SM Energy Grabs 61,000 Bakken Net Acres - $330 Million

July 30, 2014 Kirk Eggleston

In late July of 2014, SM Energy announced it will acquire approximately 61,000 net acres in Divide and Williams Counties for $330-million from Baytex Energy. The acreage is directly adjacent to the company's Gooseneck focus area. Upon closing, the company will have ~97,000 acres in the area.

Company officials say the acquisition is expected to add significant drilling inventory, and includes interests in 126 drilling spacing units, 81 of which will be operated by SM Energy. Net production from the acreage is ~3,200 boe/d (91% oil, 1,500 BTU rich gas). The properties are 90% operated and approximately 70% held by production. Working interest for operated spacing units is expected to range between 37.5% – 50.0%

Directly adjacent to the acquisition area, SM Energy noted improvements in its Three Forks program recently due to faster drilling times and improved completions. Current data reflects recent wells have higher sustained production rates than older wells.

The transaction has an effective date of July 1, 2014, is expected to close by the end of the third quarter of 2014, and is subject to customary closing conditions and adjustments. The Company expects to fund the acquisition with cash on hand and borrowings under its existing credit facility.

SM Energy Completed 42 Gross Bakken Wells in 2013

February 19, 2014 Kirk Eggleston

SM Energy completed 42 gross flowing completions in its operated Bakken/Three Forks program in 2013. Eight wells were completed in the fourth-quarter of 2013.

At the end of 2013, SM Energy had 103 net wells producing and 79 proved undeveloped net locations in the Bakken.

The company had 54 mmboe of total proved reserves in the Bakken at end of the year.

SM Energy Focusing on Infill Development in the Bakken

In 2014, the company's Bakken plans include testing completion design, spacing, and new intervals to maximize program economics and prove up additional inventory. SM Energy plans to run three rigs spending $275 million on operated activity and another $75 million on non-operated properties.

SM Energy is currently focusing its drilling on the Raven/Bear Den and Gooseneck prospects in North Dakota. Substantially all of the company's activity is now focused on infill development. Two of the three rigs the company is running in North Dakota are operating in the Raven/Bear Den prospect and the third in the Gooseneck prospect.

During 2013, the Company's drill and complete costs for its operated wells decreased by approximately 4% in both the Raven/Bear Den and Gooseneck prospects.

SM Energy Q4 Company-Wide Daily Production in 2013

Oil production company-wide was up 31% in the fourth quarter of 2013 to 40,800 b/d from 31,300 b/d in Q4 2012. Natural gas production was up 24% from 429.3 mmcf/d in the fourth-quarter of 2013 to 347.1 mmcf/d. NGL production was up 51% to 31,500 b/d from 20,800 b/d. Oil Equivalent production was 143,800 b/d. That's also up 31% from 109,900 b/d.

SM Energy Bakken Highlights

42 gross flowing completions of wells in 2013
103 net wells producing and 79 proved undeveloped net locations in Bakken in 2013
54 mmboe of total proved reserves in 2013
$275 million on operated activity and another $75 million on non-operated properties in 2014

SM Energy Company-Wide Production Highlights

2013 4Q company wide oil production up 31% - 40,800 b/d
2013 4Q company wide natural gas production up 24% - 429.3 mmcf/d
2013 4Q company wide ngl production up 51% to 31,500 b/d
2013 4Q company wide oil equivalent production up 31% to 143,800 b/d

SM Energy Will Run Three Bakken Rigs In 2014

December 23, 2013 R.T. Dukes

SM Energy plans to run three rigs spending $275 million on operated activity and another $75 million on non-operated properties.

Activity will primarily target the Bear Den, Raven, and Gooseneck areas in North Dakota.

SM Energy expects to complete 45 gross, operated wells in 2014.

Tony Best, CEO commented, "Our 2014 growth will be anchored by our core development programs in the Eagle Ford and Bakken-Three Forks, with additional investments being made in our emerging oil programs in the Permian Shales and the Powder River Basin."

SM Energy Grew Bakken Production 9% in the Third Quarter

October 31, 2013 R.T. Dukes

SM Energy grew Bakken production volumes from 13,700 boe/d in the second quarter to 14,900 boe/d in the third quarter.

The company completed 13 gross wells and is producing 35% more than it did at this time last year.

SM has three rigs running, with a focus in the Gooseneck, and Raven/Bear Den areas. SM Energy has 162,000 net acres prospective for the Bakken and Three Forks, but is focused on development of 81,000 net acres.

The company made two comments related to testing in the play:

Downspacing results will be considered in planning at year-end
Evaluating alternate completion designs being used in the play - Current design utilizes a 26-stage sliding sleeve completion and 80,000 barrels of fluid.

Read the company's full third quarter press release at sm-energy.com

SM Energy's Bakken Production Up - Utilizing Walking Rigs

August 1, 2013 R.T. Dukes

SM Energy's Bakken production was up 12% from the first quarter to average 13,700 boe/d in the second quarter of 2013.

During the quarter, the company released two traditional rigs and contracted a walking rig. SM plans to run three rigs through 2013. Almost all activity is infill drilling at this point. SM is has largely completed its exploration efforts and its efforts to hold leases with production.

Pad drilling has driven costs down 8% on the company's Gooseneck acreage to an average of $6.5 million.

SM completed 12 gross Bakken wells in the second quarter and expects to complete 40 gross wells in 2013.

Watch for results from a downspacing pilot and a lower Three Forks test in the Raven area. Other operators have also had success in the Bakken interval in the Gooseneck area. Positive results from any of those could add to the company's resource potential.

Read the company's full second quarter press release at sm-energy.com