The deal is expected to expand SM Energy’s portfolio with “assertive” scale, increase its oil volumes, and extend low-breakeven inventory life. It also boosts the company’s return of capital while maintaining a strong balance sheet and provides high-margin barrels competitive with Midland Basin due to higher oil content and lower operating costs.
Financing and Operations
SM Energy plans to finance its acquisition through a combination of debt and cash on hand. The company has received “firm commitments” from J.P. Morgan, Bank of America, and Wells Fargo for an aggregate $1.2 billion unsecured bridge facility, according to the statement.
SM Energy will be the operator of the acquired assets, while Northern Oil and Gas will participate in development pursuant to cooperation and joint development agreements the parties entered into relating to the deal.
Legal Advisors
The Kirkland team advising SM Energy and Northern Oil and Gas was led by corporate partners David Castro Jr., William Eiland, and Lindsey Jaquillard and included tax partners Mark Dundon and Jacob Walley; antitrust partners Chuck Boyars and Matt Wheatley; and environmental transactions partner Jonathan Kidwell. Debt finance partners Will Bos and Chad Davis and capital markets partners Matt Pacey and Anthony Sanderson also advised SM Energy on financing.
