SM Energy Co. (SM) struggled a bit in the first quarter of 2015 but said May 5 it had entered into two agreements to sell assets in the Midcontinent.

SM said it sold assets in the Arkoma Basin in Oklahoma and the Ark-La-Tex area of East Texas and North Louisiana for $324 million. However, production won’t be affected as the Eagle Ford continues to produce most of SM’s volumes.

The company had been actively seeking a buyer for the assets, though the value is less than Simmons & Co. International’s expectations of $350 million to $375 million, said Pearce Hammond, co-head of E&P research for Simmons.

Jay Ottoson, president and CEO, said SM Energy had a strong start to the year with its core development assets performing better than expected.

“As a result, we are able to keep our full year production guidance flat despite the fact that we plan to close on the sale of our Midcontinent assets by mid-year,” he said. “This divestiture will allow us to exit the year with a stronger balance sheet and more liquidity than we originally forecast. Our focus in 2015 is to generate differential value for our shareholders by proving up additional economic drilling inventory in our core development assets."

SM is maintaining its production guidance of up to 63.5 million barrels of oil equivalent (MMboe). The Midcontinent properties averaged 11.1 Mboe/d in the first quarter of 2015. The increase in forecast production is being driven largely by strong performance in the company's Eagle Ford program, SM said.

SM said annual production growth for 2015 is expected to be between 10% and 15%. Production growth on its remaining properties will increase to about 17% from 13% without incremental capital.

For the quarter, SM Energy reported a net loss of $53.1 million, or $0.79 per diluted share. That compares to net income of $65.6 million, or $0.96 per diluted share for the same period of 2014. Average daily production was 186.4 Mboe/d and the company said service costs are down by 15% to 20%, in line with SM’s assumptions.

For the quarter, SM posted an EPS miss vs. Global Hunter Securities estimates due to higher-than-modeled exploration expense and lower realized hedging gains offset with lower-than-modeled operating costs, said Mike Kelly, senior analyst.

Kelly said the Midcontinent assets equate to $29,000/flowing boe compared to SM, which trades at $35,000/flowing boe.

In 2015, SM closed its office in Tulsa, Okla., as it made efforts to divest its Midcontinent assets, a move expected to cost $10 million in various expenses.

The transactions are expected to close in the second quarter of 2015, SM said. RBC Richardson Barr served as an adviser to SM in the transactions.