SM ENERGY REPORTS SECOND QUARTER 2024 RESULTS AND ANNOUNCES ACQUISITION OF ADDITIONAL UINTA BASIN ASSETS; HIGHLIGHTS EXCELLENT OPERATIONAL EXECUTION, SIGNIFICANT PORTFOLIO EXPANSION AND INCREASED RETURN OF CAPITAL
Excellent operational execution supported strong second quarter results including:
- Net production was 14.4 MMBoe, or 158.5 MBoe/d, at 46% oil or 72.7 MBbls/d, which exceeded guidance. Higher than expected oil production and total production were driven largely by better than expected performance from
Midland Basin wells and higher than expected oil content from newSouth Texas wells. - Return of capital to stockholders during the quarter totaled
$71.9 million through the repurchase of 1,058,956 shares of common stock and payment of the Company's$0.18 per share quarterly dividend onMay 3, 2024 . InJune 2024 , the Board approved an 11% increase in the Company's fixed quarterly dividend policy, from$0.18 to$0.20 per share, expected to commence in the fourth quarter 2024, and reloaded the Company's existing stock repurchase program to$500 million , following repurchases totaling$369.1 million in shares through the second quarter, and extended the program throughDecember 31, 2027 . - Net income was
$210.3 million , or$1.82 per diluted common share, Adjusted net income(1) was$1.85 per diluted common share, net cash provided by operating activities was$476.4 million and Adjusted EBITDAX(1) was$485.9 million , all of which benefited from strong oil production and higher than expected oil and NGL prices. - Net cash provided by operating activities of
$476.4 million before net change in working capital of$(50.2) million totaled$426.2 million (1) and capital expenditures of$322.7 million adjusted for a change in capital expenditure accruals of$5.1 million were$327.8 million .(1) Capital expenditures include approximately$12.0 million for an opportunistic bulk pre-purchase of pipe that was not considered in guidance. - Adjusted free cash flow(1) was
$98.4 million , up 45% from the first quarter 2024.
Agreements to acquire assets totaling
- On
August 5, 2024 , the Company exercised its option to acquire 80% of certain additional assets adjacent to theXCL Resources, LLC asset acquisition in the core of theUinta Basin for approximately$70.0 million (together with the XCL Acquisition, the "Uinta Basin Acquisitions"). The assets include, net to the Company's 80% interest, approximately 26,100 net acres, approximately 1 MBoe per day production (based onSeptember 2024 projection) that is 75% oil, and an estimated 75 net drilling locations (normalized to 10,000 feet). - As previously announced, the Company executed and delivered a Purchase and Sale Agreement to acquire an 80% undivided interest in the oil and gas assets of
XCL Resources, LLC , and affiliated entities (the "XCL Acquisition"). The assets include, net to the Company's 80% interest, 37,200 net acres in theUinta Basin , 43 MBoe/d net production (based onSeptember 2024 projection) that is 88% oil, 107 MMBoe preliminary estimated net proved reserves and an estimated 390 net drilling locations (normalized to 10,000 feet). The transaction has aMay 1, 2024 , effective date and is expected to close onOctober 1, 2024 . There can be no assurance that this transaction will close on time or at all. - In addition, the Company confirmed that two initial Woodford-Barnett wells at Sweetie Peck were successfully brought on-line during the second quarter. These wells, together with offset operator wells, indicate more than 20,000 net acres at Sweetie Peck that are prospective for Woodford-Barnett development (inclusive of the previously announced acreage additions to the west).
- Subsequent to quarter-end, the Company issued and sold
$750.0 million aggregate principal amount of 6.750% senior notes due 2029 and$750.0 million aggregate principal amount of 7.000% senior notes due 2032. The Company intends to use the net proceeds from the notes offering, together with cash on hand and borrowings under its Credit Agreement, to fund the Uinta Basin Acquisitions, redeem all of its outstanding 5.625% Notes due in 2025, and to pay related fees and expenses. - On
July 25, 2024 , the Company issued a notice of redemption to the holders of the 2025 Senior Notes, notifying such holders that the Company intends to redeem the$349.1 million aggregate principal amount outstanding of its 2025 Senior Notes onAugust 26, 2024 .
