Raises second-half production outlook and maintains full-year capital guidance
Delivers record operating cash flow, reduces debt, and returns capital to stockholders
DENVER, Aug. 5, 2026 /PRNewswire/ -- SM Energy Company (the "Company" or "SM") (NYSE: SM) today reported financial and operating results for the second quarter 2026. Investor materials, including accompanying slides, can be accessed at https:// sm-energy.com/investors. A conference call is scheduled for 8 a.m. MT/10 a.m. ET on August 6, 2026. Participation details are included in this release.
SM continues to advance the integration of its Civitas merger (the "Merger") and deliver strong progress against three strategic priorities: Integrate, Execute and Bolster. Second quarter 2026 performance on each of these priorities is summarized below.
Integrate –
Progressed Merger-related synergies, with 95% of the target, or $355 million, actioned to date; full run-rate synergies expected to be actioned by year-end 2026.
Lowered full-year 2026 recurring G&A guidance by $50 million at the midpoint, reflecting accelerated integration and full capture of Merger-related G&A synergies.
Execute –
Net income was $4.46 per diluted share; adjusted net income1 was $2.19 per diluted share.
Generated operating cash flow of $1.1 billion, or $1.2 billion before net change in working capital, including certain long-term items.1 Capital expenditures totaled $754 million, or $717 million before changes in accruals.1
Delivered adjusted free cash flow1 of $467 million, after $42 million of one-time integration, transaction, and capital costs.
Adjusted EBITDAX1 was $1.4 billion.
Average net daily production totaled approximately 440 MBoe/d, including approximately 230 MBbl/d of oil.
Increased second-half 2026 production guidance to 435–440 MBoe/d, including approximately 238 MBbl/d of oil.
Maintained full-year 2026 capital guidance of $2.65–$2.85 billion.
Bolster –
Returned $137 million of capital to stockholders, or approximately 30% of adjusted free cash flow,1 through $84 million in share repurchases (2.6 million shares) and SM's $0.22 per share quarterly dividend.
Closed the $950 million sale of certain South Texas assets (the "South Texas Divestiture") on April 30, 2026, substantially achieving SM's $1.0 billion-plus asset-sales target; net proceeds of approximately $900 million were used to redeem all $819 million aggregate principal amount of the 6.75% and 5.0% Senior Notes due 2026 (collectively, "2026 Senior Notes"), contributing to a $1.1 billion sequential reduction in net debt.1
Subsequent to quarter-end, issued a notice of full redemption of all remaining $417 million aggregate principal amount of the 6.625% Senior Notes due 2027 ("2027 Senior Notes") at par using cash on hand, retiring all Senior Notes due through mid-2028.
1Adjusted net income per diluted share; operating cash flow before net change in working capital, including certain long-term items; capital expenditures, before changes in accruals; adjusted free cash flow; adjusted EBITDAX; and net debt are non-GAAP measures. Indicates a non-GAAP measure or metric. Refer to "Definitions of Non-GAAP Measures and Metrics As Calculated By the Company" and the accompanying reconciliations later in this release. |
"Our team delivered strong results in the second quarter, generating significant free cash flow on the strength of our scaled portfolio," stated President and CEO Beth McDonald. "In our first full quarter as a combined company, we moved with urgency, actioning 95% of our targeted run-rate synergies, while further strengthening our balance sheet and returning $137 million to stockholders through dividends and share repurchases. With strong performance year-to-date, we today raised second-half 2026 production expectations, reaffirmed full-year capital expectations and reduced our full-year G&A guidance. Our team is focused on disciplined execution – turning scale and asset quality into growing, durable returns for stockholders."
Second Quarter 2026 Review
Production of approximately 440 MBoe/d, including approximately 230 MBbl/d of oil, with an average realized price of $53.86 per Boe, before hedges. Second-quarter volumes include approximately 12 MBoe/d from the recently divested South Texas assets, or one month of production prior to the April 30, 2026 sale.
Recognized an estimated $262 million gain on the South Texas Divestiture.
Year-to-date transaction and integration costs are $172 million compared to full-year guidance of $180 million; the substantial majority of one-time costs have now been incurred.
Other operating income included an approximate $70 million severance tax refund.
Guidance
SM raised its second-half production outlook to 435–440 MBoe/d, including approximately 238 MBbl/d of oil, from 430 MBoe/d, and narrowed its full-year production guidance to 418–423 MBoe/d (223–225 MBbl/d of oil).
