SM Energy Company (SM) announced that it is initiating a process to sell its gas-producing assets in the Mid-Continent regions of Oklahoma, Texas and Louisiana. Moreover, the company will close its regional office in Tulsa, OK.
The assets include the Arkoma Basin of Oklahoma and in the Arklatex area of East Texas and Northern Louisiana. During 2014, these assets produced about 3.4 million barrels of oil equivalent (MMBOE) net (98% gas).
The sale, which will be managed by RBC Richardson Barr & Co., is expected to close by mid-2015, assuming acceptable bids are received. With the office in Tulsa slated to close, SM Energy intends to relocate several of its employees to its other offices.
The latest sale forms a part of the Denver-based oil and gas company’s strategy to increase focus on its core assets in the Eagle Ford and Bakken/Three Forks areas. SM Energy acquired assets in the Bakken/Three Forks shale play of North Dakota alongside its existing Gooseneck holdings in Sep 2014 for $325 million from Baytex Energy USA. This acquisition is the biggest in monetary terms in the company’s 106-year old history.
Currently, SM Energy has an economic drilling inventory equating to over 20 years of current company production and 10 years of gross locations.
The company’s attractive oil and gas investments, balanced and diverse portfolio of proved reserves and development of drilling opportunities is expected to create long-term value for shareholders. SM Energy is viewed as one of the most attractive players in the exploration and production space.
Currently, SM Energy carries a Zacks Rank #5 (Strong Sell). Better-ranked stocks include Spectra Energy Partners, LP (SEP), Seadrill Partners LLC (SDLP) and QEP Midstream Partners, LP (QEPM), each sporting a Zacks Rank #1 (Strong Buy).
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