Stephens Raised Target Price on SM Energy (SM) to $49, Following Divesture of Some South Texas Assets

SM Energy Company (NYSE:SM) is one of the 13 Deep Value Stocks to Buy Right Now.

On February 19, Stephens raised its target price on SM Energy by 2.1% to $49 (from $48) and retained its Overweight rating on the stock. This update came a day after SM Energy announced on February 18 that it sold some of its South Texas assets to Caturus Energy for $950 million.

The firm views the deal as “positive” for SM Energy, despite the unit price ($25,000 per Boepd) being slightly below average compared with similar completed Eagle Ford transactions over the past three years, thereby triggering the target price increase.

As for the full details of the deal, SM Energy is selling 61,000 net acres, containing 260 producing wells (including the related support facilities) in its southern Maveric Basin position, Webb County, Texas, for $950 million. These assets have 168 MMboe in net proven reserves, generate 37 to 39 Mboe/d, and yield $160 million in full-year asset-level cash flows (excluding G&A level overhead).

The proceeds of the sale, which is expected to close in the 2nd quarter, will be used to reduce the company’s debt, “reinforcing its commitment to balance sheet strength and financial flexibility”.

SM Energy Company (NYSE:SM) is an energy company engaged in the acquisition, exploration, development, and production of oil, gas, and natural gas liquids. The company is based in Denver, Colorado, and was founded in 1908.

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