SM Energy Company is an independent energy company engaged in the acquisition, exploration, development, and production of crude oil, natural gas, and natural gas liquids (NGLs). The company operates primarily in Texas and Utah, focusing on maximizing production and returns through operational efficiency and cost management. SM Energy sells crude oil, natural gas, and NGLs, which are integral to its business operations.
- Oil Production - Engages in the extraction and sale of crude oil, which is the largest contributor to the company's revenue.
- Gas Production - Involves the production and sale of natural gas, contributing significantly to the company's operations.
- NGL Production - Produces and markets natural gas liquids, adding value to the company's product portfolio.
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- Based on the Q1 discussion where you mentioned modest oil cut improvement from 53% and potential timing issues with Uinta wells coming online, can you clarify how these timing variances might impact your full-year production guidance and oil mix strategy?
- In light of current oil prices being below $60 and your focus on reducing leverage, can you detail the conditions under which share repurchases might be deferred in favor of aggressive debt reduction, and explain the potential inflection points for a shift in this strategy?
- With the transition from 9 rigs down to an anticipated 6, can you specify the concrete timelines or performance milestones that will trigger additional rig reductions, and explain how this adjustment could affect your production turn-in-lines?
- Given the noted increases in corporate LOE driven by factors like fuel gas usage and workover activities, do you view these cost impacts as predominantly one-time adjustments, or should investors expect them to persist beyond the current program?
- Reflecting on the strong performance of the acquired Uinta assets and the planned incorporation of insights into your 2026 pad designs, can you elaborate on the specific operational or technical changes that will drive improved capital efficiency and well performance going forward?
Research analysts who have asked questions during SM Energy earnings calls.
Gabriel Daoud
Cowen
4 questions for SM
Hsu-Lei Huang
Tudor, Pickering, Holt & Co.
4 questions for SM
Leo Mariani
ROTH MKM
4 questions for SM
Michael Scialla
Stephens Inc.
4 questions for SM
Scott Hanold
RBC Capital Markets
4 questions for SM
Timothy Rezvan
KeyBanc Capital Markets Inc.
4 questions for SM
Zachary Parham
JPMorgan Chase & Co.
4 questions for SM
Michael Ferro
Pickering Energy Partners
3 questions for SM
Neal Dingmann
Truist Securities
3 questions for SM
Michael Furrow
Pickering Energy Partners
2 questions for SM
David Deckelbaum
TD Cowen
1 question for SM
Fu Fan
ROTH Capital Partners
1 question for SM
Oliver Huang
TPH&Co.
1 question for SM
Tim Rezvan
KeyBanc Capital Markets
1 question for SM
Zach Parham
JPMorgan Chase & Co.
1 question for SM
| Customer | Relationship | Segment | Details |
|---|---|---|---|
Major Customer #1 | Purchaser of oil, gas, and NGL | All | 2024: $899.609 million (34%) , 2023: $580.557 million (24%) , 2022: $848.595 million (24%) |
Major Customer #2 | Purchaser of oil, gas, and NGL | All | 2024: $248.383 million (9%) , 2023: $260.574 million (11%) , 2022: $255.395 million (7%) |
Group of Entities Under Common Control | Purchasers of oil, gas, and NGL | All | 2024: $426.248 million (16%) , 2023: $530.131 million (22%) , 2022: $830.276 million (24%) |
Notable M&A activity and strategic investments in the past 3 years.
| Company | Year | Details |
|---|---|---|
XCL Resources, LLC and affiliated entities | 2024 | SM Energy Company acquired an 80% undivided interest in the Uinta Basin oil and gas assets, which include approximately 37,200 net acres and production of about 38,200 boe/d, for an aggregate consideration of $2.55 billion (with SM Energy’s effective share at $2.04 billion after a 20% assignment to Northern Oil and Gas, Inc.) as per the Purchase Agreement executed on June 27, 2024. Additionally, SM Energy exercised an option to acquire adjacent assets for $70 million, adding another 26,100 net acres and approximately 1 MBoe/d production to enhance its portfolio and drilling prospects, with the deal closing on October 1, 2024. |
Recent press releases and 8-K filings for SM.
- SM Energy has achieved substantial growth, with SEC proved reserves increasing by 68% from year-end 2020 to 2024 and oil equivalent production growing 64% from 2020 to 2025 guidance, notably without diluting shareholders.
