Latest News and Analysis
Deals and Transactions
Track Drilling (Rigs by operator) | Completions (Frac Spreads)

    emailEmail    |    bookmarkBookmark

SM Energy Doubles Down in the Midland Basin; Inks $1.6B Acreage Deal

Announced Date
October 18,2016
Deal Value $
1,600,000,000
Net Acres
35,700
Transaction Type
Property
Buyer
Seller
Price Per BOE $
35,000
Source Documents:
   Source Link
Location
Region
Permian - Midland Basin

Country
United States

State
Texas

County
Howard ,Martin

Play


Production
Production
2,400 Boe/d


Multiples
Production ($/boe/d)
666,667

$Price/Net Acre
44,818

$Price/Adj. Net Acre
42,465

Adj. $/acre is based on production @35,000 Boe/d

Transaction Details: 

Closing Announcement - December 22, 2016

SM Energy has closed the previously announced acquisition of oil and natural gas assets in Howard and Martin Counties, Texas, from QStar LLC and a related entity for $1.6 billion.

The Company estimates its Midland Basin footprint to approximate 87,600 net acres, including the pending acquisition of additional leasehold interests announced in early December 2016. The acquisition was funded predominantly with cash proceeds from recent asset divestitures and the issuance to the sellers of 13.4 million shares of SM Energy common stock. The effective date of the transaction is September 1, 2016. The Company intends to operate two rigs on this leasehold position during 2017, starting in the first quarter.


Initial Announcement - October 18, 2016

SM Energy has made a deal to acquire 35,700 net acres in Howard and Martin Counties in West Texas, expanding the Company's Midland Basin footprint to approximately 82,450 net acres.

The acquired acreage complements, and is partially contiguous to, the Company's recently closed Howard County acreage acquisition and includes approximately 2,400 Boe per day net production.

Acreage Map

The purchase price is $1.1 billion cash, subject to customary purchase price adjustments, plus 13.4 million shares of SM common stock to be issued to the seller. The seller is QStar LLC, a portfolio company of EnCap Investments L.P. and a related entity.

The Company plans to fund the majority of the $1.1 billion cash portion of the acquisition with the proceeds from the Williston Basin asset sale and the remainder under the Company's revolving line of credit, which has a borrowing base of $1.35 billion, aggregate commitments of $1.25 billion and was undrawn as of October 14, 2016.

The Company is issuing to the sellers $500 million in SM Energy common stock based on the 30-day volume-weighted average price of $37.35 per share, or approximately 13.4 million shares. Further, the Company remains on track with the planned sale of its non-operated assets in the Eagle Ford program, which we expect will be a potential source of funding for the acceleration of activity in the Permian Basin over the coming years.

Permian Basin Well Results

The acquisition is expected to close mid-December, 2016, with an effective date of September 1, 2016, and the divestiture is expected to close early-December, with an effective date of October 1, 2016.

Petrie Partners served as exclusive financial advisor to SM Energy in connection with both of the transactions. Jefferies LLC served as sole financial advisor to QStar and EnCap Investments, L.P.

About Qstar LLC

QStar is a growing oil and gas company based in Houston, Texas. Drawing on deep technical and financial expertise, QStar identifies, acquires and exploits oil reserves from underdeveloped or bypassed reservoirs in U.S. onshore basins.

Executive Team:

  • Gerald R. Carman Chief Executive Officer
  • David C. Newman Chief Operating Officer
  • Joel E. Saber Chief Financial Officer

Contact:

QStar, LLC
6363 Woodway, Suite 750
Houston, TX 77057
(713) 333-9200

Permian - Midland Basin Deal Activity In Last 12 Months



Other Permian - Midland Basin Region's Deals



Announced DateBuyerSellerDeal Value($mm)LocationCategory
Feb-12-2024 - - Click here Texas  E&P
Dec-11-2023 - - Click here Texas  E&P
Sep-13-2023 - - Click here Texas  E&P
Jun-20-2023 - - Click here Texas  E&P
Apr-03-2023 - - Click here Texas  E&P

Price History



Date Deal Headline Price$/acre
Feb-12-2024 Diamondback To Acquire Endeavor Energy In $26 Billion Transaction - -
Jan-04-2024 APA Corp to Acquire Permian Pure Player- Callon In All Stock Deal - -
Dec-15-2023 Fury Resources Takes Battalion Private In Transaction Worth $450 Million : Map - -

Other QStar Deals



Announced DateBuyerSellerDeal Value($mm)LocationCategory
Mar-30-2015 - - Click here Texas  E&P

Other SM Energy Company Deals



Announced DateBuyerSellerDeal Value($mm)LocationCategory
Apr-04-2018 - - Click here Texas  E&P
Jan-10-2018 - - Click here Wyoming  E&P
Nov-04-2017 - - Click here Texas  E&P
Jan-03-2017 - - Click here Texas  E&P
Oct-18-2016 - - Click here North Dakota  E&P