Executive Summary

Q3 2025 delivered record production at 213.8 MBoe/d (53% oil), resilient cash margins, and strong cash generation; diluted EPS was $1.35 and Adjusted EBITDAX was $588.2M .
Versus Wall Street: EPS beat consensus ($1.33 actual vs $1.26 est), EBITDA modestly beat, while revenue missed consensus ($811.6M total operating revenues vs $827.6M est) — highlighting price pressure despite volume strength (S&P Global data; see Estimates Context) .
Guidance tuned: FY25 production narrowed (207–208 MBoe/d; 53–54% oil) with LOE, transportation, production/ad valorem taxes, and exploration expense all reduced; FY25 capex raised to $1.375–$1.395B reflecting opportunistic working interest acquisitions; Q4 guide set at ~206–212 MBoe/d and $225–$245M capex .
Balance sheet and hedging support: Borrowing base reaffirmed at $3.0B (elected $2.0B) and net leverage reduced to ~1.1x TTM Adjusted EBITDAX; Q4 hedges cover ~50% oil and ~40% gas volumes .
Strategic catalyst: Announced all‑stock merger with Civitas (EV ~$12.8B) to create top‑10 U.S. oil‑focused independent, with targeted $200–$300M annual synergies and >$1.0B planned divestitures within a year post‑close; supports accelerated deleveraging and capital returns .

What Went Well and What Went Wrong

What Went Well

Back‑to‑back record production with strong oil mix and resilient cash production margins despite >$10/Bbl YoY oil price decline; Adjusted free cash flow rose 80% YoY to $234.3M .
Net cash provided by operating activities reached $505.0M (before WC $557.5M), and Adjusted EBITDAX of $588.2M was up 22% YoY, driven by higher volumes and favorable net derivative settlements .
Management emphasized operational excellence and innovation; CEO Herb Vogel: “back‑to‑back quarters of record production… maintain strong Company‑wide cash production margins year‑over‑year, even with lower oil prices” .

What Went Wrong

Realized oil prices fell YoY ($63.83 pre‑hedge vs $74.72 in Q3’24), compressing reported net income ($155.1M vs $240.5M in Q3’24) and EPS ($1.35 vs $2.09) despite volume growth .
Unit costs elevated versus prior year: LOE $5.67/Boe (+20% YoY) and transportation $3.77/Boe (+77% YoY), reflecting basin dynamics and logistics; DD&A per Boe up 27% YoY, tied to depletion rates and Uinta contribution .
Revenue underwhelmed relative to consensus, missing by ~$16M, even as EBITDA slightly exceeded expectations — signaling price headwinds and mix effects vs models (S&P Global data; see Estimates Context) .

Financial Results

Metric	Q3 2024	Q2 2025	Q3 2025
Total Operating Revenues and Other Income ($USD Millions)	$643.6	$792.9	$811.6
Production Revenue ($USD Millions)	$642.4	$785.1	$811.0
Net Income ($USD Millions)	$240.5	$201.7	$155.1
Diluted EPS ($USD)	$2.09	$1.76	$1.35
EBITDA ($USD Millions)	$533.9*	$587.9*	$571.9*
EBITDA Margin (%)	83.0%*	77.1%*	73.5%*

Values marked with * retrieved from S&P Global.

Segment production breakdown (Q3 2025):

Operating Area	Oil (MBbl / MBbl/d)	Natural Gas (MMcf / MMcf/d)	NGLs (MBbl / MBbl/d)	Total (MBoe / MBoe/d)
Midland Basin	4,745 / 51.6	16,742 / 182.0	4 / —	7,540 / 82.0
South Texas	2,061 / 22.4	18,689 / 203.1	2,771 / 30.1	7,947 / 86.4
Uinta Basin	3,677 / 40.0	3,043 / 33.1	2 / —	4,186 / 45.5
Total	10,483 / 113.9	38,473 / 418.2	2,777 / 30.2	19,672 / 213.8

Realized pricing (Q3 2025):

