SM Energy Company said on Monday that it has sold assets in the Eagle Ford Basin to Venado Oil and Gas for $800 million.
The deal includes SM Energy’s ownership interest in related midstream assets and the company’s third party operated assets in the basin.
The buyer, Venado Oil and Gas, is an affiliate of KKR.
The assets expected to be sold include 37,500 net acres in the Maverick Basin /Eagle Ford area in the south of Texas.
The deal also includes a 12.5 percent interest in the Springfield Gathering System.
Net proved reserves associated with the assets were 65 million barrels of oil equivalent as of the end of 2015.
Oil accounts for 38 percent of those net proved reserves, natural gas accounts for 31 percent and natural gas liquids accounts for 31 percent.
Denver-based SM Energy said in the third quarter of 2016 that the assets produced 27,260 net barrels of oil equivalent per day.
Oil accounted for 33 percent of that production, natural gas accounted for 33 percent of production and natural gas liquids accounted for 34 percent of that production.
The transaction is expected to close in the first quarter of 2017, with an effective date of November 1, 2016.
SM Energy said the purchase price will be subject to certain closing price adjustments.
The transaction is subject to the satisfaction of customary closing conditions.
SM Energy added that there can be no assurance that the transaction will close on time or at all.
“The proceeds from this sale will provide us with additional flexibility to pursue aggressive growth from our Midland Basin assets, with related capital expenditures in excess of cash flow over the next few years, while at the same time improving our debt metrics and maintaining strong liquidity,” SM Energy president and CEO Jay Ottoson said.
Ottoson said his company’s 2017 capital program will focus on its position in the Midland Basin.
SM Energy said its “top tier oil position in the Midland Basin” currently consists of 87,600 net acres.
The company added that its operated natural gas and NGL position in the Eagle Ford consists of 161,500 net acres.
