Back to top

Analyst Blog

Zacks Equity Research

SM Energy Buys Permian Basin Assets; Hikes Borrowing Base


Trades from $3

SM Energy Company (SM - Analyst Report) recently declared that it has completed the acquisition of certain Permian Basin assets from Rock Oil Holdings LLC. In details, the company completed the acquisition of 24,783 net acres of land in Howard County, TX for a total consideration of $980 million.  

With this buyout, the company will be able to expand its footprint in the Midland Basin to approximately 46,750 net acres. SM Energy estimates net production of 5,300 barrels of oil production per day from the acquired resources for September.

SM Energy also announced that its borrowing base has increased to $1.35 billion, including bank commitment of $1.25 billion. This definitely enhances the company’s liquidity.

Denver, CO-based SM Energy, previously known as St. Mary Land & Exploration Company, is an independent oil and gas company engaged in the exploration, exploitation, development, acquisition and production of natural gas and crude oil in North America. The company boasts a diverse asset mix and has promising organic production growth outlook. SM Energy is also favorably positioned than most of its peers in terms of balance sheet strength.



The recent OPEC decision to curb oil production amid oversupplied commodity market might help in oil price recovery. This is a boon for the upstream and integrated energy players – like Apache Corp. (APA - Analyst Report) , Denbury Resources Inc. (DNR - Analyst Report) and Antero Resources Corporation (AR - Snapshot Report) –whose business is directly related with oil prices and SM Energy is no exception.

Confidential from Zacks

Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>