Sm Energy Company · NYSE:SM
Sm Energy — IPAA OGIS NYC 2015
25 slides from Sm Energy's conference presentation, Apr 20, 2015
Slide 1: IPAA OGIS NYC
IPAA OGIS NYC Jay Ottoson President and CEO April 20, 2015
Slide 2: Forward Looking Statements - Cautionary Language
2 Forward Looking Statements - Cautionary Language Except for historical information contained herein, statements in this presentation, including information regarding the business of the Company, contain forward looking statements within the meaning of securities laws, including forecasts and proje
Slide 3: Asset and Strategy Overview
(1) Economic inventory consists of projects expected to achieve at least a 20% rate of return at 5-yr average strip pricing as of 2/23/15 and expected well costs. 3 Asset and Strategy Overview Williston Basin ~90 MMBOE (net) ~500 gross locations Eagle Ford ~900 MMBOE (net) ~1,050 gross locations Eco
Slide 4: Financial Position
Financial Position 4 Revolving Credit Facility 6.625% Senior Notes 6.50% Senior Notes Borrowing base reaffirmed at $2.4 billion at the April 2015 redetermination. Strong proved reserve adds at YE14 resulted in a maintained borrowing base in depressed commodity market. 6.125% Senior Notes 6.50% Senio
Slide 5: 2015 Operated Activity
5 2015 Operated Activity Reducing rig activity and building WOC inventory 0 10 20 30 40 50 60 70 80 90 100 0 2 4 6 8 10 12 14 16 18 20 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Wells Waiting on Completion Rigs Eagle Ford Bakken/Three Forks Powder River Basin Permian East Texas WOC inventory
Slide 6: 2015 Capital Expenditures
6 2015 Capital Expenditures Total CAPEX budget of $1,230 Op. Eagle Ford $470 Other $185 Bakken/Three Forks $255 Non - Op Eagle Ford $135 (in millions) $1,045 $185 Drilling and Completion Non-drilling and New Ventures
Slide 7: Service Costs Coming Down
7 Service Costs Coming Down 2015 budget assumed 15% - 20% service cost deflation by year-end. Company-wide costs currently are in-line with budgeted deflation assumptions. Drilling costs currently down 10% - 20%. Completions costs currently down 20% - 25%. Operated EF costs per stage down ~20% from
Slide 8: 1Q15 Production Beat Expectations
8 1Q15 Production Beat Expectations 175.8 186.4 Strong sequential production growth of 6% from 4Q14. Production beat primarily driven by better than expected well performance. Product mix essentially unchanged quarter to quarter. Company plans to revisit guidance after the completion of its Mid-Con
Slide 9: Operated Eagle Ford Program
9 TEXAS Operated Eagle Ford Program ~144,000 total net acres Dimmit Webb 44.8 48.1 43.0 54.2 56.2 8.2 7.9 7.1 9.7 9.8 23.3 27.2 26.1 29.7 32.1 0 20 40 60 80 100 120 1Q14 2Q14 3Q14 4Q14 1Q15e MBOE/d NGL Oil Gas 76.3 83.2 76.2 93.6 98.1
Slide 10: Operated Eagle Ford Type Log
10 Operated Eagle Ford Type Log Upper EF Lower EF SM Energy has some of the thickest total Eagle Ford Shale interval in the play. Identified several targets within the Upper and Lower Eagle Ford based on facies work. Thickness and geo-mechanical variability presents an opportunity for increased inve
Slide 11: Upper Eagle Ford East Testing
11 Upper Eagle Ford East Testing Proving up the viability of the Upper Eagle Ford Upper Eagle Ford East results are in-line with Lower Eagle Ford East type curve. Galvan Ranch B311H (Upper EF) Galvan Ranch C314H (Upper EF) East Area Type Curve 0 5 10 15 20 25 30 35 40 45 50 0 2 4 6 8 10 12 2 - STREA
Slide 12: Upper Eagle Ford North Testing
12 Upper Eagle Ford North Testing Proving up the viability of the Upper Eagle Ford Briscoe Catarina East 25H (Upper EF) Galvan Ranch LP GU5 State 20H North Area Type Curve (Upper EF) Upper Eagle Ford North results are in-line with Lower Eagle Ford North type curve. 0 5 10 15 20 25 30 35 40 45 0 2 4
Slide 13: Eagle Ford Testing Road Map
