The sale comprises assets, operated by a third-party, including SM Energy’s ownership interest in related midstream assets.
The firm said that the deal supports its strategy to be a premier operator of top tier assets.
Under the terms of the deal, Venado will acquire approximately 37,500 net acres in the Maverick Basin /Eagle Ford area of south Texas as well as 12.5% stake in the Springfield Gathering System.
SM Energy estimates the net proved reserves associated with these assets to be 65 million barrels of oil equivalent (MMBoe) as of 2015 end.
SM Energy president and CEO Jay Ottoson said: "Our 2017 capital program will focus on our top tier oil position in the Midland Basin, consisting of approximately 87,600 net acres, and our top tier operated natural gas and NGL position in the Eagle Ford, consisting of approximately 161,500 net acres.
“The proceeds from this sale will provide us with additional flexibility to pursue aggressive growth from our Midland Basin assets, with related capital expenditures in excess of cash flow over the next few years, while at the same time improving our debt metrics and maintaining strong liquidity."
Scheduled to be completed in the first quarter of 2017, the transaction is subject to the satisfaction of customary closing conditions.
In December, SM Energy acquired oil and natural gas assets in Howard and Martin Counties, Texas, from QStar and a related entity for $1.6bn.
Image: US-based oil and gas producer SM Energy intends to strengthen its business. Photo: courtesy of Rosemary Ratcliff/FreeDigitalPhotos.net.
