Current SM Stock Info

SM Energy closes $765.8 million Williston Basin divestiture
SM Energy (ticker: SM) announced Thursday after market close that the company has completed its previously announced divestiture of its Williston Basin assets located outside of Divide County, North Dakota to Oasis Petroleum (ticker: OAS). Net cash proceeds from the deal amount to $765.8 million, according to the company’s press release.

Third quarter 2016 production associated with these assets was approximately 14,350 BOEPD (78% oil). The company plans to apply the proceeds from ...

Analyst Commentary

KLR Group
SM announced an acquisition of ~4,100 net acres complementary to their Howard County
footprint for $120 million, equating to a reasonable ~$29.3k per acre. The company priced a common equity offering of
~10.925 million shares (includes over-allotment) at a price to the public of ~$38.25 per share (~5% discount to yesterday’s
close) for gross proceeds of ~$418 million. The common stock offering increases the company’s shares outstanding ~11% and
lowers YE’16 net debt-to-EBITDA from ~4.2x to ~3.9x. This announcement should have a negative value impact primarily
due to the dilutive effect of the equity offering.

We view the bolt-on acquisition positively as the purchase price represents a
discount to SM's prior transaction. Some may interpret the equity offering as a
negative read on the non-op EF sale, but buying interest appears to be high.

Johnson Rice & Company
SM has acquired an additional 4.1k net acres in Howard County. The acreage comes from
one new transaction as well as additional leases being finalized by QStar and RRP which
SM acquired earlier this quarter. At $120mm, the price per acre is below that
of the original transaction ($29k/ac vs $40-45k/ac). The $29k/ac could be lower if there is
significant associated production, which wasn’t disclosed. SM’s revolver was also reduced
from $1,350mm to $1,165mm, but the company only has ~$350mm drawn. Additionally SM
offered ~10.9mm shares (10.8% o/s, including shoe) for ~$420mm in gross proceeds.  

Legal Notice