SM Energy (NYSE: SM) continues to strengthen its position in the Midland Basin, one of the most productive oil and gas regions in the U.S. The company’s 2024 operational success and 2025 strategic plan highlight key efficiency gains, cost optimizations, and growth initiatives that position SM Energy for sustained profitability and shareholder returns.
Midland Basin Performance: 2024 Success & 2025 Growth Plans
Production & Reserves
- Total 2024 production: 29.4 MMBoe (80.5 MBoe/d), with 19.1 MMBbls of oil.
- Proved reserves: 230.5 MMBoe, representing 34% of SM Energy’s total reserves.
- Reserve Quality: 75% of reserves are developed, supporting long-term production stability.
SM Energy’s Midland Basin assets continue to deliver strong well productivity, driven by a disciplined focus on long-lateral drilling, advanced completion techniques, and cost reductions.
Efficiency Gains in the Midland Basin: Faster, Cheaper, and Higher Output
SM Energy’s operational improvements in the Midland Basin from 2022-2024 have resulted in significant cost savings and productivity gains. Here’s how the company is enhancing efficiency:
Drilling & Completion (D&C) Efficiency
- Drilling speed improved by 20% (measured in average feet drilled per day).
- Completion efficiency increased by 18%, reducing overall cycle time per well.
- Cost reductions:
- 10% decrease in D&C costs per foot from 2022-2024.
- 19% reduction in completion costs over the past two years.
These efficiency gains allow SM Energy to bring wells online faster, reduce capital expenditures per well, and enhance free cash flow generation.
Well Performance vs. Peers
SM Energy’s wells outperformed regional peers in Howard County by ~40% in cumulative oil production, demonstrating superior well design and execution. Additionally, their Woodford-Barnett wells produced 50% more oil than large-cap competitors.
2025 Strategy: Optimized Capital Allocation & High-Return Wells
SM Energy’s 2025 operating plan for the Midland Basin emphasizes capital efficiency and production growth, with a focus on high-quality inventory and strategic cost control.
Capital Spending & Well Development
- 35%-40% of total 2025 capital budget allocated to Midland.
- ~40 net wells drilled, ~60 net wells completed.
- Four rigs early in 2025, dropping to two rigs later in the year to optimize capital spending.
- 1 completion crew running throughout the year.
Longer Laterals & High-Return Wells
- Average lateral length of ~12,300 feet, maximizing well productivity.
- Expanding development into Woodford-Barnett (20,000+ net acres in Sweetie Peck).
- Klondike Dean wells outperforming initial acquisition models, reinforcing asset value.
Midland Basin Outlook: Efficiency, Growth & Shareholder Value
SM Energy’s 2025 strategy for the Midland Basin is clear:
✅ Maximize efficiency through drilling and completion advancements.
✅ Optimize capital spending while delivering high-return wells.
✅ Expand inventory with new development in Woodford-Barnett and Klondike Dean.
✅ Generate free cash flow to support dividends and debt reduction.
With superior well performance, disciplined cost management, and strategic asset expansion, SM Energy is well-positioned for a strong 2025 in the Midland Basin.