SM reaffirmed its full-year capital guidance.
See the table below for detailed third quarter and full-year guidance.
The following table summarizes SM's third quarter and full-year 2026 operational and financial guidance.
Production | 3Q 2026 | Full Year 2026 |
Total Production (MMBoe)1 | 39.5 – 40.5 | 152.5 – 154.5 |
Total Production (MBoe/d)1 | 430 – 440 | 418 – 423 |
Oil Production (MBbl/d)1 | 230 – 240 | 223 – 225 |
Capital Program ($MM) | ||
Capital Expenditures2 | $740 – $790 | $2,650 – $2,850 |
DC&E | $2,300 – $2,500 | |
Facility, Land, and Other | ~$280 | |
One-Time Capital Costs3 | ~$70 | |
Net Wells Drilled | ~55 | ~245 |
Net Wells Turned-In-Line | ~85 | ~295 |
Avg. Well Cost ($/lateral ft)4 | ~$710 | |
Operating Expenses ($/Boe) | ||
Lease Operating Expense | $6.50 – $6.80 | |
Transportation | $3.60 – $3.75 | |
Production Taxes (% of oil, gas and NGL revenue) | ~6% | |
Ad Valorem Taxes | ~$0.50 | |
DD&A | $14.00 – $15.00 | |
General & Administrative ($MM) | ||
Recurring G&A5 | $230 – $250 | |
One-Time Integration & Transaction — Cash6 | ~$160 | |
One-Time Integration & Transaction — Non-Cash6 | ~$20 | |
Other ($MM) | ||
Exploration Expense | ~$100 | |
Cash Taxes: | ||
$75–$80/Bbl (WTI) | $20 – $30 | |
$80–$85/Bbl (WTI) | $30 – $50 |
Notes: |
1 FY26 production guidance includes 11 months of Civitas contribution following the January 30, 2026, Merger close, the conversion of certain acquired volumes to two-stream reporting, and four months of production from certain South Texas assets divested on April 30, 2026. |
2 Indicates a non-GAAP measure or metric. Refer to "Definitions of Non-GAAP Measures and Metrics As Calculated By the Company" and the accompanying reconciliations later in this release. FY26 capital expenditures before changes in accruals include ~$50 million of expected synergies. |
3 Includes one-time, non-recurring capital costs related to Merger integration and the South Texas Divestiture. |
4 Company-wide average 2026 expected well cost and includes well connection/equipment costs. |
5 FY26 recurring G&A guidance includes ~$35 million of stock-based compensation. |
6 The majority of one-time integration and transaction costs (both cash and non-cash) were incurred in 1H26. |
Webcast Details
SM plans to host a conference call and webcast at 8 a.m. MT (10 a.m. ET) tomorrow, August 6, 2026. The call and accompanying presentation may be accessed at https://www.sm-energy.com/investors. Participants can also dial into the conference call at (877) 407-6050 or +1 (201) 689-8022 for international participants.
About SM Energy Company
SM is a premier, scaled operator of top-tier oil and gas assets across four leading U.S. shale basins: the Permian Basin, DJ Basin, South Texas, and Uinta Basin. SM routinely posts important information about the Company on its website. SM is focused on operational excellence, disciplined capital allocation, and delivering growing returns to stockholders. For more information, visit www.sm-energy.com.
Forward Looking Statements
This release contains forward-looking statements within the meaning of securities laws. The words "anticipate," "deliver," "demonstrate," "establish," "estimate," "expects," "goal," "generate," "guidance," "maintain," "objectives," "optimize," "plan," "priority," "target," and similar expressions are intended to identify forward-looking statements. Forward-looking statements in this release include, among other things, the Company's 2026 plans and strategic objectives; the Company's intention to redeem in full its 2027 Senior Notes; future return of capital plans; expectations regarding increased scale; integration objectives and synergy targets, including the expected timing and magnitude; plans to achieve the Company's $1.0 billion-plus divestiture target; assumptions and projections for the third quarter, second half, and full year 2026 regarding guidance for total production and oil production; the Company's capital plan, including total capital expenditures; drilling, completion and equipment costs; facility, land and other costs; one-time capital costs; Company average cost per lateral foot; certain operating expenses, including lease operating expense, transportation, production and ad valorem taxes; DD&A; general and administrative expense; and certain other costs, including exploration expense and cash taxes. These statements involve known and unknown risks, which may cause the Company's actual results to differ materially from results expressed or implied by the forward-looking statements. Future results may be impacted by the risks discussed in the Risk Factors section of the Company's most recent Annual Report on Form 10-K, as such risk factors may be updated from time to time in the Company's other periodic reports filed with the Securities and Exchange Commission, specifically the 2025 Form 10-K. The forward-looking statements contained herein speak as of the date of this release. Although the Company may from time to time voluntarily update its prior forward-looking statements, it disclaims any commitment to do so, except as required by securities laws.
