Sm Energy Company · NYSE:SM
Sm Energy — Scotia Howard Weil Energy Conference 2015
30 slides from Sm Energy's conference presentation, Mar 23, 2015
Slide 1: Scotia Howard Weil Energy Conference
Scotia Howard Weil Energy Conference Jay Ottoson President and CEO March 23, 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: Debt to TTM adjusted EBITDAX
4 Debt to TTM adjusted EBITDAX Note: 12/31/14 balance sheet and TTM EBITDAX data sourced from Bloomberg. Peer Group consists of CLR, COG, CXO, DNR, EGN, NFX, OAS, PXD, ROSE, RRC, UPL, WLL, WPX, XCO, and XEC. SM Energy’s December 31, 2014 debt to trailing twelve-month adjusted EBITDAX is below its pe
Slide 4: Financial Position
Financial Position 5 Revolving Credit Facility 6.625% Senior Notes 6.50% Senior Notes Strong balance sheet with significant liquidity. First maturity is in 2019. Credit Facility: Matures in 2019 Borrowing base of $2.4 billion Commitments of $1.5 billion 6.125% Senior Notes 6.50% Senior Notes 5.00% S
Slide 5: 2015 Operated Activity
2015 Operated Activity 6 Reducing rig activity and building WOC inventory
Slide 6: 2015 Capital Expenditures
2015 Capital Expenditures 7 Significantly reduced CAPEX program that yields YoY production growth Total CAPEX budget of $1,230
Slide 7: Financial Outlook
Financial Outlook 8 2015 CAPEX is expected to be ~$150 million in excess of 2015 adjusted EBITDAX.* Expecting quarterly adjusted EBITDAX to exceed quarterly CAPEX in 2H15.* Strong financial and liquidity position entering 2016. *Outspend and leverage amounts assume strip pricing as of 2/23/15 and do
Slide 8: Operated Eagle Ford Program
TEXAS Operated Eagle Ford Program 9 ~144,000 total net acres Mexico Dimmit Webb
Slide 9: 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 10: Upper Eagle Ford East Testing
Upper Eagle Ford East Testing 11 Proving up the viability of the Upper Eagle Ford Upper Eagle Ford East results are in-line with Lower Eagle Ford East type curve.
Slide 11: Upper Eagle Ford North Testing
Upper Eagle Ford North Testing 12 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.
Slide 12: Eagle Ford Testing Road Map
Eagle Ford Testing Road Map 13 12 well stacked/staggered 3Q15 completion 3 well stacked/staggered 3Q15 completion 2 well UEF “W” test 2Q15 completion 15 well LEF infill spacing test (625’ & 450’) 2Q15 completion 5 well stacked/staggered 3Q15 completion
Slide 13: Eagle Ford North Stack/Stagger Pilot
Eagle Ford North Stack/Stagger Pilot 14 ~85’ ~120’ 1 PAD Upper and Lower EF development well spacing in targeted facies ~70’ ~85’ ~120’ ~110’ 1 PAD Successful stack/stagger development of the Eagle Ford could more than double the current inventory of ~1,050 locations.
Slide 14: Williston Basin Acreage
Williston Basin Acreage 15 Divide Golden Valley Billings Dunn McKenzie Williams Roosevelt Sheridan Richland Wibaux Gooseneck: ~120,000 net acres Raven/Bear Den: ~40,000 net acres Total Williston Basin acreage: ~245,000 net acres
Slide 15: Gooseneck Sweet Spot
Gooseneck Sweet Spot 16 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
Gooseneck Three Forks vs. Offset Divide 17 Gooseneck Three Forks program outperforms offset operators Three Forks Type Curve Offset Operator Results
Slide 17: Gooseneck Bakken
Gooseneck Bakken 18 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 outperf
Slide 18: Takeaways
19 Takeaways SM Energy enters 2015 with 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. 2015 program positions SM Energy to exit this downturn as a strong competitor.
