Brian Velley

Brian Velley with Capital One Securities inquired about SM Energy's total production guidance for the year, specifically the impact and location of three-stream to two-stream conversions, and how to model associated price realizations for NGL and gas streams. He also asked about the heavier Q1 CapEx spend and if it's driven by a higher starting rig count that will decrease throughout the year.

Answer

President and CEO Beth McDonald explained the company's focus on value over volume, detailing the three-stream to two-stream conversion impact in the DJ Basin (20% BOE to NGLs) and Permian (5% BOE to NGLs), advising on historical realizations for modeling. She highlighted the importance of focusing on the H2 2026 run rate for capital efficiency. Beth also confirmed that the higher Q1 CapEx is due to starting the year with 15 rigs, which will be optimized down to an average of 11 rigs by year-end. EVP and CFO Wade Purcell added that 45% of total capital is allocated to the second half of the year.