Investor Relations
Megan Hays, Vice President, Investor Relations, mhays@sm-energy.com
Meghan Dack, Director, Investor Relations, mdack@sm-energy.com
SM ENERGY COMPANY | |||||||||||||
FINANCIAL HIGHLIGHTS (UNAUDITED) | |||||||||||||
June 30, 2026 | |||||||||||||
Production Data | |||||||||||||
For the Three Months Ended | Percent Change Between | For the Six Months | Percent | ||||||||||
June 30, | March 31, | June 30, | 2Q26 & 1Q26 | June 30, | June 30, | YTD 2026 | |||||||
2026 | 2026 | 2025 | 2026 | 2025 | |||||||||
Realized sales price (before the effect of net derivative settlements): | |||||||||||||
Oil (per Bbl) | $ 96.85 | $ 73.69 | $ 62.04 | 31 % | $ 86.43 | $ 66.04 | 31 % | ||||||
Gas (per Mcf) | $ 0.17 | $ 1.72 | $ 2.15 | (90) % | $ 0.88 | $ 2.73 | (68) % | ||||||
NGLs (per Bbl) | $ 24.69 | $ 21.58 | $ 21.91 | 14 % | $ 23.21 | $ 23.85 | (3) % | ||||||
Equivalent (per Boe) | $ 53.86 | $ 44.22 | $ 41.27 | 22 % | $ 49.48 | $ 44.17 | 12 % | ||||||
Realized sales price (including the effect of net derivative settlements):1 | |||||||||||||
Oil (per Bbl) | $ 80.62 | $ 69.56 | $ 64.05 | 16 % | $ 75.64 | $ 67.25 | 12 % | ||||||
Gas (per Mcf) | $ 1.54 | $ 2.27 | $ 2.67 | (32) % | $ 1.87 | $ 3.08 | (39) % | ||||||
NGLs (per Bbl) | $ 24.83 | $ 21.75 | $ 21.91 | 14 % | $ 23.36 | $ 23.37 | — % | ||||||
Equivalent (per Boe) | $ 48.36 | $ 43.32 | $ 43.36 | 12 % | $ 46.07 | $ 45.47 | 1 % | ||||||
Net production volumes:2,3 | |||||||||||||
Oil (MMBbl) | 20.9 | 17.1 | 10.5 | 22 % | 38.0 | 19.9 | 92 % | ||||||
Gas (Bcf) | 86.8 | 72.4 | 36.2 | 20 % | 159.2 | 72.6 | 119 % | ||||||
NGLs (MMBbl) | 4.6 | 4.2 | 2.5 | 10 % | 8.9 | 4.8 | 84 % | ||||||
Equivalent (MMBoe) | 40.0 | 33.4 | 19.0 | 20 % | 73.4 | 36.8 | 100 % | ||||||
Average net daily production:2,3 | |||||||||||||
Oil (MBbl per day) | 229.8 | 190.3 | 115.7 | 21 % | 210.2 | 109.7 | 92 % | ||||||
Gas (MMcf per day) | 953.7 | 804.1 | 398.3 | 19 % | 879.3 | 401.2 | 119 % | ||||||
NGLs (MBbl per day) | 51.0 | 46.9 | 26.9 | 9 % | 48.9 | 26.6 | 84 % | ||||||
Equivalent (MBoe per day) | 439.7 | 371.2 | 209.1 | 18 % | 405.7 | 203.2 | 100 % | ||||||
Per Boe data: | |||||||||||||
Lease operating expense | $ 6.71 | $ 6.25 | $ 5.52 | 7 % | $ 6.50 | $ 5.81 | 12 % | ||||||
Transportation costs | $ 3.57 | $ 3.65 | $ 4.13 | (2) % | $ 3.61 | $ 4.03 | (10) % | ||||||
Production taxes | $ 3.25 | $ 2.43 | $ 1.59 | 34 % | $ 2.88 | $ 1.82 | 58 % | ||||||
Ad valorem tax expense | $ 0.37 | $ 0.47 | $ 0.54 | (21) % | $ 0.41 | $ 0.54 | (24) % | ||||||
General and administrative4,5 | $ 1.98 | $ 5.20 | $ 2.21 | (62) % | $ 3.44 | $ 2.21 | 56 % | ||||||
Net derivative settlement gain (loss) | $ (5.50) | $ (0.90) | $ 2.09 | (511) % | $ (3.41) | $ 1.29 | (364) % | ||||||
Depletion, depreciation, and amortization | $ 14.81 | $ 12.91 | $ 15.40 | 15 % | $ 13.95 | $ 15.30 | (9) % |
1 Indicates a non-GAAP metric calculated as the average realized price after the effects of net commodity derivative settlements. The Company believes this metric is useful to management and the investment community to understand the effects of net commodity derivative settlements on average realized price. |
2 Amounts and percentage changes may not calculate due to rounding. |
