SM Energy announced the sale of a portfolio of South Texas assets to Caturus Energy, LLC for $950 million in cash. The deal covers roughly 61,000 net acres and 260 producing wells in the Maverick Basin’s Webb County, Texas. The transaction became effective on February 1 2026 and is expected to close in the second quarter of 2026.
The sale is a key component of SM Energy’s deleveraging strategy, which has already seen the company pay off its credit facility and build a $100 million cash cushion. By divesting the South Texas assets, SM Energy will accelerate debt repayment and strengthen its balance sheet, positioning the company for future capital allocation and potential growth initiatives. The divestiture also supports a strategic shift toward higher‑margin assets in the Midland and Uinta Basins, where the company expects stronger profitability and operational leverage.
SM Energy’s recent financial performance provides context for the transaction. In Q4 2023 the company reported an adjusted EPS of $1.56 and revenue of $608.7 million. In Q4 2024, adjusted EBITDAX reached $610.8 million and adjusted net income was $1.91 per diluted share. Analyst consensus for Q4 2025 projects EPS of $0.77 and revenue of $764.4 million. The sale will help SM Energy move closer to its target of a 1× leverage ratio by year‑end 2025; the company’s leverage ratio was 0.57× at year‑end 2023 and its net debt‑to‑adjusted EBITDAX was 1.2× as of June 30 2025.
The transaction is part of a broader strategy that began with SM Energy’s $12.8 billion merger with Civitas Resources, which earned the company credit rating upgrades to ‘BB’ from S&P and ‘BB+’ from Fitch. In addition, SM Energy recently amended its credit agreement, increasing the borrowing base to $5 billion and extending the maturity to January 30 2031. Caturus Energy plans to use the acquired assets to supply low‑nitrogen natural gas to key LNG hubs in Louisiana, aligning with its growth strategy.
President and CEO Beth McDonald said, “This timely asset sale largely accomplishes one of our key priorities of selling more than $1.0 billion in assets, which will enable us to reduce debt and strengthen our capital structure.” The sale is expected to improve free cash flow, enhance shareholder returns over the long term, and provide SM Energy with the financial flexibility to pursue additional opportunities in its core high‑margin regions.
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