Michael Ferro's questions to SM Energy Co (SM) leadership • Q4 2024
Question
Michael Ferro asked about the decision-making behind the 2025 DUC inventory drawdown and whether the current capital allocation split and completion cadence represent the long-term go-forward strategy for the company.
Answer
President and CEO Herbert Vogel reiterated that DUCs are an outcome of activity and pad sizes, not a managed metric, with the current high count resulting from the XCL acquisition's pace. He explained that capital allocation is flexible, with the company running multiple scenarios to maximize multi-year free cash flow by flexing activity between its three core basins based on commodity prices. CFO Wade Pursell added that returns are currently very similar across all three areas.