SM Energy to divest Mid-Continent assets

SM Energy Co. (NYSE: SM) has entered into two agreements to divest its assets in the Arkoma Basin of Oklahoma and in the ArkLaTex area of east Texas and northern Louisiana for a total purchase price of $324 million.

The divestiture closes the funding gap, said analysts with Stifel following the announcement. "Net of the asset sale, we project cash flow will slightly exceed expenditures of $1.2B this year. The balance sheet should remain strong as debt/TTM EBITDA increases to a comfortable 2.2x at YE15 from 1.7x at 3/31/15."

The transactions are expected to close in the second quarter of 2015. RBC Richardson Barr served as an advisor to SM Energy in these transactions.

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