Commodity	Pre‑Hedge Total ($)	Post‑Hedge Total ($)
Oil ($/Bbl)	$63.83	$65.40
Gas ($/Mcf)	$2.19	$2.77
NGLs ($/Bbl)	$20.79	$20.79
Equivalent ($/Boe)	$41.23	$43.21

KPIs and unit costs:

Metric (per Boe)	Q3 2024	Q2 2025	Q3 2025
LOE ($/Boe)	$4.73	$5.52	$5.67
Transportation ($/Boe)	$2.13	$4.13	$3.77
Production Taxes ($/Boe)	$1.87	$1.59	$1.69
Ad Valorem ($/Boe)	$0.76	$0.54	$0.51
G&A ($/Boe)	$2.25	$2.21	$2.00
Net derivative settlement ($/Boe)	$1.05	$2.09	$1.98
DD&A ($/Boe)	$12.98	$15.40	$16.54

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Production (MBoe/d)	FY 2025	200–215	207–208	Narrowed/raised mid‑point
Oil % of Total	FY 2025	53–54% (raised from 51–52%)	53–54%	Maintained raised oil mix
Capex (net of accruals, excl. acquisitions)	FY 2025	~$1.375B	$1.375–$1.395B	Raised (range)
LOE ($/Boe)	FY 2025	~$5.90	~$5.85	Lowered
Transportation ($/Boe)	FY 2025	$— (unchanged prior detail)	$3.80–$4.00	Added detailed lowered range
Production & Ad Valorem Taxes ($/Boe)	FY 2025	$— (unchanged prior detail)	$2.25–$2.50	Lowered
Exploration Expense ($)	FY 2025	$— (unchanged prior detail)	~$65M	Lowered
Wells Drilled/Completed (net)	FY 2025	~115 / ~150	~115 / ~150	Maintained
Net Production (MBoe/d; % oil)	Q4 2025	—	~206–212; 52–53% oil	New Q4 guide
Capex (net of accruals, excl. acquisitions)	Q4 2025	—	~$225–$245M	New Q4 guide

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
Uinta Basin performance and subsurface optimization	Q2: Strong IPs, improved costs via conveyor system; focus on lower/upper cube landing zones and co‑development	Q3: Oil‑weighted mix contributed to resilient margins; continued delineation across all three assets	Sustained strength; optimization ongoing
Logistics/Price River Terminal & realizations	Q2: Record rail volumes; strategy to maximize Salt Lake vs Gulf Coast realizations	Q3: Pre‑/post‑hedge realizations steady; derivatives added ~$1.98/Boe	Operational execution continues
Cash taxes/OBBBA impacts	Q2: Lower 2025 cash tax est. (~$10M) from OBBBA (bonus depreciation, R&D expensing)	Q3: Benefits reflected in results via tax expense; TTM leverage ~1.1x	Positive tax tailwind persists
Hedging posture	Q2: 3Q–4Q oil ~46% hedged; gas ~45%; basis hedges WAHA/MEH	Q4 hedges: oil ~50%, gas ~40%, detailed collars/swaps and basis	Maintained prudent coverage
Leverage & capital returns	Q2: Path to 1.0x by YE at strip; dividend maintained	Q3: Net leverage ~1.1x; $35.1M returned via dividend/buyback	Deleveraging/returns progressing
Macro/gas view	Q2: Cautious on gas given supply response and volatility	Q3: Continued focus on oil‑weighted mix; hedges support	Caution steady
Technology/AI optimization	—	Post‑Q3: merger plan includes AI‑driven optimization tools across assets	Emerging positive lever

Management Commentary

CEO Herb Vogel: “SM Energy has delivered back‑to‑back quarters of record production… maintain strong Company‑wide cash production margins year‑over‑year, even with lower oil prices” .
President & COO Beth McDonald: “We believe in the quality and depth of our inventory… deliver strong well results… delineate new zones in all three assets” .
CFO Wade Pursell (borrowing base reaffirmation): “reaffirmed borrowing base… reflects… continued trust in SM Energy’s disciplined strategy and financial strength” .