President and Chief Executive Officer
"We are excited to significantly expand our top-tier portfolio through the acquisition of assets in the core of the
SECOND QUARTER 2024 RESULTS
NET PRODUCTION BY OPERATING AREA |
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Second Quarter 2024 |
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Total |
Oil (MBbl / MBbl/d) |
4,671 / 51.3 |
1,946 / 21.4 |
6,617 / 72.7 |
Natural Gas (MMcf / MMcf/d) |
15,438 / 169.7 |
16,772 / 184.3 |
32,211 / 354.0 |
NGLs (MBbl / MBbl/d) |
5 / - |
2,432 / 26.7 |
2,437 / 26.8 |
Total (MBoe / MBoe/d) |
7,249 / 79.7 |
7,173 / 78.8 |
14,422 / 158.5 |
Note: Totals may not calculate due to rounding. |
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- Second quarter net production volumes were 14.4 MMBoe (158.5 MBoe/d) and were 46% oil (72.7 MBbl/d). Volumes were 50% from the
Midland Basin and 50% fromSouth Texas . - Second quarter net production exceeded expectations due to strong performance from
Midland Basin wells and higher than expected oil content from newSouth Texas wells.
REALIZED PRICES BY OPERATING AREA |
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Second Quarter 2024 |
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Total (Pre/Post-hedge)(1) |
Oil ($/Bbl) |
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Natural Gas ($/Mcf) |
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NGLs ($/Bbl) |
nm |
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Per Boe |
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Note: Totals may not calculate due to rounding. |
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- Second quarter average realized price before the effect of hedges was
$43.92 per Boe, and average realized price after the effect of hedges was$45.07 per Boe.(1) - Second quarter benchmark pricing included NYMEX WTI at
$80.57 /Bbl, NYMEX Henry Hub natural gas at$1.89 /MMBtu and OPIS Composite NGLs at$27.96 /Bbl. - The effect of commodity net derivative settlements for the second quarter was a gain of
$1.15 per Boe, or$16.5 million .
For additional operating metrics and regional detail, please see the Financial Highlights section below and the accompanying slide deck.
NET INCOME, NET INCOME PER SHARE AND NET CASH PROVIDED BY OPERATING ACTIVITIES
Second quarter 2024 net income was
Second quarter 2024 net cash provided by operating activities of
ADJUSTED EBITDAX,(1) ADJUSTED NET INCOME,(1) AND NET DEBT-TO-ADJUSTED EBITDAX(1)
Second quarter 2024 Adjusted EBITDAX(1) was
Second quarter 2024 Adjusted net income(1) was
At
CAPITAL EXPENDITURES(1)
Second quarter 2024 capital expenditures of
For the first six months of 2024, capital expenditures of
ADJUSTED FREE CASH FLOW(1)
Second quarter 2024 cash flow from operations before net change in working capital totaled
RETURN OF CAPITAL TO STOCKHOLDERS
Return of capital to stockholders during the quarter totaled
In
FINANCIAL POSITION AND LIQUIDITY
On
Subsequent to quarter-end, the Company issued and sold
COMMODITY DERIVATIVES
As of
SWAPS AND COLLARS:
- Oil: Approximately 5,830 MBbls, or 40-45% of expected 3Q-4Q 2024 net oil production before consideration of the Uinta Basin Acquisitions, is hedged to benchmark prices at an average price of
$70.77 /Bbl (weighted-average of collar floors and swaps) to$79.93 /Bbl (weighted-average of collar ceilings and swaps), excluding basis swaps. - Natural gas: Approximately 16,430 BBtu, or 20-25% of expected 3Q-4Q 2024 net natural gas production before consideration of the Uinta Basin Acquisitions, is hedged to benchmark prices at an average price of
$3.40 /MMBtu (weighted-average of collar floors and swaps, excluding basis swaps).
BASIS SWAPS:
- Oil,
Midland Basin differential: Approximately 2,470 MBbls of expected 3Q-4Q 2024 netMidland Basin oil production are hedged to the local price point at a positive weighted-average price of$1.21 /Bbl. - Gas, WAHA differential: Approximately 10,580 BBtu of expected 3Q-4Q 2024 net
Midland Basin natural gas production are hedged to WAHA at a weighted-average price of ($0.86 )/MMBtu. - Gas, HSC differential: Approximately 9,180 BBtu of expected 3Q-4Q 2024 net
South Texas natural gas production are hedged to HSC at a weighted-average price of ($0.35 )/MMBtu.