3 The results for the three months ended March 31, 2026, include only two months of production from the Civitas assets acquired on January 30, 2026. The results for the three months ended June 30, 2026, include only one month of production from the South Texas assets divested on April 30, 2026. The results for the six months ended June 30, 2026, include five months of production from the acquired Civitas assets and four months of production from the divested South Texas assets. |
4 Includes recurring non-cash stock-based compensation expense of $0.12, $0.26, and $0.24 per Boe for the three months ended June 30, 2026, March 31, 2026, and June 30, 2025, respectively, and $0.18 and $0.28 per Boe for the six months ended June 30, 2026, and 2025, respectively. |
5 Includes one-time costs (consisting of both cash and non-cash items) of $0.92 per Boe and $3.52 per Boe for the three months ended June 30, 2026, and March 31, 2026, respectively, and $2.10 per Boe for the six months ended June 30, 2026, respectively. |
SM ENERGY COMPANY | |||
FINANCIAL HIGHLIGHTS (UNAUDITED) | |||
June 30, 2026 | |||
Condensed Consolidated Balance Sheets | |||
(in millions, except share data) | June 30, | December 31, | |
ASSETS | 2026 | 2025 | |
Current assets: | |||
Cash and cash equivalents | $ 620 | $ 368 | |
Accounts receivable | 989 | 331 | |
Derivative assets | 145 | 83 | |
Prepaid expenses and other | 146 | 29 | |
Total current assets | 1,900 | 811 | |
Property and equipment (successful efforts method): | |||
Proved oil and gas properties | 23,214 | 16,012 | |
Accumulated depletion, depreciation, and amortization | (8,466) | (8,793) | |
Unproved oil and gas properties, net of valuation allowance of $12 and $12, respectively | 860 | 460 | |
Wells in progress | 809 | 458 | |
Other property and equipment, net of accumulated depreciation of $67 and $63, respectively | 131 | 65 | |
Total property and equipment, net | 16,548 | 8,202 | |
Noncurrent assets: | |||
Derivative assets | 56 | 6 | |
Other noncurrent assets | 354 | 234 | |
Total noncurrent assets | 410 | 240 | |
Total assets | $ 18,858 | $ 9,253 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities: | |||
Accounts payable and accrued expenses | $ 2,367 | $ 690 | |
Senior Notes, net | 416 | 419 | |
Derivative liabilities | 184 | 2 | |
Other current liabilities | 122 | 58 | |
Total current liabilities | 3,089 | 1,169 | |
Noncurrent liabilities: | |||
Revolving credit facility | — | — | |
Senior Notes, net | 6,620 | 2,296 | |
Asset retirement obligations | 430 | 150 | |
Deferred tax liabilities, net | 630 | 724 | |
Derivative liabilities | 1 | 2 | |
Other noncurrent liabilities | 275 | 102 | |
Total noncurrent liabilities | 7,956 | 3,274 | |
Stockholders' equity: | |||
Common stock, $0.01 par value - authorized: 400,000,000 and 200,000,000 shares, respectively; issued and outstanding: 237,494,374 and 114,630,905 shares, respectively | 2 | 1 | |
Additional paid-in capital | 3,888 | 1,517 | |
Retained earnings | 3,921 | 3,291 | |
Accumulated other comprehensive income | 2 | 1 | |
Total stockholders' equity | 7,813 | 4,810 | |
Total liabilities and stockholders' equity | $ 18,858 | $ 9,253 |
SM ENERGY COMPANY | |||||||
FINANCIAL HIGHLIGHTS (UNAUDITED) | |||||||
June 30, 2026 | |||||||
Condensed Consolidated Statements of Operations | |||||||
(in millions, except per share data) | For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||
2026 | 2025 | 2026 | 2025 | ||||
Operating revenues and other income: | |||||||
Oil, gas, and NGL production revenue | $ 2,156 | $ 785 | $ 3,633 | $ 1,625 | |||
