Billion Dollar Shale Deal - Implications for a Recent Bison Insights Idea
SM’s divestiture was completed at a high valuation and carries positive implications for a recent Bison Insights company that owns adjacent acreage.
Last week, SM Energy sold the southern, more liquids-rich gas portion of its Eagle Ford position in South Texas for $950 million in cash. The package included 61,000 net acres, 38 mboe/d of estimated 2026 production, and approximately $160 million of asset-level cash flow. On a per-unit basis, the buyer paid:
$15,574 per net acre
$25,000 per flowing barrel (9% oil)
5.9x cash flow
These are relatively high valuation metrics, with positive value implications for the company I recently highlighted in “Oil & Gas Moneyball.” The “Moneyball” company owns a large asset adjacent to the acreage SM just sold. The “Moneyball” company acquired the asset through an acquisition in 2024 at a much lower per-unit valuation, indicating that the value of its acquisition has already materially increased (and demonstrating the value of the Moneyball model):
The large increase in valuation since that 2024 acquisition highlights two key points:
It confirms what I heard repeatedly at a major oil conference last week: private market asset values in oil and gas are high and are rising (you can read my full conference recap and detailed takeaways here).
The “Moneyball” model creates a lot of value: they acquire out-of-favor assets at discounted prices, improve capital allocation and operational efficiency, generate strong cash flow, and in some cases, sell assets at premium valuations to reduce leverage and recycle capital into the next opportunity.
In this article, I illustrate SM’s recent transaction in more detail and analyze the implied value implications for the company that I highlighted in “Oil & Gas Moneyball.” In short, there is even more upside, and a potential catalyst for unlocking that value.
Disclaimer: This is for informational and educational purposes only. This is not an offer, solicitation, or investment recommendation. Please consult an advisor and do your own diligence. Past performance may not repeat itself.