A detailed schedule of these and additional derivative positions are provided in the 2Q24 accompanying slide deck.
2024 OPERATING PLAN AND GUIDANCE
The Company is unable to provide a reconciliation of forward-looking non-GAAP capital expenditures because components of the calculation are inherently unpredictable, such as changes to, and timing of, capital accruals. The inability to project certain components of the calculation would significantly affect the accuracy of a reconciliation.
UPDATED GUIDANCE FULL YEAR 2024:
Presented before consideration of Uinta Basin Acquisitions.
- Full year guidance for net production is unchanged at 57-60 MMBoe, or 156-164 MBoe/d.
- Oil production, as a percent of total production, is increased from 44% to 45%, or an average of 70-74 MBbls/d.
- Full year guidance for capital expenditures (net of the change in capital accruals),(1) excluding acquisitions, is unchanged at
$1.14-$1.18 billion . The Company has increased the number of net wells drilled and completed in 2024 to approximately 123 and 125, respectively. - Other expense line items remain unchanged.
Preliminary assumptions for consolidation of Uinta Basin assets for the fourth quarter only.
-
Uinta Basin assets expected to add production volumes after close of 44 MBoe/d at 87% oil. - Capital expenditures related to
Uinta Basin assets are expected to add between$100-120 million .
GUIDANCE THIRD QUARTER 2024:
Presented without consideration of Uinta Basin Acquisitions, where expected closing is after quarter-end.
- Capital expenditures (net of the change in capital accruals),(1) excluding acquisitions: are expected to range between
$300-$310 million . In the third quarter of 2024, the Company expects to drill approximately 33 net wells, of which 14 are planned forSouth Texas and 19 are planned for theMidland Basin , and turn-in-line approximately 39 net wells, of which 22 are planned forSouth Texas and 17 are planned for theMidland Basin . The increased third quarter completion activity inSouth Texas is expected to contribute to higher volumes and a slight reduction in the oil percentage in the fourth quarter. - Production volumes are expected to range between 15.0-15.4 MMBoe, or 163-167 MBoe/d, up 0.8 MMBoe sequentially at the mid-point. Oil volumes are expected to be 45-46% of total volumes.
UPCOMING EVENTS
EARNINGS Q&A WEBCAST AND CONFERENCE CALL
- Webcast (available live and for replay) - on the Company's website at sm-energy.com/investors (replay accessible approximately 1 hour after the live call); or
- Telephone - join the live conference call by registering at https://event.choruscall.com/mediaframe/webcast.html?webcastid=38NmS5EP. Dial-in for domestic toll free/International is 800-715-9871 / +1 646-307-1963 (Conference ID: 4602950 or Company Name required for entry).
CONFERENCE PARTICIPATION
DISCLOSURES
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," "indicate," "maintain," "objectives," "optimize," "plan," "target," and similar expressions are intended to identify forward-looking statements. Forward-looking statements in this release include, among other things: the timing of payment of the increased dividend; certain matters related to the Uinta Basin Acquisitions, including break-even prices, accretion to certain financial metrics, the number of acres to be acquired, the percentage of oil associated with the assets, the number of drilling locations, projections for production and proved reserves, the number of acres and prospectivity for future Woodford-Barnett development, the timing to payout of certain recently-drilled
FOOTNOTE 1
Indicates a non-GAAP measure or metric. Please refer below to the section "Definitions of non-GAAP Measures and Metrics as Calculated by the Company" in Financials Highlights for additional information.
