DENVER - SM Energy Company (NYSE: NYSE:SM), an independent energy firm, announced the pricing of a private offering of $1.5 billion in senior notes, divided equally between 6.750% notes due 2029 and 7.000% notes due 2032. The sale is expected to conclude on July 25, 2024, contingent upon customary closing conditions.
The company plans to allocate the net proceeds from the notes, alongside existing cash and credit facilities, to finance the acquisition of oil and gas assets in the Uinta Basin from XCL Resources' affiliates. Additionally, the funds will be used to redeem SM Energy's existing 5.625% notes due in 2025 and cover related transaction fees and expenses.
The 2029 notes carry a special condition requiring redemption if the acquisition is not completed by July 1, 2025, or if SM Energy decides not to proceed with the purchase.
The offering targets qualified institutional buyers and non-U.S. persons outside the United States, in compliance with the Securities Act of 1933. Since the notes will not be registered under the Securities Act or state securities laws, they cannot be sold within the U.S. or to U.S. persons without registration or an applicable exemption.
This press release does not represent a solicitation or offer to buy or sell securities and is not a redemption notice for the 2025 notes. Prospective investors should be aware that forward-looking statements in this release are subject to various risks, including market conditions and the successful closure of the offering and acquisition.
SM Energy, based in Texas, focuses on the acquisition, exploration, development, and production of oil, gas, and natural gas liquids. This press release is based on a press release statement from SM Energy.
In other recent news, SM Energy Co has amended its credit agreement to facilitate the acquisition of oil and gas assets in the Uinta Basin. This strategic move, in collaboration with Wells Fargo (NYSE:WFC) Bank and other lenders, is expected to enhance SM Energy's portfolio in the energy sector.
Analyst firms such as RBC (TSX:RY) Capital, Truist Securities, BMO (TSX:BMO) Capital, and Roth/MKM have been closely monitoring these developments. RBC Capital maintains a Sector Perform rating for SM Energy, while Truist Securities has adjusted its price target to $49.00, maintaining a Hold rating. Both firms project higher earnings and free cash flow estimates for SM Energy.
BMO Capital has also maintained its Market Perform rating on SM Energy, projecting significant enhancements to Free Cash Flow Per Share, Earnings Per Share, and Cash Flow Per Share. Roth/MKM, maintaining its Buy rating, suggests that SM Energy's estimated production of approximately 195,000 barrels of oil equivalent per day may be conservative. These are recent developments that reflect SM Energy's ongoing efforts to maintain stable production levels and implement operational efficiencies.
InvestingPro Insights
As SM Energy Company (NYSE: SM) navigates its strategic acquisition and financing activities, current and prospective investors may find it valuable to consider key metrics and insights from InvestingPro.
With a market capitalization of $5.44 billion and a P/E ratio that stands at a modest 7.37, SM Energy presents an interesting profile in the energy sector. The company's P/E ratio has seen a slight adjustment in the last twelve months as of Q1 2024, settling at 7.24, which could signal a steady valuation in the eyes of investors.
InvestingPro Tips indicate that analysts have become somewhat cautious, with six analysts revising their earnings predictions downwards for the upcoming period. Despite this, SM Energy has demonstrated a commitment to returning value to shareholders, maintaining dividend payments for an impressive 32 consecutive years. This consistency is further underscored by a current dividend yield of 1.54%, coupled with a notable dividend growth of 20.0% in the last twelve months as of Q1 2024.
Moreover, the company's stock price has experienced a large uptick over the last six months, with a total return of 31.56%. This performance is part of a longer-term trend, as the company has also delivered a strong return over the last five years.
For those considering a deeper dive into SM Energy's financial health and future prospects, InvestingPro offers additional analysis and tips. By using the promo code PRONEWS24, investors can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, which includes further valuable insights. There are currently 8 additional InvestingPro Tips available for SM Energy, which can be accessed at: https://www.investing.com/pro/SM
Investors should note the next earnings date for SM Energy is scheduled for July 31, 2024, which will provide further clarity on the company's operational performance and financial health following the recent developments.
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