- The company maintains a strong balance sheet, having reduced leverage from 2.3 times EBITDAX at year-end 2020 to 1.2 times today, with a target to be below one times levered by year-end.
- SM Energy is committed to returning capital, increasing its quarterly dividend to $0.20 per share and executing $370 million in share buybacks since September 2022, with an additional $500 million authorization for future buybacks.
- The company's returns-based technical focus has led to superior well performance compared to peers and the strategic acquisition of 63,000 acres in the Uinta Basin, which demonstrated higher margins than the Midland Basin in Q2 results.
- SM Energy reported strong Q2 2025 financial results, including Adjusted Net Income per share of $1.50 , Adjusted EBITDAX of $569.6 million , and Adjusted Free Cash Flow of $113.9 million.
- The company achieved record-breaking Q2 production of 209.1 MBoe/d at 55% oil , driven by operational execution and the completion of Uinta Basin integration.
- SM Energy returned capital to stockholders with a $0.20 per share cash dividend paid in Q2 and reduced net debt by approximately $140 million , progressing towards its 1x leverage target. The company also has a $500 million stock repurchase authorization through 2027.
- For the full year 2025, SM Energy projects total net production of 200-215 MBoe/d with an oil percentage of 53%-54%, and capital expenditures of approximately $1.375 billion.
- SM Energy focuses on identifying, owning, and developing high-return assets, emphasizing operational execution, capital efficiency, and free cash flow generation.
- The company highlighted its track record in Howard County and the Austin Chalk plays, and discussed the Uinta Basin as its next key area, where integration is progressing with optimized marketing and cost reductions from an operated sand mine.
- SM Energy is prioritizing debt repayment to reach a 1x levered target, having been 1.1 times levered on a pro forma basis at the end of the first quarter, before recommencing its share buyback program.
- The company plans to reduce its rig count from nine to six by year-end, with a six-rig program expected to result in flattish production in oily areas, but potential BOE growth if capital shifts to gassier areas.
- Cost deflation is being observed in some service aspects, such as rigs and pumping services, but not in labor costs.
- Production Surge: Q1 2025 production reached 197.3 MBoe/d with a 53% oil mix, driven by successful Uinta Basin integration and a 36% boost in daily production versus Q1 2024 .
- Strong Financials: Reported net income of $182.3 million and diluted EPS of $1.59 , with Adjusted EBITDAX of $588.9 million and operating cash flow of $514.5 million .
- Capital & Liquidity: Capital expenditures of $440.8 million supported key basin investments, while robust free cash flow enabled a fixed $0.20 per share dividend (3.5% yield) and a $31MM debt reduction, maintaining liquidity at approximately $2.0 billion .
- Guidance & Initiatives: Q1 results hit the high end of guidance with updated forecasts that include higher lease operating expenses in Q2, along with plans to modestly increase the oil cut in Q2 and implement new drilling and completion innovations in 2026 .
- Asset Strength: Strengthened asset portfolio with an expanded drilling inventory featuring 57 sub-$50 breakeven locations and production margins comparable to the Midland Basin .
- Achieved record production with full-year oil production of 29.4 MMBbls, Q4 net production of 19.1 MMBoe , and year-end estimated net proved reserves of 678 MMBoe .
- Reported strong financial performance with full-year net income of $770.3 million, adjusted EBITDAX of $2.0 billion, and adjusted EPS of $1.91 alongside $188.9 million in adjusted free cash flow .
- Returned $169.0 million to shareholders while raising the fixed dividend to $0.80 per share .
- Launched a $1.3 billion capital program to drill approximately 105 net wells, targeting over 20% net production and 30% oil production growth through integration of Uinta Basin assets .
- Delivered operational and expansion highlights with the integration of the Uinta Basin acquisition, the onboarding of 83 new employees, and a 23% YoY increase in oil production .
- Announced leadership changes including the retirement of VP Investor Relations, Jennifer Martin Samuels (effective March 7, 2025), and key promotions of Dean Lutey, Pat Lytle, Richard Jenkins, and Alan Bennett .
- Provided forward-looking guidance with updates on production, capital spending, and operational risks, noting a Q1 production impact from a scheduling gap in South Texas frac operations with anticipated recovery .