Sm Energy Company · NYSE:SM
Sm Energy — Q1 2024 Earnings Presentation
29 slides from Sm Energy's earnings presentation, May 3, 2024
Slide 1: First Quarter 2024 Financial and Operating Results
First Quarter 2024 Financial and Operating Results May 2, 2024 NYSE: SM WEB: sm-energy.com 1
Slide 2: Disclaimers
Disclaimers Forward-looking Statements This presentation contains forward-looking statements within the meaning of securities laws. The words “believes,” “demonstrate,” “estimate,” “expect,” “intends,” “plan,” “target,” and similar expressions are intended to identify forward-looking statements. For
Slide 3: SM Energy Is… A Premier Operator of Top-tier Assets
SM Energy Is… A Premier Operator of Top-tier Assets A Premier Operator Capital Efficiency Owner of Top-tier Assets High-Quality Inventory with Long Runway A Leader Sustainability and Stewardship 3
Slide 4: SM Energy Operates in Texas
SM Energy Operates in Texas 1Q24 Added +8K Net Acres | Austin Chalk Drill-to-Earn ~155,000 NET ACRES ~111,000 NET ACRES +8K AUSTIN CHALK DRILL-TO-EARN Midland Basin South Texas 4
Slide 5: Excellent Operational Execution
Excellent Operational Execution Supports 2024 Core Objectives 2024 Core Objectives 1Q24 Results 13.2 MMBoe, or 145.1 MBoe/d, at 44% oil or 63.7 MBbls/d Focus on operational execution to 1 Better performance from new wells deliver low-breakeven, high-return wells, while employing new technologies
Slide 6: Operational Excellence: Oil Production Outperformance vs Peers
Operational Excellence Significant Oil Production Outperformance Compared to Regional Peers ... SM is ... focused on being the most technically proficient operator. SM utilizes larger fracs and wider spacing than most peers, with a focus on optimizing the value of each completion. ”(1) SM 300 Wells
Slide 7: Operational Excellence, continued: New Technologies
Operational Excellence, continued New Technologies: Efficiencies ↑; Costs ↓ Midland Basin Avg. Midland Basin Avg. Drilling Footage per Day Completed Footage per Day Feet per Day ↑~10% ↑~85% Feet per Day 2022 2023 1Q24 2022 2023 1Q24 South Texas Avg. South Texas Avg. Drilling Footage per Day Complete
Slide 8: Operational Excellence, continued: Strong Performance from New Wells
Operational Excellence, continued Strong Performance from New Wells New Briscoe C Pads Briscoe C(2) | 8 Wells (7 AC & 1 EF) 1,250’ MIDDLE AUSTIN CHALK Briscoe C(2) AUSTIN LOWER CHALK 1,250’ Briscoe C(1) EAGLE FORD Existing PDP Wells 2024 Middle Austin Chalk Wells 2024 Eagle Ford Well 2024 Lower Aust
Slide 9: Extending Inventory Through Targeted Acreage Acquisitions
Operational Excellence, continued Extending Our High-Quality Inventory Through Targeted Acreage Acquisitions Klondike Acquisition • ~20,700 Net Acres • 1st pad drilled in new Klondike area We wanted to dive into (4 wells including 1 science well)(1) drilling results in and around SM's recent Klondik
Slide 10: Safety and Stewardship | Always at the Forefront
Operational Excellence, continued Safety and Stewardship | Always at the Forefront 1Q24 Executive Field Tour 15 Board Members & Executives in Attendance 3 Locations Visited CDP Supplier Engagement Key Areas of Focus Safety protocols & procedures ESG initiatives Operational performance metrics
Slide 11: 1Q 2024 Performance
1Q 2024 Performance Key Metrics 1Q24 Net Production and Pricing Total Net Production (MMBoe) Total Net Production (MBoe/d) Oil percentage / Liquids 13.2 145.1 44% / 61% 145.1 MBoe/d 1Q24 NET PRODUCTION Pre-Hedge Realized Price ($/Boe) $42.39 Post-Hedge Realized Price(1) ($/Boe) $43.40 Costs (per Boe
Slide 12: Delivering Return of Capital to Stockholders
Delivering Return of Capital to Stockholders 79% of 1Q24 FCF(1) Returned to Stockholders ~$21 million ~9 million shares 1Q24 Dividends Paid Repurchased Since Program Inception(2) ~$429 million ~$33 million Total Capital Returned to Stockholders Since Program Inception(2) 1Q24 $ Shares Repurchased ~$
Slide 13: Empowered by a Strong Balance Sheet
Empowered by a Strong Balance Sheet Low Leverage and Balance Sheet Flexibility 0.6x Debt Maturities (IN MILLIONS) $1,500 NET DEBT-TO- $2.5B ADJUSTED EBITDAX(1) $1,250 Borrowing Base LIQUIDITY $1.75 billion $1.25B $1,000 Aggregate Lender $750 CASH BALANCE $506 million Commitments $500 NET DEBT(1)(2)
Slide 14: 2024 Plan Guidance | More for Less!
