Sm Energy Company · NYSE:SM
Sm Energy — Q2 2024 Earnings Presentation
31 slides from Sm Energy's earnings presentation, Aug 8, 2024
Slide 1: Second Quarter 2024 Financial and Operating Results
Second Quarter 2024 Financial and Operating Results August 7, 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,” “preliminary,” “target,” and similar expressions are intended to identify forward-looking
Slide 3: SM Energy Is…
SM Energy Is… A Premier Operator of Top-tier Assets A Premier Operator UT Capital Efficiency Pending Owner of Top-tier Assets High-Quality Inventory with Long Runway A Leader Sustainability and Stewardship Note: On June 27, 2024, SM Energy executed and delivered a purchase and sale agreement to acqu
Slide 4: Excellent Operational Execution
Excellent Operational Execution Meeting or Exceeding 2024 Core Objectives 2024 Core Objectives 2Q24 Results Focus on operational execution to 158.5 MBoe/d, at 46% oil 1 deliver low-breakeven, high-return wells, Production exceeds midpoint of guidance by 2,500 Boe/d while employing new technologi
Slide 5: Expanding Top-Tier Portfolio
Expanding Top-Tier Portfolio Core Acreage(1) ↑ ~40% | More than 465 Uinta Basin Locations(2) (and Just Getting Started) Uinta Basin Midland Basin Maverick Basin XCL + Altamont Acquisitions Klondike Acquisition | Sweetie Peck Extension Austin Chalk Drill-to-Earn ~63.3K net acres ~20.7K net acres | ~9
Slide 6: Expanding Top-Tier Portfolio: Value Creation
Expanding Top-Tier Portfolio Value Creation $1.25MM Value per location at $35K per flowing barrel Acquired for less than 3x 2025 projected Adjusted EBITDAX(1) EXPANDING TOP–TIER ASSET PORTFOLIO Net SM Energy’s XCL Altamont Total 80% Interest Acquisition Acquisition SIGNIFICANT RESOURCE UPSIDE DRIVEN
Slide 7: Uinta Basin Returns | Competitive with the Best
Expanding Top-Tier Portfolio Uinta Basin Returns | Competitive with the Best ...we believe there are sufficient data points to acknowledge that the Uinta is a prolific, stacked- pay oil play.... We come away impressed by the overall rock quality in the Uinta....”(1) Compared to SM Energy(2) Compared
Slide 8: Inventory Upside in Greater Sweetie Peck
Operational Excellence Inventory Upside in Greater Sweetie Peck What are the most significant asset- and basin-level trends for North American E&Ps?... (SM Energy’s) recent Woodford well within its Sweetie Peck region... could signal additional upside in the ... Midland Basin...”(1) SM Woodford-Barn
Slide 9: Significant Oil Production Outperformance Compared to Regional 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 Wells v. H
Slide 10: Operational Excellence: Prolific New AC Wells
Operational Excellence: Prolific New AC Wells Strong Performance, High Liquids Content SM’s Briscoe C spacing pilot in the Austin Chalk is performing in line with more conservatively spaced offsets and could add over 60 locations to our existing inventory estimate.”(4) New Briscoe C Pads Briscoe C(2
Slide 11: SM Energy | A Leader in Stewardship
Operational Excellence SM Energy | A Leader in Stewardship Key Areas of Focus Safety protocols & procedures ESG initiatives Operational performance metrics CDP Score Climate Change 2023 Technological advancements Leadership Level CDP Score Supplier Engagement 2023 Leadership Level 11
Slide 12: 2Q 2024 Performance
2Q 2024 Performance Key Metrics 2Q24 Net Production and Pricing Total Net Production (MMBoe) Total Net Production (MBoe/d) Oil percentage / Liquids 14.4 158.5 46% / 63% 158.5 MBoe/d 2Q24 NET PRODUCTION Pre-Hedge Realized Price ($/Boe) $43.92 Post-Hedge Realized Price(1) ($/Boe) $45.07 Costs (per Boe
Slide 13: Increased Return of Capital Program
Increased Return of Capital Program Increased Quarterly Fixed Dividend | Reloaded Stock Repurchase Authorization Fixed Quarterly Dividend(1) Increased Stock Repurchase Authorization Reloaded(1) 11% $500 million to Through $0.20 per share 2027 ($ in MM, shares in M) 2Q24 YTD 2024 Program-to-Date(2) D
Slide 14: Empowered by a Strong Balance Sheet
Empowered by a Strong Balance Sheet Low Leverage and Balance Sheet Flexibility Debt Maturities (IN MILLIONS) as of June 30, 2024: $2.5B As of June 30, 2024: Borrowing Base $1.25B Aggregate Lender 0.6x NET DEBT-TO- ADJUSTED EBITDAX(1) Commitments LIQUIDITY $1.74 billion CASH BALANCE $488 million NET
Slide 15: Senior Notes Detail
Empowered by a Strong Balance Sheet Senior Notes Detail Principal Amount Coupon Initial Call Date Current Call Price Maturity Date Outstanding 2024 - - - - - Credit rating agency senior 2025(1) $349 5.625% 6/2020 100.000% 6/2025 unsecured debt ratings 2026 $419 6.750% 9/2021 101.125% 9/2026 S&P: BB-
