SM Energy Announces Put Option Notification for 3.50% Senior Convertible Notes Due 2027

SM Energy Company SM today announced that it is notifying holders of its 3.50% Senior Convertible Notes due 2027 that the holders have the right, pursuant to the terms of the indenture governing the Notes, to require the Company to repurchase all or a portion of their Notes. The Company has elected to repurchase any Notes for which holders properly exercise their Put Right for cash. The Put Right expires at 5:00 p.m., New York City time, on Friday, March 30, 2012. As required by rules of the United States Securities and Exchange Commission, the Company will file a Tender Offer Statement on Schedule TO today. In addition, documents specifying the terms, conditions and procedures for exercising the Put Right will be available through the Depository Trust Company and the paying agent, which is Wells Fargo Bank, N.A. None of the Company, its board of directors, or its employees has made or is making any representation or recommendation to any holder as to whether to exercise or refrain from exercising the Put Right. The Put Right entitles each holder of the Notes to require the Company to repurchase all or a part of such holder's Notes in principal amounts equal to $1,000 or integral multiples of $1,000. The purchase price for such Notes will be equal to 100% of the principal amount of the Notes, plus any accrued and unpaid interest up to, but not including April 1, 2012 (the “Repurchase Date”), upon the terms and subject to the conditions set forth in the Notes and the indenture governing the Notes. The Repurchase Date is an interest payment date under the terms of the Notes. Accordingly, on April 2, 2012, the business day immediately following the Repurchase Date, the Company will pay accrued and unpaid interest on all of the Notes through March 31, 2012, to all holders who were holders of record on March 15, 2012, regardless of whether the Put Right is exercised with respect to such Notes. On the Repurchase Date, there will be no accrued and unpaid interest on the Notes. As of March 2, 2012, there was $287,500,000 in aggregate principal amount of the Notes outstanding. If all outstanding Notes are surrendered for repurchase pursuant to the Put Option, the aggregate cash purchase price will be $287,500,000. The Company intends to use available cash to fund the purchase of any Notes with respect to which a holder has validly exercised the Put Right.