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SM Energy adds to record year for Permian M&A with US$1.6 billion Midland Basin acquisition

SM Energy adds to record year for Permian M&A with US$1.6 billion Midland Basin acquisition

Report summary

SM Energy announced two transactions on 18 October 2016, acquiring acreage in the Midland Basin from Encap-backed QStar for US$1.6 billion, while divesting its non-core Williston Basin assets to Oasis Petroleum for US$785 million. Its Midland Basin acquisition – which will be paid with US$1.1 billion in cash plus 13.4 million shares – includes 35,700 net acres in Martin and Howard counties. Post-transaction, SM Energy will hold 82,450 net acres in the Midland Basin. The price paid equates to US$42,100 per net acre after adjusting for 2,400 boe/d of flowing production (assuming US$40,000 per flowing boe/d), which is in line with other late summer Midland acquisitions from Parsley Energy and Callon Petroleum. The Midland Basin remains one of the most resilient areas in the Lower 48 due to its superior well results, established infrastructure and supply chain, as well as its large inventory of stacked pay locations. The acquired position falls in the heart of the Midland Basin.

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  • SM Energy adds to record year for Permian M&A with US$1.6 billion Midland Basin acquisition PDF - 551.81 KB 6 Pages, 7 Tables, 2 Figures


The upstream oil and gas industry conducts activities against a backdrop of growing energy and environmental challenges. Political instabilities, international conflicts and government and environmental regulation have all impacted the production process.

This has forced companies to re-examine their corporate strategy, moving away from high-risk exploratory drilling to lower-risk exploration in mature basins as they search for increased returns.

This Upstream Oil and Gas Deal Insight report provides an in-depth analysis of this deal. You will also find information about upstream assets and the strategic rationale behind the deal.

For investors and businesses, this deal insight report provides an understanding of the effect this deal will have on the market, including oil and gas pricing and assumptions. Use it to keep up to date with deal announcements, gain expert insights and analyse potential developments that might affect your strategy.

Wood Mackenzie goes beyond company-reported data and announcements to give you an independent and informed view. Our unique valuation metrics are underpinned by our deep understanding of upstream assets and companies. We help you objectively benchmark and evaluate asset and corporate deals so you can compare deal economics around the world.

  • Executive summary
  • Transaction details
  • Upstream assets
  • Deal analysis
  • Upsides and risks
  • Strategic rationale
  • Oil & gas pricing and assumptions

In this report there are 9 tables or charts, including:

  • Executive summary
    • 2016 Midland Basin M&A deals
    • Executive summary: Table 1
  • Transaction details
  • Upstream assets
    • SM Energy and QStar Midland Basin wells
    • Upstream assets: Table 1
  • Deal analysis
    • Deal analysis: Table 1
    • Deal analysis: Table 2
    • Deal analysis: Table 3
  • Upsides and risks
  • Strategic rationale
  • Oil & gas pricing and assumptions
    • Oil & gas pricing and assumptions: Table 1
    • Oil & gas pricing and assumptions: Table 2
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