- Negotiations concerning divestiture of Eagle Ford shale assets have
begun
- Enters into agreement to divest non-core assets
- Announces amended credit facility with increased borrowing base and
commitments
Company Website:
http://www.sm-energy.com
DENVER -- (Business Wire)
SM Energy Company (NYSE: SM) announces it has commenced negotiations
concerning the divestiture and development of a material portion of its
Eagle Ford shale position. The Company received multiple bids during its
marketing process and is currently negotiating a transaction or
combination of transactions.
In addition, the Company has entered into an agreement to sell non-core
assets in the Constitution Field for aggregate proceeds of approximately
$44 million. First quarter production associated with these properties
is approximately 6 MMCFE/d. The Constitution Field transaction
represents the Company’s entire position in this legacy field in
southeastern Texas. These assets have been categorized as assets held
for sale on the Company’s balance sheet since the third quarter of 2010.
The closing of this divestiture is expected to occur late in the second
quarter of 2011. The sale is subject to customary purchase price
adjustments, closing conditions, and transaction fees.
SM Energy also announces its entry into an amended five-year senior
secured revolving credit facility, with an increase of the Company’s
borrowing base to $1.3 billion from $1.0 billion. The commitment amount
has also been increased to $1.0 billion, up from $678 million. The
Company’s previous credit facility was scheduled to mature in July of
2012. As of May 31, 2011, the Company did not have any borrowings drawn
against its credit facility.
Tony Best, President and CEO, remarked, “We are pleased that we have
reached this phase of our Eagle Ford marketing effort. Our oft-stated
goal is to create value for our stockholders and we believe that a
meaningful sell-down of our Eagle Ford position, when completed, will
further enhance our ability to achieve that goal. The non-core asset
sale and amended credit facility that we are announcing today further
strengthen our already strong liquidity position and balance sheet. Our
robust inventory of high-return projects and solid financial standing
are a winning combination that will benefit our stockholders for years
to come.”
INFORMATION ABOUT FORWARD-LOOKING STATEMENTS
This release contains forward-looking statements within the meaning of
securities laws, including forecasts and projections. The words “will,”
“believe,” “budget,” “anticipate,” “plan,” “intend,” “estimate,”
“forecast,” and “expect” and similar expressions are intended to
identify forward-looking statements. These statements involve known and
unknown risks, which may cause SM Energy’s actual results to differ
materially from results expressed or implied by the forward-looking
statements. These risks include factors such as the uncertainty of
negotiations to result in an agreement or a completed transaction, the
uncertain nature of the expected benefits from the actual or expected
acquisition, divestiture, farm down or joint venture of oil and gas
properties, the uncertain nature of announced divestiture, joint
venture, farm down or similar efforts and the ability to complete such
transactions, the volatility and level of oil, natural gas, and natural
gas liquids prices, uncertainties inherent in projecting future rates of
production from drilling activities and acquisitions, the imprecise
nature of estimating oil and gas reserves, the availability of
additional economically attractive exploration, development, and
property acquisition opportunities for future growth and any necessary
financings, unexpected drilling conditions and results, unsuccessful
exploration and development drilling, the availability of drilling,
completion, and operating equipment and services, the risks associated
with the Company’s commodity price risk management strategy, uncertainty
regarding the ultimate impact of potentially dilutive securities, and
other such matters discussed in the “Risk Factors” section of SM
Energy’s 2010 Annual Report on Form 10-K and subsequent quarterly
reports filed on Form 10-Q. Although SM Energy may from time to time
voluntarily update its prior forward-looking statements, it disclaims
any commitment to do so except as required by securities laws.
ABOUT THE COMPANY
SM Energy Company is an independent energy company engaged in the
exploration, exploitation, development, acquisition, and production of
natural gas, natural gas liquids, and crude oil. SM Energy routinely
posts important information about the Company on its website. For more
information about SM Energy, please visit its website at sm-energy.com.
PR-11-11
Contacts:
SM Energy Company
Brent A. Collins, 303-861-8140
Source: SM Energy Company
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