St. Mary Land & Exploration Co. (SM) has entered into three different transactions to sell its non-core Rocky Mountain properties for a total consideration of $307 million.
 
In the first transaction, St Mary sold acreage in Wyoming to Legacy Reserves LP (LGCY) for $130 million. The deal is expected to close in February this year. In the second transaction, the company sold its North Dakota properties to a private buyer for $137 million. This transaction is anticipated to close in March 2010. Both transactions are subject to customary purchase price adjustments and closing conditions.
 
Finally, St Mary sold its entire stake in the Hanging Woman basin coalbed methane project in Wyoming and Montana to JM Huber Corp. for about $40 million. The sale was completed in December 2009.
 
The company has chosen mainly internally generated cash flows and proceeds from these divestitures to fund its 2010 capex, as it stated during the capex budget release last month. If necessary, the company can also avail of its existing credit facility.
 
St Mary has been working over the past several years to build a significant position in emerging shale plays in order to transition it to more of a resource play focused company. These transactions state the company’s commitment in that direction, which can unlock value for shareholders. In the last four weeks alone, St Mary shares have inched up more than 8% to the current price of $37.65.
Read the full analyst report on “SM”
Read the full analyst report on “LGCY”
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