SM Energy has agreed to divest its Galvan Ranch assets in South Texas, US, to Caturus Energy in an all-cash deal worth $950m.
The deal encompasses roughly 61,000 net acres in Webb County and nearly 260 operational wells along with associated support facilities.
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The assets are projected to yield an average of 37,000–39,000 barrels of oil equivalent per day in the current year, resulting in nearly $160m in cash flow, excluding corporate expenses.
As of December 2025, net proved reserves tied to these assets stood at approximately 168 million barrels of oil equivalent.
SM Energy plans to use the proceeds from these transactions to focus on debt reduction, highlighting its dedication to maintaining a robust balance sheet.
SM Energy president and CEO Beth McDonald said: “This timely asset sale largely accomplishes one of our key priorities of selling more than $1bn in assets, which will enable us to reduce debt and strengthen our capital structure.
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By GlobalData“We are excited about the impact this divestiture has on our balance sheet and look forward to sharing our updated return‑of‑capital programme when we report earnings next week.”
RBC Capital Markets is acting as the exclusive financial adviser for SM Energy, while Skadden, Arps, Slate, Meagher & Flom is serving as legal counsel.
The deal follows the recent closing of SM Energy’s all-stock merger with Civitas Resources. The combined company is now operating as SM Energy with a listing on the New York Stock Exchange.
For Caturus, the deal is expected to increase its pro forma net production to roughly 950 million cubic feet equivalent per day.
With this acquisition, Caturus aims to strengthen its position as a leading independent natural gas producer in the US, controlling more than 275,000 net acres across the Gulf Coast.
The company is working on a strategy that includes the expansion into Haynesville through a deal with Black Stone Minerals and delivering low-nitrogen natural gas to key liquefied natural gas hubs at Gillis and Agua Dulce.
Caturus CEO David Lawler said: “Galvan Ranch significantly expands our footprint in the Eagle Ford and Austin Chalk and comes with existing infrastructure that supports long‑term, capital‑efficient development.
“Adjacent to Caturus’ westernmost operations, the assets, including a largely contiguous position in the Webb County Core, offer more than a decade of high‑quality drilling inventory across both the wet and dry gas windows, with additional upside beyond that horizon.”
BofA Securities is serving as the financial adviser to Caturus, with Bank of America providing committed debt financing and Kirkland & Ellis serving as legal counsel.
Completion of the Galvan Ranch transaction is pending customary closing conditions and regulatory approvals. Finalisation of the sale is expected in the second quarter of 2026 (Q2 2026), with an effective date of 1 February 2026.
Earlier this month, Caturus signed a 20-year sale and purchase agreement with Aramco Trading, a subsidiary of Saudi Arabia’s Aramco, related to its Commonwealth LNG project in the US.
Under this agreement, Aramco Trading will purchase one million tonnes per annum of liquefied natural gas from the Commonwealth LNG export facility. This midstream asset is currently under development in Cameron Parish, Louisiana, along the Gulf Coast.