Q&A Highlights

Q3 2025 earnings conference call was held Nov 3, 2025, replacing the previously scheduled webcast/Q&A; a transcript was not available in our document set .
From Q2 2025 Q&A (context):
- Cash taxes lowered under OBBBA; R&D expensing a recurring benefit .
- Uinta program cadence, lower well costs and stronger performance; focus on lower and upper cube delineation .
- Marketing/logistics execution (rail vs Salt Lake/Gulf Coast) to optimize realizations .
- Gas macro caution; willingness to hedge out‑years .

Estimates Context

Actual vs S&P Global consensus – Q3 2025:

Metric	Consensus	Actual	Result
Primary EPS Consensus Mean ($)	1.26	1.33	Beat (approx. +$0.07)
Revenue Consensus Mean ($USD)	827.6M	811.6M	Miss (approx. −$16.0M)
EBITDA Consensus Mean ($USD)	560.7M	571.9M	Beat (approx. +$11.2M)

Consensus and actual values from S&P Global (Primary EPS Consensus Mean, Revenue Consensus Mean, EBITDA Consensus Mean). Company‑reported revenue and EPS are cited above .

Key Takeaways for Investors

Volume‑driven quarter: Record 213.8 MBoe/d with 53% oil; resilient cash margins despite lower oil prices — supports strong CFO and FCF generation .
Mixed vs Street: EPS and EBITDA modest beats; revenue miss underscores price headwinds and basin differentials; watch realizations into Q4 (S&P Global; see Estimates Context) .
Cost discipline improving: FY25 LOE, transportation, production/ad valorem taxes, and exploration expense reduced; DD&A per Boe elevated, reflecting Uinta mix .
Balance sheet momentum: Net leverage ~1.1x; borrowing base reaffirmed at $3.0B; Q4 hedges (~50% oil, ~40% gas) de‑risk near‑term cash flows .
Capital returns continuing: $35.1M returned in Q3 (dividend $0.20/share plus repurchases); dividend declared Sept 25 for Nov 3 payment .
Strategic inflection: Civitas merger (EV ~$12.8B) targets $200–$300M annual synergies and >$1.0B divestitures to accelerate deleveraging and support sustained returns; rating agencies’ positive watch post‑announcement .
Near‑term trading: Merger news and Q3 operational beat are likely the dominant catalysts; monitor Q4 production/realization mix, synergy execution milestones, and any divestiture updates .

Appendix: Additional Details and Data

Actual vs Consensus by quarter (S&P Global):

Metric	Q1 2025	Q2 2025	Q3 2025
EPS ($)	1.76 actual vs 1.62 est	1.50 actual vs 1.25 est	1.33 actual vs 1.26 est
Revenue ($USD)	$807.7M actual vs $823.8M est	$762.7M actual vs $783.5M est	$811.6M actual vs $827.6M est
EBITDA ($USD)	$546.2M actual vs $574.4M est	$587.9M actual vs $527.4M est	$571.9M actual vs $560.7M est

Consensus and actual values from S&P Global.

Capital and cash flow (Q3 2025):

Capex (before accrual change): $323.2M; Adjusted free cash flow: $234.3M; net derivative settlement gain: $38.9M .
Net cash provided by operating activities: $505.0M; before WC: $557.5M .
Return of capital: $35.1M (dividend $23.0M + repurchases $12.1M) .

Debt and liquidity (Q3 2025):

Senior notes principal: $2.736B; cash: $162.3M; Net Debt $2.574B; Net debt‑to‑TTM Adjusted EBITDAX ~1.1x .

Merger details (Nov 3 & Nov 17):

Exchange ratio: 1.45 SM shares per CIVI share; pro forma EV ~$12.8B; targeted annual synergies $200–$300M; planned divestitures >$1.0B within first year post‑close; path to ~1.0x net leverage by YE 2027 at $65 WTI / $3.50 HH .

Dividend declaration:

Quarterly cash dividend $0.20/share; payable Nov 3, 2025 to holders as of Oct 17, 2025 .

Conference call logistics:

Q3 event held Nov 3; prior webcast/Q&A canceled; call info provided .

S&P Global disclaimer: Where values are marked with *, data were retrieved from S&P Global.

SM Energy Co (SM)·Q3 2025 Earnings Summary