SM Energy Increases Eagle Ford Reserves Estimate - Downspacing

SM Energy Operated Eagle Ford Acreage Map
SM Energy Operated Eagle Ford Acreage Map

SM Energy has increased its estimate of net recoverable resources in the Eagle Ford by 500 bcfe to 5.8 Tcfe. SM still only has 2 years of drilling booked as proved reserves. The company attributes the increase in reserves to better EURs (4.5 Bcfe per well) and expectations for tighter well spacing in portions of the play. Briscoe Ranch will be developed on 52-acre spacing compared to guidance of 72-acres per well previously.

The company completed 77 operated wells in 2012. At year-end, SM had 154 wells producing and 29 wells waiting to be brought online. Operated production grew to 271.3 mmcfed in the fourth quarter and non-operated production grew to 15,500 boe/d (93 mmcfed). That's growth of more than 10% over the third quarter of 2012.

SM is currently running 5 rigs and 2 frac spreads in the play. In it's non-operated position, SM expects Anadarko will drop down to 8 rigs in 2013, but believes the number of well completions will hold steady due to efficiency gains in drilling.

SM Energy operates 145,000 net acres in the Eagle Ford. Leases on 4,000 acres prospective for dry gas at Apache Ranch were allowed to expire in 2012.

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