,600 net acres, and our top tier operated natural gas and NGL position in the Eagle Ford, consisting of approximately 161,500 net acres. 

“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.”

The assets comprise nearly 37,500 net acres of the Maverick Basin / Eagle Ford area located in South Texas, and 12.5% interest in the Springfield Gathering System.

In the third quarter of last year, these assets produced nearly 27,260 net barrels of oil equivalent a day consisting of 33% oil, 33% natural gas and 34% NGLs.

The sale agreement is expected to close by the first quarter of 2017.

The transaction and the purchase price are subject to customary closing conditions and price adjustments. Additionally, SM Energy does not assure that the transaction will close within the expected time.

In this deal, Scotia Waterous served as the financial advisor of SM Energy.