SM Energy closes Powder River assets sale, provides update

By Patrick C. Miller | April 02, 2018

Denver-based SM Energy Co. has completed the sale of the majority of its assets in the Powder River Basin for $500 million to Northwoods Operating LLC.

The assets sold include 112,200 predominantly contiguous net acres with average December 2017 net production of about 2,200 barrels of oil equivalent per day (51 percent oil, 18 percent NGL and 31 percent natural gas). SM Energy plans to use proceeds from this divestiture for general corporate purposes, including debt reduction.

The buyer—Northwoods Operating—is a portfolio company of funds managed by affiliates of Apollo Global Management LLC. The effective date of the transaction is October 1, 2017.

For the first two months of 2018, SM Energy reported spending $350 million to complete 18 wells in the Permian Basin and five in the Eagle Ford. The company’s total capital expenditures for the year are expected to be nearly $1.3 billion.

In January and February, the company said its Permian Basin production exceeded projections because new completions were stronger than expected. Higher Permian Basin production performance was partially offset by downtime at a third-party pipeline system in the Eagle Ford. As a result, first quarter production is expected to be closer to the upper end of original guidance.