SM Q1 2025: Defers Buybacks, Targets 1x Leverage via Debt Paydown
| Metric | YoY Change | Reason |
|---|---|---|
Total Operating Revenue | +50% (from $559.6M in Q1 2024 to $839.6M in Q1 2025) | Increased production revenues from oil, gas, and NGL segments significantly improved from prior performance. The integration of new Uinta Basin assets (acquired in Q4 2024) added substantial revenue streams and enhanced overall pricing and volume relative to Q1 2024. |
Oil Revenue | +49% (from $440.9M in Q1 2024 to $658.5M in Q1 2025) | Oil production volumes and realized prices improved due to higher extraction outputs and the contribution of Uinta Basin assets, boosting oil revenue markedly compared to the previous period. |
Gas Revenue | +77% (from $67.8M in Q1 2024 to $120.1M in Q1 2025) | Gas revenue surged driven by a combination of a 17% increase in production volumes and a 51% rise in the realized gas price, along with additional production from Uinta Basin, which was absent in Q1 2024. |
NGL Revenue | +20% (from $50.9M in Q1 2024 to $61.1M in Q1 2025) | A modest increase reflecting higher NGL production volumes—even with nearly stable prices—bolstered revenue growth in this segment compared to the previous quarter. |
Midland Basin Revenue | -14% (from $456.9M in Q1 2024 to $392.79M in Q1 2025) | Downward pressure likely resulted from lower production volumes or adverse price adjustments in the Midland Basin relative to other regions, contrasting with strong gains seen in new asset additions. |
South Texas Revenue | +21% (from $192.0M in Q1 2024 to $232.73M in Q1 2025) | Enhanced operational execution and increased production volumes—especially from the Austin Chalk formation—drove revenue gains, offsetting lower commodity prices, when compared to the previous year. |
Uinta Basin Revenue | New ($214.09M in Q1 2025, not present in Q1 2024) | The acquisition of Uinta Basin assets in Q4 2024 introduced substantial new production output, contributing a fresh revenue stream not available in Q1 2024 and adding significantly to the overall performance. |
Net Income | +39% (from $131,199K in Q1 2024 to $182,269K in Q1 2025) | Improved operational performance—driven by higher overall production revenue and better margin management, including reduced derivative losses—boosted net income markedly compared to the same period last year. |
Basic Net Income per Share | +40.7% (from $1.13 in Q1 2024 to $1.59 in Q1 2025) | Higher net income combined with a slightly reduced weighted-average common share count resulted in a significant per-share improvement relative to Q1 2024. |
Total Operating Expenses | Nearly Flat (from $565,253K in Q1 2024 to $568,256K in Q1 2025) | Enhanced operational leverage allowed expenses to remain almost unchanged despite higher production volumes, indicating better cost efficiency relative to Q1 2024. |
Operating Cash Flow | Strong at $482,985K in Q1 2025 | Robust production receipts and disciplined cash management contributed to solid operating cash flow, even though the ending cash balance was very low at $54K, suggesting aggressive reinvestment or payout strategies compared to Q1 2024. |
Total Assets | Increased to $8,787,665K (up $211,018K from prior period) | Growth in current and noncurrent assets—notably in property, equipment, and receivables—driven by investments and integration of newly acquired assets contributed to the asset base increase relative to December 31, 2024. |
Stockholders’ Equity | Increased to $4,403,733K | A robust net income performance coupled with controlled capital transactions (factoring in dividends, share repurchases, and minor equity issuance adjustments) helped strengthen the equity position compared to the previous fiscal period. |
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Debt Strategy
Q: Are repurchases off due to debt focus?
A: Management is prioritizing debt reduction to achieve 1x leverage, allocating free cash flow primarily to lowering debt while keeping open the possibility to support the stock if needed. -
Production Mix
Q: Any Uinta production timing issues?
A: Management noted that while Q2 will see a modest improvement in the oil cut, a major increase in Q3 is expected without altering full-year guidance. -
Capital Allocation
Q: Have returns shifted across regions?
A: They emphasized that, at a commodity price near $55, the returns across all regions remain attractive, so no reallocation of capital is planned. -
Rig Count & CapEx
Q: What are the 2026 rig plans?
A: There isn’t a fixed plan for 2026; management is evaluating multiple scenarios with a base of 6 rigs, implying near-flat maintenance costs unless significant price shifts occur. -
LOE Impact
Q: Are LOE increases one-time?
A: Management explained that roughly one‑third of the LOE increase is due to fuel gas usage changes and that some workover and water production costs may persist but are already factored into full‑year guidance. -
Uinta Performance
Q: How are acquired Uinta assets doing?
A: They are performing exceptionally well, exceeding expectations and leading to improved well design that will be incorporated into the new pad design in 2026. -
Oil Sales Channel
Q: What percent is sold locally?
A: Typically, 15–20% of the crude is sold to Salt Lake City refineries to benefit from lower transportation costs. -
CapEx Guidance
Q: Will CapEx shift from $1.3B guidance?
A: Management expects similar spending in the second half, so full‑year CapEx remains aligned with the guided $1.3 billion level. -
Revenue Recognition
Q: Is there a production–revenue lag?
A: A slight lag is inherent due to cutoff timing between production and revenue recognition, with no true‑up adjustment planned.
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