13 Eagle Ford Testing Road Map 12 well stacked/staggered 3Q15 completion 3 well stacked/staggered 3Q15 completion 2 well LEF “W” test 2Q15 completion 15 well LEF infill spacing test (625’ & 450’) 2Q15 completion 5 well LEF/UEF “W” test 3Q15 completion Successful stack/stagger development of the Eagl
Slide 14: Williston Basin Acreage
14 Williston Basin Acreage Divide Billings Dunn McKenzie Williams Roosevelt Sheridan Gooseneck: ~120,000 net acres Raven/Bear Den: ~40,000 net acres Total Williston Basin acreage: ~245,000 net acres 16.0 16.5 17.5 23.4 23.3 0 5 10 15 20 25 1Q14 2Q14 3Q14 4Q14 1Q15e MBOE/d
Slide 15: Gooseneck Sweet Spot
15 Gooseneck Sweet Spot Divide Burke Sheridan, MT Williams Decreasing reservoir quality Decreasing reservoir quality Sizeable acreage position in the sweet spot of Divide County, ND The geology deteriorates as you move east and west from the center section of Divide County. Decreasing thermal maturi
Slide 16: Gooseneck Three Forks vs. Offset
16 Gooseneck Three Forks vs. Offset Divide Gooseneck Three Forks program outperforms offset operators Three Forks Type Curve Offset Operator Results 0 2 4 6 8 10 12 14 16 1 3 5 7 9 11 13 15 17 19 21 23 CUMULATIVE PRODUCTION (MBOE/1000FT ) PRODUCING MONTHS
Slide 17: Gooseneck Bakken
Gooseneck Bakken Middle Bakken Wells 2015 Planned Bakken Completions Successful development of the Gooseneck Bakken has the potential to double the current inventory of 400 identified Gooseneck Three Forks locations. Three Forks Type Curve Bakken Well Results Bakken wells in Gooseneck are outperform
Slide 18: Takeaways
18 Takeaways SM Energy has a strong balance sheet, significant liquidity, and a robust inventory in core programs. Potential to add meaningful inventory in core programs in current pricing environment. Focus is on creating shareholder value and outperforming the peer group.
Slide 19: Appendix
19 Appendix
Slide 20: Operated Eagle Ford – East
Assumes $3.50/mmbtu gas, 40% WTI NGL realizations, and 25% reduction from YE14 well costs. Utilizes assumptions from IRR sensitivity using $65/bbl oil. 21 Operated Eagle Ford – East Strong asset continues to provide top-tier returns. Assuming single interval development, SM Energy has identified mor
Slide 21: Operated Eagle Ford – North
Assumes $3.50/mmbtu gas, 40% WTI NGL realizations, and 25% reduction from YE14 well costs. Utilizes assumptions from IRR sensitivity using $65/bbl oil. 22 Current type curve Operated Eagle Ford – North Improved completions have enhanced this asset. Assuming single interval development, SM Energy has
Slide 22: Operated Eagle Ford – South
23 Operated Eagle Ford – South Wells in southern acreage provide an economic dry gas option. Assuming single interval development, SM Energy has identified more than 200 locations on its operated Eagle Ford South area. Webb Mexico Dimmit Historical well results Represents 25% reduction from YE14 wel
Slide 23: Eagle Ford North Stack/Stagger Pilot
24 Eagle Ford North Stack/Stagger Pilot ~85’ ~120’ 1 PAD Upper and Lower EF development well spacing in targeted facies ~70’ ~175 ft Austin Chalk Upper Eagle Ford Lower Eagle Ford ~200 ft 525’ 263’ 262’ 525’ 525’ ~85’ ~120’ ~110’ 1 PAD
Slide 24: Gooseneck – Three Forks
Assumes $3.50/mmbtu gas, 40% WTI NGL realizations, and 25% reduction from YE14 well costs. Utilizes assumptions from IRR sensitivity using $65/bbl oil. 25 Gooseneck – Three Forks Under current assumptions, SM Energy has identified more than 400 Three Forks locations on its operated Gooseneck acreage
Slide 25: Raven/Bear Den – Bakken
Assumes $3.50/mmbtu gas, 40% WTI NGL realizations, and 25% reduction from YE14 well costs. Utilizes assumptions from IRR sensitivity using $65/bbl oil. 26 Raven/Bear Den – Bakken Under current assumptions, SM Energy has identified more than 75 Bakken locations on its operated Raven/Bear Den acreage.