Slide 16: 2024 Plan Guidance
2024 Plan Guidance 2Q24 Guidance Update | Increased Oil Percentage Standalone Guidance Key Metrics Guidance FY ’24 Capital Expenditures(1) ($B) $1.14–$1.18 Total Net Production (MMBoe) 57–60 4th Quarter Additions from Total Net Production (MBoe/d) 156-164 Pending Uinta Basin Acquisitions Oil percent
Slide 17: 2024 Plan Guidance: Midland Basin and South Texas
2024 Plan Guidance Focused on: Midland Basin | Delineation of New Assets | Optimized Well Costs Midland Basin Plan Details 2024 Net wells planned: ~72 drills and ~71 completions ~11,760 ft expected average lateral length per well, including ~32 wells at ~15,000 ft lateral length(2) ~34% Boe PD
Slide 18: Appendix
Appendix
Slide 19: 2Q 2024 Realizations by Region
2Q 2024 Realizations by Region Two Top-Tier Areas of Operation Net Production Volumes Midland Basin South Texas Total Benchmark Pricing Oil (MBbls) 4,671 1,946 6,617 Gas (MMcf) 15,438 16,773 32,211 NYMEX WTI Oil ($/Bbl) $ 80.57 NGL (MBbls) 5 2,432 2,437 NYMEX Henry Hub Gas ($/MMBtu) $ 1.89 Total (MB
Slide 20: Activity by Region
Activity by Region Wells Drilled, Flowing Completions & DUC Count Wells Drilled Flowing Completions DUC Count 2Q24 2024 YTD 2Q24 2024 YTD As of June 30, 2024 Gross Net Gross Net Gross Net Gross Net Gross Net Midland Basin RockStar 19 17 31 27 26 20 29 22 27 24 Sweetie Peck 5 4 12 11 6 6 19 15 7 6 Mi
Slide 21: Leasehold Summary
Leasehold Summary Growing Midland Basin Position Net Acres(1) Midland Basin RockStar Sweetie Peck(2) 83,900 27,100 ~155,000 Midland Basin total 111,000 SOUTH TEXAS NET ACRES South Texas 154,800 Rocky Mountain Other 10,600 Other Areas / Exploration 25,000 Total 301,400 ~111,000 MIDLAND BASIN NET ACRE
Slide 22: Uinta Basin Acquisitions Leasehold
Uinta Basin Acquisitions Leasehold(1) Offset Operator Map XCL + Altamont All Cash Acquisitions $2.1B Acquired at $1.25MM per location | ~$9,000 per net acre(2) ~465 preliminary net locations extend inventory by 3+ years(3) (1) The Uinta Basin Acquisitions have a May 1, 2024 effective date and
Slide 23: NGL Realizations
NGL Realizations 2024 Plan Assumes Ethane Processing All Year Austin Chalk – Realizations by Quarter 2Q 2024 1Q 2024 4Q 2023 3Q 2023 2Q 2023 High Liquids Content OPIS Benchmark(1) Price ($/Bbl) $27.96 $29.28 $26.89 $27.81 $25.21 SM Energy NGL Realization ($/Bbl) $22.86 $22.94 $21.92 $23.61 $20.83 %
Slide 24: Hedging Summary
Hedging Summary Oil Volumes Hedged Increased in Conjunction with Pending Asset Acquisitions 2024 Hedge Program SWAPS AND COLLARS: Oil: ~5,830 MBbls,(1) or 40 – 45%, of expected 3Q-4Q net oil production(2) is hedged to benchmark prices at an average price of $70.77/Bbl (weighted-average of collar f
Slide 25: Oil Derivative Positions
Oil Derivative Positions(1) By Quarter NYMEX WTI NYMEX WTI Midland - Cushing MEH – WTI NYMEX WTI Weighted-Average Price Oil Oil Swaps Oil Collars Oil Basis Swaps Oil Basis Swaps Roll Basis Swaps of Swaps and Collars Price Price Price Volume Volume Ceiling Floor Volume Volume Volume Ceiling Floor Per
Slide 26: 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 Price Gas Gas Swaps Gas Swaps Gas Basis Swaps Gas Basis Swaps Gas Collars of Swaps and Collars Volume Volume Volume Volume Volume Ceiling Floor Ceiling Floor Period $/MMBtu(2) $/MMB
Slide 27: Second Quarter 2024 Non-GAAP Reconciliations and Disclosures
Second Quarter 2024 Non-GAAP Reconciliations and Disclosures
Slide 28: Definitions of Non-GAAP Measures and Metrics as Calculated by the Company
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 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations Trailing Twelve Adjusted EBITDAX(1) Three Months Ended Months Ended Adjusted Net Income (1) Three Months Ended (in thousands) June 30, 2024 June 30, 2024 (in thousands, except per share data) June 30, 2024 Net income (GAAP) $ 210,293 $ 810,946 Net income (GAAP) $ 210,293 Int
Slide 30: Non-GAAP Reconciliations, continued
Non-GAAP Reconciliations, continued Adjusted Free Cash Flow(1) Three Months Ended Six Months Ended July 1, 2022 to (in thousands) June 30, 2024 June 30, 2024 June 30, 2024 Net cash provided by operating activities (GAAP) $ 476,382 $ 752,382 $ 3,128,521 Net change in working capital (50,215) 47,473 1
Slide 31: Contact Information
Contact Information Jennifer Martin Samuels Vice President – Investor Relations and ESG Stewardship 303.864.2507 jsamuels@sm-energy.com