Current APO Stock Info

Northwoods is buyer of SM Energy’s PRB acreage; Apollo commits up to $850 million of funding

Northwoods Energy LLC, a portfolio company of certain funds managed by affiliates of Apollo Global Management, LLC (ticker: APO), has plans to acquire SM Energy’s core Powder River Basin assets (read more below). The acquisition is comprised of over 112,200 predominantly contiguous net acres of leasehold in Converse, Campbell and Johnson counties in Wyoming.

Northwoods CEO Tom Tyree said, “Northwoods is excited to be working with Apollo to build a leading Powder River Basin-focused independent E&P business. 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.”

The Apollo funds, including Apollo Investment Fund VIII and Apollo Natural Resources Partners II, have committed to invest up to an aggregate of $850 million in Northwoods.

Northwoods Energy Receives $850 Million Commitment for PRB Play

SM Energy Map of Operations

SM Energy Sells 112,200 Acres for $500 Million

Unloads PRB, increasing concentration on Midland and Eagle Ford

SM Energy Company (ticker: SM) said that it entered into a definitive agreement to sell a majority of the company’s Powder River basin assets for a cash purchase price of $500 million. The buyer was undisclosed.

President and CEO Jay Ottoson said, “Divestiture of these assets is consistent with our strategy of focusing on development of our top tier Midland basin and Eagle Ford assets and improving our balance sheet by reducing debt. Pro forma for this transaction, as of the end of the third quarter 2017, net debt is reduced by approximately 20% and net debt:EBITDAX is reduced to less than 3 times.”

The assets to be sold include approximately 112,200 predominantly contiguous net acres located in northwest Converse County and portions of southeast Johnson and southwest Campbell Counties, Wyoming. These assets represent approximately 80% of the company’s current Powder River basin acreage position. Each acre sold for approximately $4,456.

Net production in the basin as of Dec. 2017 was approximately 2,200 BOEPD (51% oil, 18% NGLs and 31% natural gas) and preliminary estimates of proved reserves for year-end 2017 are 4.2 MMBOE (82% PDP). According to these numbers, SM Energy sold its assets for $227,272 per flowing BOEPD and $119.05 per BOE of reserves.

The transaction is expected to close in the first quarter of 2018, with an effective date of Oct. 1, 2017. The purchase price will be subject to certain closing price adjustments. The company plans to use the expected sale proceeds for general corporate purposes, including debt reduction.

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