SM Energy Company

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In December, 2008, Denver, Colorado-based St. Mary Land & Exploration Company (NYSE: SM) announced that it had entered into an agreement wherein it could earn 43,000 almost contiguous net acres (50,000 gross acres) of land prospective for Marcellus shale in the central Pennsylvania counties of McKean and Potter. In 2010, the name of the company was changed to SM Energy Company, and, as of August, 2010, it appeared to be planning either to sell its Marcellus shale and other non-core holdings or else enter into a joint venture. Bank of America Merrill Lynch had been retained to market the assets.

By January, 2009 with a deteriorating economy, the company announced that it was cutting its Marcellus exploration and development budget by 54%.

A May, 2009 report indicated that St. Mary planned to drill two horizontal Marcellus wells during the third quarter of 2009 and begin testing activities. It is permissible under its agreement to drill anytime before the end of 2010, so the work could be deferred until the following year.

A further report at the end of June, 2009 qualified the above statement to say that that the company does plan to test part of its acreage during 2009. One of St. Mary's business partners in the Marcellus venture already has gas gathering and processing capability that should give the company a leg up in marketing the gas.

In November, 2009 St. Mary announced the drilling and completion of the Potato Creek 1H and the Potato Creek 3H, its first two horizontal wells located in McKean County, PA. St. Mary owned a 70% working interest (WI) in each well. The company was in the process of laying a temporary sales pipeline to the first of the two wells. The wells were expected to go online to sales in the second quarter of 2010. It further noted that St. Mary's acreage position in northeastern Pennsylvania's McKean and Potter counties amounted to 41,000 net acres.

Update:In Augest, 2010 SM Energy (formerly St. Mary) announced that the Potato Creek 3H had begun producing to sales earlier in the month at a facility constrained initial rate of 7 Mmcfe/d.

According to a February, 2010 news account, St. Mary's joint venture (JV) partner in the Potato Creek acreage was South Jersey Industries that owned the remaining 30% WI on 21,000 acres in McKean Co. The JV partners planned to drill two additional Marcellus shale wells during 2010.

According to an early May, 2010, company update, St. Mary had decided to defer its 2010 Marcellus drilling program until June when its sales pipeline was to be complete. The company was required to drill two wells under its joint venture agreement during the year.

  • Tony Best is St. Mary's President and CEO.
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