SM Energy sells Powder River Basin assets for $500 million

By Patrick C. Miller | January 16, 2018

SM Energy Co. is selling the majority its Powder River Basin assets to Northwoods Energy LLC for $500 million.

The two Denver-based companies recently reached an agreement for Northwoods Energy to purchase more than 112,200 acres of SM Energy’s leasehold in Wyoming’s Converse, Campbell and Johnson counties. Northwoods is a portfolio company of Apollo Global Management.

Jay Ottoson, SM Energy president and CEO, said divestiture of the assets was consistent with the company’s strategy of focusing on development of its top-tier Midland Basin and Eagle Ford assets in Texas. The transaction would improve SM Energy’s balance sheet by reducing debt by about 20 percent.

Formerly known as Converse Energy, Northwoods Energy is a Colorado upstream oil and gas company focused on the Powder River Basin. Northwoods is backed by investment funds affiliated with Apollo Global Management and the Northwoods management team.

The Apollo funds—including Apollo Investment Fund VIII and Apollo Natural Resources Partners II—have committed to invest up to $850 million in Northwoods Energy.

“Northwoods is excited to be working with Apollo to build a leading Powder River Basin-focused independent E&P business,” said Tom Tyree, Northwoods Energy chairman and CEO. “We believe the basin has some of the best geology of any play in the Lower 48 and that Northwoods has a tremendous opportunity to develop this highly contiguous, core acreage position.”

Apollo is a global alternative investment management firm with offices in New York, Los Angeles, Houston, Chicago, St. Louis, Bethesda, Toronto, London, Frankfurt, Madrid, Luxembourg, Mumbai, Delhi, Singapore, Hong Kong and Shanghai. It has assets of approximately $242 billion in private equity, credit and real estate funds invested in a core group of nine industries.