Slide 19: Appendix
20 Appendix
Slide 20: 4Q14 Regional Realizations
21 4Q14 Regional Realizations NYMEX WTI OIL (Bbl) $ 73.16 Hart Composite NGL (Bbl) $ 29.53 NYMEX Henry Hub Gas (MMBTU) $ 3.77 Production Volumes STGC Rockies Mid-Con Permian SM Total Oil (MBbls) 2,164 2,326 27 582 5,099 Gas (MMcf) 34,961 2,239 5,381 1,295 43,876 NGL (MBbls) 3,675 60 25 0 3,760 MBOE
Slide 21: 2015 Guidance
22 2015 Guidance FY 2015 Production (MMBOE) 60.4 – 63.5 Average daily production (MBOE/d) 165 – 174 LOE ($/BOE) $4.40 – $4.65 Ad Valorem ($/BOE) $0.50 – $0.55 Transportation ($/BOE) $6.25 – $6.55 Production taxes (% of pre-derivative oil and gas revenue) 4.5% – 5.0% G&A – Cash ($/BOE) $2.50 – $2.80
Slide 22: Operated Eagle Ford – East
Operated Eagle Ford – East 23 Strong asset continues to provide top-tier returns. Assuming single interval development, SM Energy has identified more than 300 locations on its operated Eagle Ford East area. Webb Mexico Dimmit Economics(2) Well Cost (6,500’ lateral) $5.8MM IRR ~60% NPV10 ~$6.3 MM Ass
Slide 23: Operated Eagle Ford – North
Current type curve Operated Eagle Ford – North 24 Improved completions have enhanced this asset. Assuming single interval development, SM Energy has identified more than 500 locations on its operated Eagle Ford North area. Assumes $3.50/mmbtu gas, 40% WTI NGL realizations, and 25% reduction from YE1
Slide 24: Operated Eagle Ford – South
Operated Eagle Ford – South 25 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 25: Gooseneck – Three Forks
Gooseneck – Three Forks 26 Under current assumptions, SM Energy has identified more than 400 Three Forks locations on its operated Gooseneck acreage. Divide Williams Substantial remaining inventory in our most economic Williston program. Economics(2) Well Cost (~10,000’ lateral) $4.1 MM IRR ~35% NPV
Slide 26: Raven/Bear Den – Bakken
Raven/Bear Den – Bakken 27 Under current assumptions, SM Energy has identified more than 75 Bakken locations on its operated Raven/Bear Den acreage. Williams McKenzie Economics(2) Well Cost (~10,000’ lateral) $6.8 MM IRR ~30% NPV10 ~$3.1 MM Current type curve Enhanced well design results Assumes $3.
Slide 27: Adjusted EBITDAX Reconciliation
28 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): December 31, 2014 2013 Net income (GAAP) $331,726 $6,996 Interest expense 27,703 2
Slide 28: Oil Derivative Position
29 Oil Derivative Position* Oil Swaps - NYMEX Equivalent Bbls $/Bbl 2015 Q1 1,711,000 $ 91.96 Q2 1,639,000 $ 91.26 Q3 1,254,000 $ 90.78 Q4 1,137,000 $ 90.15 2015 Total 5,741,000 2016 Q1 1,868,000 $ 86.93 Q2 1,752,000 $ 86.73 Q3 1,170,000 $ 90.29 Q4 780,000 $ 90.05 2016 Total 5,570,000 Grand Total 11
Slide 29: Gas Derivative Position
30 Gas Derivative Position* Natural Gas Swaps - NYMEX Equivalent Natural Gas Collars - NYMEX Equivalent Ceiling Floor MMBTU $/MMBTU MMBTU $/MMBTU $/MMBTU 2015 2015 Q1 23,548,000 $ 4.25 Q1 2,525,000 $ 4.31 $ 4.01 Q2 15,985,000 $ 3.97 Q2 2,296,000 $ 4.34 $ 4.04 Q3 14,950,000 $ 4.09 Q3 2,005,000 $ 4.33
Slide 30: NGL Derivative Position
31 NGL Derivative Position* Natural Gas Liquid Swaps - Mont. Belvieu Bbls $/Bbl 2015 Q1 781,000 $ 55.42 2015 Total 781,000 Grand Total 781,000 *Includes all commodity derivative contracts for settlement at any time during the first quarter of 2015 and later periods entered into as of February 18, 20
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