2024 Plan Guidance | More for Less! May 2024 Guidance Update: Increased Production | Decreased Capital (1) Key Metrics Guidance FY ’24 Capital Expenditures Capital Expenditures(1) ($B) $1.14–$1.18 ↓ 2% $1.14- $1.18 Total Net Production (MMBoe) 57–60 ↑ 2% Total Net Production (MBoe/d) 156-164 ↑ 2% bi
Slide 15: 2024 Plan Guidance, continued
2024 Plan Guidance, continued Focused on: Midland Basin | Delineation of New Assets | Optimized Well Costs Midland Basin Plan Details 2024 Net wells planned: drill and complete ~70 ~11,850 ft expected average lateral length per well, including 25-30 wells at ~15,000 ft lateral length(2) ~34% B
Slide 16: Hedging Summary
Hedging Summary Hedging Volumes Aligned with Lower Leverage 2024 Hedge Program SWAPS: Oil: ~5,870 MBbls,(1) or ~30%, of expected 2Q-4Q net oil production(2) is hedged to benchmark prices at an average price of $69.31/Bbl (weighted-average of collar floors and swaps) to $81.91/Bbl (weighted- averag
Slide 17: SM Energy Is A Premier Operator, And Third Parties Agree
SM Energy Is A Premier Operator And Third Parties Agree… ... SM is ... focused on being the most We wanted to dive into drilling results in and technically proficient operator. SM utilizes around SM's recent Klondike acquisition in larger fracs and wider spacing than most Dawson County. We come away
Slide 18: Appendix
Appendix
Slide 19: 1Q 2024 Realizations by Region
1Q 2024 Realizations by Region Two Top-Tier Areas of Operation Net Production Volumes Midland Basin South Texas Total Benchmark Pricing Oil (MBbls) 4,363 1,431 5,795 Gas (MMcf) 14,475 16,670 31,145 NYMEX WTI Oil ($/Bbl) $ 76.96 NGL (MBbls) 3 2,214 2,217 NYMEX Henry Hub Gas ($/MMBtu) $ 2.24 Total (MB
Slide 20: Activity by Region
Activity by Region Wells Drilled, Flowing Completions & DUC Count Wells Drilled Flowing Completions DUC Count 1Q24 1Q24 As of March 31, 2024 Gross Net Gross Net Gross Net Midland Basin RockStar 12 10 3 2 34 27 Sweetie Peck 7 7 13 9 8 8 Midland Basin total 19 17 16 11 42 35 South Texas(1) Austin Chal
Slide 21: Leasehold Summary
Leasehold Summary Growing Midland Basin Position Net Acres(1) Midland Basin RockStar Sweetie Peck(2) 84,200 27,100 ~155,000 Midland Basin total 111,300 SOUTH TEXAS NET ACRES South Texas 154,800 Rocky Mountain Other 10,600 Other Areas / Exploration 25,500 Total 302,200 ~111,000 MIDLAND BASIN NET ACRE
Slide 22: NGL Realizations
NGL Realizations 2024 Plan Assumes Ethane Processing All Year Austin Chalk – Realizations by Quarter 1Q 2024 4Q 2023 3Q 2023 2Q 2023 1Q 2023 High Liquids Content OPIS Benchmark(1) Price ($/Bbl) $29.28 $26.89 $27.81 $25.21 $30.95 SM Energy NGL Realization ($/Bbl) $22.94 $21.92 $23.61 $20.83 $26.24 %
Slide 23: Oil Derivative Positions
Oil Derivative Positions(1) By Quarter NYMEX WTI NYMEX WTI Midland - Cushing MEH – WTI NYMEX WTI Weighted Average Oil Oil Swaps Oil Collars Oil Basis Swaps Oil Basis Swaps Roll Basis Swaps Price Price Price Price Volume Volume Ceiling Floor Volume Volume Volume Ceiling Floor Period $/Bbl(2) Differen
Slide 24: Gas and NGL Derivative Positions
Gas and NGL Derivative Positions(1) By Quarter NYMEX Henry Hub IF WAHA IF WAHA IF HSC NYMEX Henry Hub Weighted Average Gas Gas Swaps Gas Swaps Gas Basis Swaps Gas Basis Swaps Gas Collars Price Volume Volume Volume Volume Volume Ceiling Floor Ceiling Floor Period $/MMBtu(2) $/MMBtu(2) $/MMBtu(2) $/MM
Slide 25: First Quarter 2024 Non-GAAP Reconciliations and Disclosures
First Quarter 2024 Non-GAAP Reconciliations and Disclosures
Slide 26: Definitions of Non-GAAP Measures and Metrics
Definitions of Non-GAAP Measures and Metrics as Calculated by the Company To supplement the presentation of its financial results prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company provides certain non-GAAP measures and metrics, which are used by management
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Trailing Twelve Adjusted EBITDAX(1) Ended Months Ended Adjusted Net Income(1) Three Months Ended (in thousands) March 31, 2024 March 31, 2024 (in thousands, except per share data) March 31, 2024 Net income (GAAP) $ 131,199 $ 750,527 Net income (GAAP) $ 131,199 I
Slide 28: Non-GAAP Reconciliations, continued
Non-GAAP Reconciliations, continued Adjusted Free Cash Flow(1) Three Months Ended (in thousands) March 31, 2024 Net cash provided by operating activities (GAAP) $ 276,000 Net change in working capital 97,688 Cash flow from operations before net change in working capital (non-GAAP) $ 373,688 Capital
Slide 29: Contact Information
Contact Information Jennifer Martin Samuels Vice President – Investor Relations and ESG Stewardship 303.864.2507 jsamuels@sm-energy.com