SM ENERGY TO SELL OK, E TX & NW LA ASSETS; WILL CLOSE TULSA OFFICE
SM Energy seeks buyer for Mid-Continent assets; plans to close Tulsa office
Mark Harden News Director- Denver Business Journal Jan 6, 2015, 6:23pm MST
SM Energy Co. says it plans to sell gas-producing assets in areas of the Mid-Continent region of Oklahoma, Texas and Louisiana and close its regional office in Tulsa, Oklahoma.
The Denver-based oil and gas company (NYSE: SM) said it will instead focus on its "core assets" in the Eagle Ford and Bakken/Three Forks areas.
The assets to be offered by SM are in the Arkoma Basin of Oklahoma and in the Arklatex area of East Texas and Northern Louisiana. The assets produced 3.4 million barrels of oil equivalent in 2014, 98 percent of it gas, SM said in late Tuesday's announcement.
SM hopes to close on the sale by the middle of this year "assuming acceptable bids are received." The sale is being managed by RBC Richardson Barr & Co.
The company said that "many" of the Tulsa office's employees will be relocated to other offices.
"We had a strong 2014 driven by outstanding well results across the company. This was particularly true in our core Eagle Ford and Bakken/Three Forks development areas where … we have economic drilling inventory equating to over 20 years of current company production and 10 years of gross locations at our current pace," said CEO Anthony J. Best.
"As part of our effort to create differential shareholder value, we are launching a process to sell the remainder of our Mid-Continent and Arklatex assets and shift our resources to further focus on the development of these core assets," Best added. "Our balance sheet is strong, we have ample liquidity, and we are confident that after costs adjust to the current commodity pricing environment we will continue to generate strong, industry leading returns on capital employed."
SM in September acquired assets in the Bakken/Three Forks shale play of North Dakota alongside its existing Gooseneck holdings from Baytex Energy USA for $325 million. It was said to be the biggest acquisition in money terms in the 106-year-old company's history.
Tony Best is set to retire from the chief executive's post Jan. 15, to be succeeded by current SM President Javan D. Ottoson.
SM's share price has slid since an early September high above $89, closing Tuesday at $35.91 before the Mid-Continent announcement. ( Click here for a live quote from Yahoo Finance.)
Views: 1272
Replies to This Discussion
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Permalink Reply by Skip Peel - Mineral Consultant on
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SM NW LA leasehold is primarily located in Bossier, Webster, Claiborne, Bienville and DeSoto parishes.
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Permalink Reply by don3833 on -
Interesting, I just received a check from JBL exercising the one year option on my North Bossier land on behalf of SME. Really surprised me but this clarifies somewhat, they have better chance to sell with land under lease for the additional year. This was the lease for the area only between base of Rodessa zone and top of Smackover. Now expires July 8, 2016.
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Permalink Reply by Skip Peel - Mineral Consultant on
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The two instances may or may not be related. Land departments of E&P companies commonly continue leasehold management operations while other departments are considering asset deals. The exercise of your lease extension option very likely was in regard to future SM development plans that have been changing over the last few months owing to the drop in crude and NG prices. It's unlikely that the extension factors into the potential sale of the Bossier leasehold.
Unit applications, drilling permits and the filing of leases in the public record regularly continue even after a company has ceased development operations and signaled a pull out. Those costs were already incurred and required weeks or months to move through their process. They merely show up in the public record after the decision to pull out was made public.
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Permalink Reply by don3833 on
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Thanks for input, I intuitively thought it was a marginal reason to extend if they didn't have any development plans but the O&G business is not my background. Ever since signing the lease with the zone restrictions I mentioned I've wondered if there is a market for the un-leased zones, how to address it and productivity of specific zones available. I know a lot of JBL leases had restrictions like mine. Any suggestions? Happy New Year!
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Permalink Reply by Skip Peel - Mineral Consultant on
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If SM successfully markets their leasehold, the company that acquires same may provide some idea of what they perceive of value. Your depth definition includes the CV Sands which seems to be the formation of interest currently. My suggestion, follow GHS and ask questions. Happy New Year.
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Permalink Reply by Skip Peel - Mineral Consultant on
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MID-CONTINENT DIVESTITURE
SM Energy has entered into two agreements to divest its assets in the Arkoma Basin of Oklahoma and in the ArkLaTex area of east Texas and northern Louisiana for a total purchase price of approximately $324 million. The transactions are expected to close in the second quarter of 2015 and are subject to customary closing conditions and adjustments. RBC Richardson Barr served as an advisor to SM Energy in these transactions.
http://ir.sm-energy.com/preview/phoenix.zhtml?c=90687&p=irol-ne...
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