SM Energy Co (NYSE: SM) is selling its assets in the Marcellus shale.
On Monday, the company announced an agreement with Endeavor International (NYSE: END).
Endeavor, an oil and gas company, has agreed to purchase the assets in Pennsylvania for a cash deal of $80 million.
The major part of the deal is the 50,000 acres of land in Pennsylvania’s McKean and Potter counties, land containing parts of the Marcellus shale.
Included are pipeline assets, facilities located on the land, as well as 3 natural gas wells with a production capacity of 3 to 4 million cubic feet per day.
This sale is in conjunction with SM Energy’s plan to raise $300 million to $500 million in one year.
They will do this by selling assets and making joint venture agreements.
Just recently, SM Energy reduced their assets in the Eagle Ford shale by half in a deal worth $680 million with Mitsui & Co (TYO: 8031).
CEO of SM, Tony Best, said of these sales in a press release, “Year to date, we have closed or entered into transactions in excess of $1 billion that will be used to fund the development of higher value assets in our portfolio while preserving the strength of our balance sheet.”
Hydraulic fracturing, the process used on these shale deposits to release natural gas, is highly controversial in regards to its environmental effects. It is, however, legal in the state of Pennsylvania.
Several states, including New York and Maryland, have extended moratoria on the process until further environmental studies could be completed.
The Marcellus shale deposit is one of the largest in the United States, and it covers parts of New York, Ohio, Pennsylvania, Maryland, and West Virginia.
The deal with SM Energy will add to the already existing shale assets of Endeavor International.
Currently, Endeavor has assets adjacent to the ones included in the deal.
The purchase will increase its Marcellus shale assets to around 68,000 acres.
According to the Wall Street Journal, SM stocks have risen 32% since the start of 2011.
Shares of Endeavor were down 9.1% on Monday.
That’s all for now,