SM Energy to buy assets in Texas for $1.6 bn and sell North Dakota assets for $785 mn

US oil and natural gas company, SM Energy Co today struck two deals: to buy some assets in West Texas for about $1.6 billion and sell its assets in North Dakota for $785 million.

The Denver, Colorado-based company is buying 35,700 net acres in Howard and Martin Counties in West Texas from QStar LLC, a portfolio company of EnCap Investments L.P, for $1.1 billion cash and 13.4 million of its shares.

SM Energy is also selling its Williston Basin assets in North Dakota for $785 million to Oasis Petroleum Inc.

The company plans to fund the majority of the $1.1 billion cash portion of the acquisition with the proceeds from the Williston Basin asset sale and the remainder through its revolving line of credit.

The purchase of assets in Howard and Martin Counties will expand the SM Energy's Midland Basin footprint to approximately 82,450 net acres. The acquired acreage complements, and is partially contiguous to, the company's recently closed Howard County acreage acquisition and includes approximately 2,400 Boe per day net production.

''Our strategy is straight-forward, we intend to deliver growth in cash flow per debt-adjusted share by being a premier operator of top tier assets. We have established a position as an outstanding operator in the Midland Basin, and with this acquisition we also establish significant scale,'' said president and CEO of SM Energy, Jay Ottoson.