SM Energy Gets $403 Million From Common Stock Offering
Zacks Investment Research | Dec 08, 2016 09:30PM ET
SM Energy Company (NYSE:SM) recently declared the closure of public offering of 10,925,000 shares of common stock. The company also gave underwriters the option to purchase extra 1,425,000 common stock.
From the offering as well as the exercise of the option, SM Energy generated net proceeds of $403 million. The amount will likely be utilized to acquire additional 4,100 net acres of oil and gas resources in the Midland Basin. The proceeds will also be used for general corporate activities and for paying debt.
Denver, CO-based SM Energy, previously known as St. Mary Land & Exploration Company, is an independent oil and gas company engaged in the exploration, exploitation, development, acquisition and production of natural gas and crude oil in North America. Over the last one month, the company underperformed the Zacks categorized Oil & Gas-U.S Exploration and Production industry. During the aforesaid period, SM Energy gained more than 8% compared with 11% improvement for the broader industry.
Nonetheless, the overall market scenario has substantially improved with the advancement of oil and gas prices of late. Crude has started recovering again after the recent OPEC deal to cut production amid oversupplied commodity market. Also, the forecast of lower-than-average temperature across the U.S. led natural gas prices to climb.
We believe that those developments will give a boost to the company and help it to outperform the Zacks categorized Oil & Gas-U.S Exploration and Production industry in the coming days. This is reflected in SM Energy’s current Zacks Rank #2 (Buy), which implies that the stock will outperform the broader U.S. equity market over the next one to three months.
Other stocks that investors may consider include Newfield Exploration Company (NYSE:NFX) , EQT Midstream Partners LP (NYSE:EQM) and Helix Energy Solutions Group, Inc. (NYSE:HLX) .
Newfield is likely to witness year-over-year earnings growth of almost 4% in the current year. The company sports a Zacks Rank #1 (Strong Buy). You can see Zacks Investment Research
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