Updates shares and adds details and analyst comment in paragraphs 2,4,5,8

By Pooja Menon

Feb 18 (Reuters) - U.S.-based oil and gas producer SM Energy SM.N said on Wednesday it would sell select assets in South Texas to Caturus Energy for $950 million in cash to reduce debt and bolster its capital structure.

SM Energy's shares rose 4.8% in afternoon trading, tracking a rise in oil prices.

The sale accomplishes one of SM Energy's key priorities of selling more than $1 billion in assets, aimed at reining in costs and improving financial flexibility, CEO Beth McDonald said.

SM Energy and Civitas Resources announced late last year that they will merge in a $12.8 billion deal, with SM saying it expects to save $200 million annually and potentially up to $300 million through lower overhead and operating costs.

The company had also said it plans to prioritize free cash flow to cut debt.

The acquisition by Caturus encompasses nearly 60,000 net acres in South Texas and about 250 million cubic feet per day (MMcfe/d) of production from 260 producing wells, with total pro forma net production of 950 MMcfe/d at closing.

Caturus, which is developing the Commonwealth LNG export facility in Louisiana, said the acquisition of SM Energy's Galvan Ranch assets would position it to deliver low-nitrogen natural gas to key LNG hubs at Gillis and Agua Dulce.

"Galvan Ranch significantly expands our footprint in the Eagle Ford and Austin Chalk and comes with existing infrastructure that supports long‑term, capital‑efficient development," Caturus CEO David Lawler said.

"We view the transaction as positive; however, we believe operational execution of the pro forma company is important to bring investors back to the story," said Siebert Williams Shank & Co. analyst Gabriele Sorbara.

Caturus has collectively executed 7 million tons per annum of long-term natural gas offtake deals with Mercuria, Saudi's Aramco 2223.SE, Glencore GLEN.L, Japan's JERA, Malaysia's PETRONAS PGAS.KL and EQT Corp EQT.N.

The transaction is expected to close in the second quarter.