SM bulks up in Bakken

Bulking up: SM adds Bakken acreage

SM Energy is doubling down on the Bakken tight-oil play in North Dakota with a $330 million deal to add 61,000 net acres from an undisclosed seller.

The asset package includes 3200 barrels of oil equivalent per day (91% oil) in addition to the acreage in Divide and Williams counties, which is 70% held by production and lies adjacent to the company's existing Gooseneck project.

In total, SM controls 225,000 net acres in the Williston basin and produces an average of 16,500 boepd from its Bakken/Three Forks operations, where it is hoping to capitalise on revisions to its completions programme to boost production.

SM expects to fund the deal, which will close in the third quarter, with cash on hand and borrowing under its existing credit facility. SM will update its capital budget next month to allocate capital for the new operations.

Outside the Bakken, SM exhausted the drilling carry in its $680 million joint venture in the Eagle Ford shale in Texas with Japanese player Mitsui in the second quarer.

While SM will now have to shoulder its own drilling costs in that play, the company is tweaking completions there too in order to boost both production and liquids yields from each well.

For second quarter, the quarter, SM reported net income of $59.8 million (88 cents per share) compared to net income of $76.5 million ($1.13 per share) a year ago.

Total revenue for the quarter increased to $675 million from $559.4 million in the same period last year.

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