SM Energy Company
) announced that an exploratory test well located in San Jacinto
County, Texas has been completed successfully.
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A horizontal completion in the Woodbine interval - the Horizontal
Properties 2H - generated about 740 barrels of oil equivalent per
day (Boe/d) in a 24-hour test. While clearing up after fracture
stimulation, the well was found to flow at a rate of 1,520 PSIG
casing pressure on a 27/64ths inch choke.
The well yielded 305 barrels of oil per day of 42 degree API
gravity and 2,600 thousand cubic feet per day of rich gas. It
will be closed until the construction of a gathering system.
The latest success increases SM Energy's acreage position in East
Texas to about 105,000 net acres. Starting third quarter 2013,
the company expects to drill further test wells aiming the
Woodbine formation and other important intervals. The necessary
gathering systems will be erected after drilling a number of
these wells. The company's existing New Venture budget will be
mainly utilized to finance the capital program of 2013.
As a result of its lenders' regularly scheduled semi-annual
redetermination process, SM Energy's borrowing base under the
company's existing revolving credit facility has been increased
to $1.9 billion from $1.55 billion. SM Energy has also revised
the terms of its credit facility to boost the commitment amount
from the bank group to $1.3 billion, from $1.0 billion. The
alterations in the terms of the credit facility will also extend
the maturity of the facility by about two years to Apr 2018.
SM Energy carries a Zacks Rank #2 (short-term Buy rating). There
are other stocks in the oil and gas industry, like
Range Resources Corporation
EPL Oil & Gas, Inc
Stone Energy Corporation
) , which appear more promising and carry a Zacks Rank #1 (Strong