Gain on divestiture activity | 262 | — | 262 | — | |||
Other operating income | 82 | 8 | 84 | 13 | |||
Total operating revenues and other income | 2,500 | 793 | 3,979 | 1,637 | |||
Operating expenses: | |||||||
Oil, gas, and NGL production expense | 556 | 224 | 984 | 449 | |||
Depletion, depreciation, and amortization | 592 | 293 | 1,024 | 563 | |||
Exploration1 | 21 | 15 | 47 | 27 | |||
General and administrative1,2 | 79 | 42 | 253 | 81 | |||
Net derivative (gain) loss3 | (272) | (78) | 425 | (61) | |||
Other operating expense2 | 28 | 2 | 48 | 7 | |||
Total operating expenses | 1,004 | 498 | 2,781 | 1,066 | |||
Income from operations | 1,496 | 295 | 1,198 | 571 | |||
Interest expense | (111) | (43) | (224) | (87) | |||
Other non-operating income, net | 4 | — | 5 | — | |||
Income before income taxes | 1,389 | 253 | 979 | 485 | |||
Income tax expense | (318) | (51) | (243) | (101) | |||
Net income | $ 1,071 | $ 202 | $ 736 | $ 384 | |||
Basic weighted-average common shares outstanding | 239 | 115 | 219 | 115 | |||
Diluted weighted-average common shares outstanding | 240 | 115 | 220 | 115 | |||
Basic net income per common share | $ 4.48 | $ 1.76 | $ 3.35 | $ 3.35 | |||
Diluted net income per common share | $ 4.46 | $ 1.76 | $ 3.34 | $ 3.34 | |||
1 Recurring non-cash stock-based compensation included in: | |||||||
Exploration expense | $ 3 | $ 1 | $ 5 | $ 3 | |||
General and administrative expense | 4 | 5 | 12 | 10 | |||
Total non-cash stock-based compensation | $ 7 | $ 6 | $ 17 | $ 13 | |||
2 Transaction and integration costs included in: | |||||||
General and administrative (includes $5 million and $20 million, respectively, of non-cash stock-based compensation associated with the Merger) | $ 37 | $ — | $ 155 | $ — | |||
Other operating expenses | — | — | 17 | — | |||
Total transaction and integration costs | $ 37 | $ — | $ 172 | $ — | |||
3 The net derivative (gain) loss line item consists of the following: | |||||||
Net derivative settlement (gain) loss | $ 220 | $ (40) | $ 250 | $ (47) | |||
Net (gain) loss on fair value changes | (492) | (39) | 175 | (14) | |||
Total net derivative (gain) loss | $ (272) | $ (78) | $ 425 | $ (61) |
Note: Prior year amounts may not calculate due to rounding. |
SM ENERGY COMPANY | |||||||||||
FINANCIAL HIGHLIGHTS (UNAUDITED) | |||||||||||
June 30, 2026 | |||||||||||
Condensed Consolidated Statements of Stockholders' Equity | |||||||||||
(in millions, except share data and dividends per share) | |||||||||||
Additional | Retained | Accumulated | Total | ||||||||
Common Stock | |||||||||||
Shares | Amount | ||||||||||
Balances, December 31, 2025 | 114,630,905 | $ 1 | $ 1,517 | $ 3,291 | $ 1 | $ 4,810 | |||||
Net loss | — | — | — | (335) | — | (335) | |||||
Net cash dividends declared, $0.22 per share | — | — | — | (53) | — | (53) | |||||
Issuance of common stock upon vesting of RSUs, and settlement of PSUs, net of shares used for tax withholdings | 235,422 | — | (17) | — | — | (17) | |||||
Stock-based compensation expense | 1,114,479 | — | 25 | — | — | 25 | |||||
Replacement equity awards issued in connection with the Merger | — | — | 29 | — | — | 29 | |||||
Issuance of common stock in connection with the Merger | 123,715,771 | 1 | 2,408 | — | — | 2,409 | |||||
Balances, March 31, 2026 | 239,696,577 | $ 2 | $ 3,962 | $ 2,903 | $ 1 | $ 6,868 | |||||
Net income | — | — |