Colorado-based SM Energy Company (SM) saw bearish investor reaction to its latest announcement relating to divestment of all of its properties in the Anadarko Basin. The stock price moved down nearly 5% to touch $85.07 on Thursday from $89.27 on Tuesday when the sale was announced.
The properties to be divested – having around 58,000 net mineral acres – also include the company’s Granite Wash interests. These assets yielded about 8,500 barrels of oil equivalent per day in the third quarter of 2013, 75% of which was natural gas. The Anadarko Basin production accounted for about 6% of the company’s total output during the quarter.
SM Energy will sell its Anadarko Basin acreage to various affiliates of EnerVest, Ltd and will raise cash proceeds of around $343 million from it. The effective date of this transaction is Oct 1, 2013. Subject to closing conditions, purchase price adjustments, and transaction fees the deal is anticipated to close by the end of 2013.
The company’s attractive oil and gas investments, balanced and diverse portfolio of proved reserves and development drilling opportunities are likely to create long-term value for shareholders. We view SM Energy as one of the most attractive players in the exploration and production space.
The company reported an impressive third quarter with improved net resource potential in the Eagle Ford and Bakken, and better-than-expected production.
SM carries a Zacks Rank #1 (Strong Buy). Other peer group stocks with the same rank that offer value and are worth buying now include TransAtlantic Petroleum Ltd (TAT), Matador Resources Company (MTDR) and Northern Oil and Gas, Inc. (NOG).
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