Sm Energy Company · NYSE:SM
Sm Energy — Barclays Energy-Power Conference 2014
23 slides from Sm Energy's conference presentation, Sep 3, 2014
Slide 1: Barclays Energy-Power Conference
Barclays Energy-Power Conference Jay Ottoson President and COO September 4, 2014
Slide 2: Forward Looking Statements - Cautionary Language
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 project
Slide 3: Overview
Reserves (MMBOE) Eagle Ford Bakken Other Overview SM Energy is a returns-focused company with core positions in the Eagle Ford and Bakken / Three Forks. 9.8 1.5 2.1 2Q14 Production (MMBOE) 13.4 MMBOE 428.7 MMBOE 3.0 11.1 18.5 30.5 0 5 10 15 20 25 30 2010 2011 2012 2013 MMBOE Eagle Ford Annual Produc
Slide 4: Production Outlook
Production Outlook 40 50 60 70 80 2013* 2014 2015 2016 Production (MMBOE) ~20% growth ~20% growth ~15% growth *2013 production for retained properties. Recently increased 2014 production guidance; 2015 annual production growth target increased to ~20% from ~15%. 2015 oil growth expected to be betwee
Slide 5: Peer-Leading Corporate Returns
Peer-Leading Corporate Returns 5 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 3-Year Average Cash Return on Average Capital Employed SM Note: Cash return on average capital employed is calculated by SM Energy as GAAP cash flow from operations adjusted for changes in working capital divided by average capit
Slide 6: Eagle Ford operated and non-operated programs
Operated and non-operated programs are focused on improving and expanding economic drilling inventory. 2014 operated program will utilize longer laterals and increased sand loading completions. Eagle Ford Dimmit Maverick Webb Mexico SM Operated APC Operated. Operated: ~144,000 net acres. Non-operate
Slide 7: Improved Drilling Time
SM Energy has decreased its average per well drilling time and increased the consistency of drilling time, leading to lower program costs. Improved Drilling Time 7
Slide 8: Eagle Ford – Area Improvements Recap
Eagle Ford – Area 2 Improvements Recap Area Net Acres 1 35,082 2 21,879 3A 22,226 3B 29,726 4 8,268 5 25,124 6 1,560 Substantial increase in sand loading resulting in: Higher flowing pressures Increased production rates Increased condensate yield 8
Slide 9: Improving Eagle Ford Completions
Improving Eagle Ford Completions Improved completion design in Area 1 Improved Completions: Average length – 7,032’ @ $8MM/well Average sand loading – 2,046 lbs/ft Old Completions: Average length – 4,396’ @ $6MM/wells Average sand loading – 1,297 lbs/ft SM Energy has increased sand loading and later
Slide 10: Improved Completion Design Higher Pressures
Improved Completion Design Higher Pressures Area 1: Casing Pressure vs. Cumulative Equivalent Production 10
Slide 11: Improved Completion Design Higher IPs
Improved Completion Design Higher IPs Area 1: Equivalent Rate Per Well vs. Time 11
Slide 12: Improved Completion Design Higher Yield
Improved Completion Design Higher Yield Area 1: Condensate Yield vs. Cumulative Equivalent Production 12
Slide 13: Bakken/Three Forks Operational Highlights
Bakken/Three Forks Operational Highlights During 2Q14, the Company operated 2 rigs in Raven/Bear Den and 1 rig in Gooseneck. Pending acquisition adjacent to Gooseneck adds ~61,000 net acres for $330MM. The Company expects to ramp its basin activity in 4Q14 and 2015. Total Williston Basin net acreage
Slide 14: Pending Gooseneck Acquisition
Pending Gooseneck Acquisition Significant acquisition fits perfectly with existing acreage and provides substantial running rooms for this program Upon closing, the Company will have ~97,000 net acres in its Gooseneck focus area. Potential for significant inventory build in Three Forks and Bakken fo
Slide 15: SM Gooseneck vs. Offset Operators
SM Gooseneck vs. Offset Operators Note: Data sourced from North Dakota Industrial Commission website. Plot includes offset operators that have >5 wells in Divide Country, North Dakota. Offset operators include AMZG, MVW, CLR BTE, Murex, and Samson Resources. 15
Slide 16: Powder River Basin Update
Powder River Basin Update In 2014, the Company has added approximately 33,000 net acres to its Powder River Basin position. The Company now holds approximately 166,000 net acres in the basin Solid results from Rush State 477-36-1FH: peak 30-day initial production rate of 737 BOE/d from a ~3,800 foot
Slide 17: Permian Update
Permian Sweetie Peck Wolfcamp B 30-day rates Avg. 5,000’ lateral well 30-day IP rate: 1,011 BOE/d Avg. 7,6000’ lateral well 30-day IP rate: 1,456 BOE/d Total D&C well costs down 13% since 1/14 Additional bench evaluation looks very encouraging Lower Spraberry Test spud 3Q14 Buffalo Wolfcamp D test i
Slide 18: Strong, Simple Balance Sheet
Strong, Simple Balance Sheet SM Energy’s pro forma debt to trailing twelve-month adjusted EBITDAX is below its peer median average of 2.0x. As of June 30, 2014 Current Revolver Commitments $1.3 billion Revolver drawn $0 First maturity of debt February 2019 * 6/30/14 debt to TTM adjusted EBITDAX was
Slide 19: Key Takeaways
Key Takeaways Peer-leading corporate returns. Drilling inventory is growing in size and quality. Production growth is continuing and getting oilier. 19
Slide 20: Appendix
4 ic Appendix
Slide 21: 2Q14 Regional Realizations
2Q14 Regional Realizations NYMEX WTI OIL (Bbl) $ 103.06 Hart Composite NGL (Bbl) $ 41.21 NYMEX Henry Hub Gas (MMBTU) $ 4.60 Production Volumes STGC Rockies Mid-Con Permian SM Total Oil (MBbls) 1,673 1,703 15 499 3,893 Gas (MMcf) 30,337 1,495 5,038 1,091 37,961 NGL (MBbls) 3,124 9 27 0 3,160 MBOE 9,8
Slide 22: Adjusted EBITDAX Reconciliation
Adjusted EBITDAX Reconciliation Adjusted EBITDAX (1) (in thousands) Reconciliation of net income(GAAP) to Adjusted EBITDAX (non-GAAP) to net cash For the Three Months Ended provided by operating activities (GAAP): June 30, 2014 2013 Net income (GAAP) $59,780 $176,522 Interest expense 24,040 21,581 O
Slide 23: Cash Returns on Average Capital Employed Calculation
Cash Returns on Average Capital Employed Calculation Cash Returns on Average Capital Employed (non-GAAP) (in thousands) For the Years Ending December 31, 2013 2012 2011 2010 Cash flow from operating activities (GAAP) $1,338.5 $922.0 $760.5 $497.1 Changes in working capital (GAAP) (14.8) (10.5) 40.8