Wednesday, December 22, 2010

SM Energy 2011 Capital Budget

SM Energy, formerly St. Mary Land & Exploration, announced today that it will spend $1.08 billion on capital expenditures in 2011.  Of that total, $830 million will be spent on drilling.  The company will focus on the Eagle Ford Shale (60% of drilling budget) and Bakken Shale (20%) next year.  Only 4% of the drilling budget, or $35 million, will be spent on the Haynesville Shale. That budget will allow SM to drill five gross operated wells and participate in 20 gross (2 net) wells.

Buuuuuuut...SM's Haynesville budget does not provide enough funding to enough to hold the company's 22,000 net Haynesville acres.  Here's what they say:

"SM Energy is currently exploring a number of options for its operated Haynesville shale acreage position in East Texas which would allow the Company to drill enough wells in 2011 and early 2012 to hold its existing acreage while minimizing the amount of capital deployed. Twelve (12) gross wells in 2011 in addition to the operated wells discussed above and eight (8) gross wells in 2012 would need to be drilled to hold the Company's acreage position." 
Stay tuned for a deal.

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