SM Energy Playbook

SM Energy Company is an independent energy company engaged in the acquisition, exploration, development, and production of crude oil, natural gas, and NGLs in the state of Texas.

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Q2 2021 Guidance

Chief Executive Officer Herb Vogel comments: “Production outperformance, higher commodity prices and continued capital efficiencies supported excellent second quarter results. We are excited to see continued strong results from our Austin Chalk delineation and development program in South Texas, driving better than expected performance in the second quarter and putting SM one step closer to confirming our estimated inventory of 400 high return Austin Chalk wells. Our focus on generating free cash flow and improving leverage metrics is ahead of schedule, with the second quarter free cash flow neutral and the 18-month outlook showing a highly competitive yield to market capitalization based on current strip prices. Once again, the commitment of the SM Energy team delivered great operational performance.”

Second quarter 2021 highlights:

Production was 12.4 MMBoe (136.5 MBoe/d) and was 54% oil. Production volumes exceeded expectations due to outperformance from new wells and base production in the Austin Chalk.
Capital expenditures reflected continued capital efficiencies with costs remaining at approximately $520 per lateral foot. Capital expenditures of $222.6 million adjusted for decreased capital accruals of $8.4 million totaled $214.2 million.
Cash flows beat expectations. Net cash provided by operating activities of $296.4 million before net change in working capital of $82.5 million totaled $213.9 million, up 40% year-over-year and up 36% sequentially. Adjusted EBITDAX, (a non-GAAP measure defined and reconciled below) was $256.9 million, up 27% year-over-year and up 19% sequentially.
New Austin Chalk wells delivered strong 30-day peak IP rates. Three new wells located in the NGL-rich East area of the Company’s South Texas asset averaged 3,300 Boe/d three stream production at 24% oil and 58% liquids from approximately 11,450 foot average laterals, further supporting the consistency, predictability and extent of the Austin Chalk program. The most prolific of the wells averaged approximately 4,000 Boe/d, of which 1,100 Bbl/d was oil.
Balance sheet strengthening through the redemption of all 2022 senior notes outstanding and a majority of the 2024 senior notes outstanding and the issuance of $400 million in 6.5% senior notes due 2028.
ESG disclosure updated. Responses to the CDP Climate Change Questionnaire were submitted with 2020 data and posted to the Company’s website at sm-energy.com.