A mystery buyer of Eagle Ford acreage

Denver-based SM Energy Co. has sold 15,400 acres of non-producing land in the Eagle Ford Shale to an unnamed buyer for $225 million.

The property, in Dimmit and La Salle counties, went for about $14,600 per acre, according to analyst estimates. That’s far less than the $21,000 per acre Marathon paid for acreage it bought from Hilcorp and KKR earlier this month.

Three wells have been drilled on the land but there is no production.

The buyers of the property is also entitled to about 12 percent of the takeaway capacity of a join venture between SM Energy, Kinder Morgan Energy Partners and Copano Energy, known as Eagle Ford Gathering LLC.

The sale is expected to close in August.

SM, which was previously known as St. Mary Land & Exploration Co., said in a statement negotiations are ongoing for other portions of its Eagle Ford acreage.

Analysts and Tudor Pickering & Holt said in a research they assume SM has about 56,000 net acres remaining to sell at about $10,000 per acre.

In a research note, Pritchard Capital Partners analysts said the acreage is in an area with rich-gas in LaSalle County, which is more valuable than areas with simply dry gas but not quite as attractive as areas with oil production possibilities.

Pritchard notes that the SM deal should mean a more positive stock price outlook for Houston-based Goodrich Petroleum — which purchased about 74,000 acres in the oil-rich Tuscaloosa Marine Shale on Monday.

Goodrich’s 40,000 Eagle Ford acres are located in the the oilier part of LaSalle and Frio Counties and should fetch more. But using the per acre price of the SM deal Goodrich’s assets are worth $584 million, or more than $16 per share for the company.

“Put another way, our NAV (net asset value) would go to ~$44 from ~$34 using $14,600/acre,” Pritchard said.

But that per acre price doesn’t do good things for Rosetta Resources, another small Houston-based E&P, said Pritchard.

“If we value the company’s 50,000 net acres in the oil and wet gas windows at $14,600/acre, our NAV declines to $33/share from $47/share,” the analysts note. “We are not presently attributing any value to ROSE’s dry gas Eagle Ford acreage in our valuation.”


Others are continuing to look at expanding their place in the Eagle Ford, including Canada’s No. 4 independent oil producer, Talisman Energy.

According to Reuters, Talisman CEO John Manzoni said Monday that Talisman would look for an incremental expansion of its existing acreage in the Eagle Ford but avoid a big-ticket deal.

“You can make your own judgments about the deals that have recently been done,” Manzoni said following a presentation to the Canadian Association of Petroleum Producers’ annual investment symposium. “We understand the land, we understand what we believe we should be paying. We’re looking at smaller deals, incremental expansions … at the right price.”

Talisman bought 37,000 acres in the Eagle Ford in May 2010, and added acreage in December 2010 via a joint venture with Statoil that paid $1.33 billion for 97,000 acres.