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SM Energy Announces Divestiture Agreement Worth $950 Million
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Key Takeaways
SM Energy to sell South Texas assets for $950M in cash, with deal closure expected in 2Q26.
SM plans to use proceeds to reduce debt and strengthen its balance sheet.
Assets for sale include 61,000 net acres and 260 wells, with 2026 output expected to be 37-39 Mboe/d.
SM Energy Company (SM - Free Report) struck a deal to sell certain South Texas assets for $950 million in cash to Caturus Energy, LLC. The cash transaction, subject to customary closing adjustments, has an effective date of Feb. 1, 2026, and is expected to close in the second quarter of 2026.
Following the sale, SM plans to use the proceeds primarily to reduce outstanding debt, strengthening its balance sheet. A stronger balance sheet will position the upstream producer to better navigate commodity price volatility, pursue growth investments and potentially increase shareholder returns, enhancing investor appeal.
The deal covers approximately 61,000 net acres and nearly 260 producing wells in the Maverick Basin, Webb County, TX,along with associated infrastructure. These properties are projected to produce between 37,000 and 39,000 barrels of oil equivalent per day in 2026, with about 45% liquids and 9% oil. The production profile is estimated to generate $160 million in cash flow in 2026. However, SM emphasized prioritizing deleveraging and capital structure improvements.
With West Texas Intermediate crude prices hovering above $65 per barrel, according to oilprice.com, the business environment of SM seems to be easing out. However, the U.S. Energy Information Administration (EIA) predicts the crude oil prices to decrease further in the coming days, implying that SM’s upstream business will remain under pressure going forward.
Some other players having presence in the upstream space and whose business models are exposed to crude price volatility are Chevron Corporation (CVX - Free Report) , BP plc (BP - Free Report) and Diamondback Energy, Inc. (FANG - Free Report) . Like SM, the business models of CVX, BP and FANG will remain under pressure in the coming days due to the EIA’s forecast of decreasing crude oil prices. CVX, BP and FANG carry a Zacks Rank #3 each at present.
Chevron, based in Houston, TX, operates across the globe and achieved record fourth-quarter 2025 production, supported by its resilient upstream assets.
With a workforce of around 100,500, BP operates as an integrated energy giant in 61 countries. In 2025, BP plc recorded refining availability of 96.3% and upstream plant reliability of 96.1%, supporting upstream production of 2.3 million barrels of oil equivalent per day.
Headquartered in Houston, TX, Diamondback Energy has presence in the Permian Basin, the most prolific asin in North America.
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SM Energy Announces Divestiture Agreement Worth $950 Million
Key Takeaways
SM Energy Company (SM - Free Report) struck a deal to sell certain South Texas assets for $950 million in cash to Caturus Energy, LLC. The cash transaction, subject to customary closing adjustments, has an effective date of Feb. 1, 2026, and is expected to close in the second quarter of 2026.
Following the sale, SM plans to use the proceeds primarily to reduce outstanding debt, strengthening its balance sheet. A stronger balance sheet will position the upstream producer to better navigate commodity price volatility, pursue growth investments and potentially increase shareholder returns, enhancing investor appeal.
The deal covers approximately 61,000 net acres and nearly 260 producing wells in the Maverick Basin, Webb County, TX,along with associated infrastructure. These properties are projected to produce between 37,000 and 39,000 barrels of oil equivalent per day in 2026, with about 45% liquids and 9% oil. The production profile is estimated to generate $160 million in cash flow in 2026. However, SM emphasized prioritizing deleveraging and capital structure improvements.
SM currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
With West Texas Intermediate crude prices hovering above $65 per barrel, according to oilprice.com, the business environment of SM seems to be easing out. However, the U.S. Energy Information Administration (EIA) predicts the crude oil prices to decrease further in the coming days, implying that SM’s upstream business will remain under pressure going forward.
Some other players having presence in the upstream space and whose business models are exposed to crude price volatility are Chevron Corporation (CVX - Free Report) , BP plc (BP - Free Report) and Diamondback Energy, Inc. (FANG - Free Report) . Like SM, the business models of CVX, BP and FANG will remain under pressure in the coming days due to the EIA’s forecast of decreasing crude oil prices. CVX, BP and FANG carry a Zacks Rank #3 each at present.
Chevron, based in Houston, TX, operates across the globe and achieved record fourth-quarter 2025 production, supported by its resilient upstream assets.
With a workforce of around 100,500, BP operates as an integrated energy giant in 61 countries. In 2025, BP plc recorded refining availability of 96.3% and upstream plant reliability of 96.1%, supporting upstream production of 2.3 million barrels of oil equivalent per day.
Headquartered in Houston, TX, Diamondback Energy has presence in the Permian Basin, the most prolific asin in North America.