SM Energy Provides Divestiture Update

SM Energy Company announces it has commenced negotiations concerning the divestiture and development of a material portion of its Eagle Ford shale position. The Company received multiple bids during its marketing process and is currently negotiating a transaction or combination of transactions.

In addition, the Company has entered into an agreement to sell non-core assets in the Constitution Field for aggregate proceeds of approximately $44 million. First quarter production associated with these properties is approximately 6 MMCFE/d. The Constitution Field transaction represents the Company's entire position in this legacy field in southeastern Texas. These assets have been categorized as assets held for sale on the Company's balance sheet since the third quarter of 2010. The closing of this divestiture is expected to occur late in the second quarter of 2011. The sale is subject to customary purchase price adjustments, closing conditions, and transaction fees.

SM Energy also announces its entry into an amended five-year senior secured revolving credit facility, with an increase of the Company's borrowing base to $1.3 billion from $1.0 billion. The commitment amount has also been increased to $1.0 billion, up from $678 million. The Company's previous credit facility was scheduled to mature in July of 2012. As of May 31, 2011, the Company did not have any borrowings drawn against its credit facility.

Tony Best, President and CEO, remarked:
"We are pleased that we have reached this phase of our Eagle Ford marketing effort. Our oft-stated goal is to create value for our stockholders and we believe that a meaningful sell-down of our Eagle Ford position, when completed, will further enhance our ability to achieve that goal. The non-core asset sale and amended credit facility that we are announcing today further strengthen our already strong liquidity position and balance sheet. Our robust inventory of high-return projects and solid financial standing are a winning combination that will benefit our stockholders for years to come."