SM Energy Company (SM)

[Timothy Smith]

SM Energy (SM) is significant operator with undeniable knowledge of oil shales who has been aggressively growing its presence in the East Texas Eagle Ford.

Earlier this year, SM unveiled its successful Woodbine exploration well in San Jacinto County, which substantially extended the Woodbine/Eaglebine play to the east. The Horizon Properties #2H produced approximately 740 Boe/d in a 24-hour test. Production consisted of 305 Bbl/d of 42 degree API gravity oil and 2.6 MMcf/d of 1,250-Btu gas. Taking into consideration that only 2,500 feet of the wellbore were effectively stimulated, the initial flow rate should be viewed as strong (operators often complete wells in this play with 6,000-8,000 foot laterals).

During the third quarter of this year, SM disclosed that it had increased its leasehold in the area to 195,000 net acres. While SM has not disclosed its primary geologic target, the company's extensive leasing campaign across several counties (Washington, Walker, Polk and San Jacinto) indicates its strong interest in the play. SM continues to acquire additional acreage and expects to drill test wells "targeting primarily Woodbine and Eagle Ford shale intervals" in the second half of 2013.