#United States #Denver #SM Energy #Caturus Energy #Maverick Basin

SM Energy's Major Asset Sale Agreement

In a strategic move to strengthen its financial position, SM Energy Company has announced an agreement to sell specific assets in South Texas for $950 million to Caturus Energy, LLC. This decision is crucial as it aims not only to achieve one of the company's primary objectives—selling over $1 billion in assets—but also to significantly reduce debt and bolster the company's capital structure.

Overview of the Transaction
The transaction encompasses approximately 61,000 net acres and about 260 producing wells situated in the southern Maverick Basin within Webb County, Texas. Production from these assets is projected to average between 37-39 MBoe/d for the year 2026, with an estimated $160 million in asset-level cash flows collected during the full year, excluding corporate obligations. This sale reflects SM Energy's commitment to optimizing its operational resources and ensuring robust returns to its stakeholders.

Beth McDonald, President and CEO of SM Energy, expressed enthusiasm about the deal’s potential impact. “This timely asset sale largely accomplishes one of our key priorities,” she stated. She anticipates that this divestiture will not only enhance the balance sheet but also pave the way for a robust return-of-capital program, which the company plans to disclose during the forthcoming earnings report.

Financial Implications of the Sale

The deal, with an expected closure date set for the second quarter of 2026, represents a significant milestone for SM Energy. The effective date of the transaction is noted as February 1, 2026. The proceeds from this asset sale are expected to be primarily allocated towards debt reduction. By doing so, the company seeks to reaffirm its dedication to maintaining a strong balance sheet and a high degree of financial flexibility.

The sale comes at a time when energy companies are increasingly focusing on optimizing their portfolios to adapt to changing market dynamics while navigating financial challenges. SM Energy's decision to relinquish part of its assets also demonstrates a forward-thinking approach to business strategy and fiscal management.

Asset Details and Future Outlook

The sold assets include valuable holdings within the Maverick Basin, a region known for its productive oil and gas properties. As of the end of 2025, the net proved reserves associated with these assets were approximately 168 MMBoe. Given the nature of the product mix—45% liquids and 9% oil—the assets have shown promising cash flow capabilities, which SM Energy plans to leverage after the sale closes.

RBC Capital Markets has been appointed as the exclusive financial advisor for the transaction while Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel. With the partnership of these advisory firms, SM Energy is well-positioned to execute this asset sale efficiently and effectively.

Navigating Forward

This announcement comes amid other recent corporate strategies by SM Energy, which include various moves to solidify its market presence while addressing broader economic challenges within the energy sector. As regulations tighten and public scrutiny rises, firms like SM Energy must remain adaptive.

With the anticipated asset sale nearing completion, stakeholders and investors alike are keen to see how this strategic maneuver will influence SM Energy's long-term growth trajectory and operational shell. The company’s plans to refocus capital utilization towards stabilizing debt indicate a pivot towards a more sustainable business development model.

In conclusion, as SM Energy ventures into the execution of this transaction, the broader implications for their financial health and future operational capabilities will unfold, setting the stage for potential new investment opportunities and enhanced market confidence.