Wednesday, February 23, 2011

SM Energy considers options for Eagle Ford acreage

SM Energy Company is initiating a marketing process to sell down or joint venture a portion of its total position in the Eagle Ford shale play. The company currently estimates that it will sell roughly 20% to 30% of its total acreage position and that as a result the net spending for 2011 will be approximately $500 million after adjusting for capital expenditures associated with divested properties and possible drilling carries. Bank of America Merrill Lynch has been engaged to market these assets.

SM Energy's operated Eagle Ford acreage overview:
-- ~165,000 net acres; Largely 100% WI
-- Gross operated production currently at 59 MMcf/d and 2,000 Bbl/d; As of Q3-2010, the net production to the company was 38.3 MMcfe/d (Gas 79%)
-- Currently two operated drilling rigs running in play
-- Nine wells commenced drilling during Q3-10; Total of 40 gross wells planned for 2010.

SM Energy's non-operated Eagle Ford acreage overview:
-- ~84,500 net acres; Roughly 25% WI
-- Net production as of Q3-2010 was 13.8 MMcfe/d (Gas 51%)
-- Six rigs currently running; 29 wells were spud during Q3-10
-- SM plans on participating in the midstream and downstream arrangements.

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