Eagle Ford And Strong Gas Prices Push PT to $87 for SM Energy

According to Dahlman, Rose & Co., SM Energy

is generating excitement with strong gas realizations, being lifted by increased NGL volumes, and heightened expectations in the Eagle Ford. Dahlman, Rose & Co. reported organic production growth of 30% when adjusted for asset sales. “SM's 2011 production guidance of 128-132 Bcfe (y/y growth of 20%) includes a reduction of a half year of production from an expected sale of 15% interest in its Eagle Ford stake. During 2011, we estimate 6-7 Bcfe has been removed for non-operated Eagle Ford working interest being sold down from 25% to 10% and 2 Bcfe for operated Eagle Ford interest sold down from 100% to 85%. Our 2011 production estimate of 140.5 Bcfe is pre-asset sale and would drop to approximately 130 Bcfe upon a sale. We estimate organic production growth is near 32% in 2011. “ SM Energy closed on Friday at $72.07.