ABOUT THE COMPANY
SM ENERGY INVESTOR CONTACTS
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FINANCIAL HIGHLIGHTS (UNAUDITED) |
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Condensed Consolidated Balance Sheets |
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(in thousands, except share data) |
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ASSETS |
2024 |
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2023 |
Current assets: |
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Cash and cash equivalents |
$ 487,869 |
|
$ 616,164 |
Accounts receivable |
239,095 |
|
231,165 |
Derivative assets |
27,208 |
|
56,442 |
Prepaid expenses and other |
20,056 |
|
12,668 |
Total current assets |
774,228 |
|
916,439 |
Property and equipment (successful efforts method): |
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Proved oil and gas properties |
12,164,196 |
|
11,477,358 |
Accumulated depletion, depreciation, and amortization |
(7,171,277) |
|
(6,830,253) |
Unproved oil and gas properties, net of valuation allowance of |
286,312 |
|
335,620 |
Wells in progress |
336,900 |
|
358,080 |
Other property and equipment, net of accumulated depreciation of |
45,402 |
|
35,615 |
Total property and equipment, net |
5,661,533 |
|
5,376,420 |
Noncurrent assets: |
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Acquisition deposit held in escrow |
102,000 |
|
— |
Derivative assets |
7,878 |
|
8,672 |
Other noncurrent assets |
111,372 |
|
78,454 |
Total noncurrent assets |
221,250 |
|
87,126 |
Total assets |
$ 6,657,011 |
|
$ 6,379,985 |
LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable and accrued expenses |
$ 563,764 |
|
$ 611,598 |
Derivative liabilities |
20,552 |
|
6,789 |
Other current liabilities |
17,469 |
|
15,425 |
Total current liabilities |
601,785 |
|
633,812 |
Noncurrent liabilities: |
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|
Revolving credit facility |
— |
|
— |
Senior Notes, net |
1,576,896 |
|
1,575,334 |
Asset retirement obligations |
124,499 |
|
118,774 |
Net deferred tax liabilities |
440,815 |
|
369,903 |
Derivative liabilities |
3,305 |
|
1,273 |
Other noncurrent liabilities |
65,771 |
|
65,039 |
Total noncurrent liabilities |
2,211,286 |
|
2,130,323 |
Stockholders' equity: |
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|
Common stock, |
1,141 |
|
1,157 |
Additional paid-in capital |
1,492,859 |
|
1,565,021 |
Retained earnings |
2,352,532 |
|
2,052,279 |
Accumulated other comprehensive loss |
(2,592) |
|
(2,607) |
Total stockholders' equity |
3,843,940 |
|
3,615,850 |
Total liabilities and stockholders' equity |
$ 6,657,011 |
|
$ 6,379,985 |
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FINANCIAL HIGHLIGHTS (UNAUDITED) |
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Condensed Consolidated Statements of Operations |
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(in thousands, except per share data) |
For the Three Months Ended
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For the Six Months Ended
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2024 |
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2023 |
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2024 |
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2023 |
Operating revenues and other income: |
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Oil, gas, and NGL production revenue |
$ 633,451 |
|
$ 546,555 |
|
$ 1,193,047 |
|
$ 1,117,333 |
Other operating income |
1,104 |
|
4,199 |
|
1,378 |
|
6,926 |
Total operating revenues and other income |
634,555 |
|
550,754 |
|
1,194,425 |
|
1,124,259 |
Operating expenses: |
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Oil, gas, and NGL production expense |
136,622 |
|
145,588 |
|
273,997 |
|
287,936 |
Depletion, depreciation, amortization, and asset retirement |
179,651 |
|
157,832 |
|
345,839 |
|
312,021 |
Exploration (1) |
17,094 |
|
14,960 |
|
35,675 |
|
33,388 |
General and administrative (1) |
31,112 |
|
27,500 |
|
61,290 |
|
55,169 |
Net derivative (gain) loss (2) |
(12,118) |
|
(11,674) |
|
16,027 |
|
(63,003) |
Other operating expense, net |
2,814 |
|
7,197 |
|
3,822 |
|
17,350 |
Total operating expenses |
355,175 |
|
341,403 |
|
736,650 |
|
642,861 |
Income from operations |
279,380 |
|
209,351 |
|
457,775 |
|
481,398 |
Interest expense |
(21,807) |
|
(22,148) |
|
(43,680) |
|
(44,607) |
Interest income |
6,333 |
|
4,994 |
|
13,103 |
|
9,696 |
Other non-operating expense |
(23) |
|
(231) |
|
(47) |
|
(463) |
Income before income taxes |
263,883 |
|
191,966 |
|
427,151 |
|
446,024 |
Income tax expense |
(53,590) |
|
(42,092) |
|
(85,659) |
|
(97,598) |
Net income |
$ 210,293 |
|
$ 149,874 |
|
$ 341,492 |
|
$ 348,426 |
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Basic weighted-average common shares outstanding |
114,634 |
|
119,408 |
|
115,138 |
|
120,533 |
Diluted weighted-average common shares outstanding |
115,715 |
|
120,074 |
|
116,092 |
|
121,175 |
Basic net income per common share |
$ 1.83 |
|
$ 1.26 |
|
$ 2.97 |
|
$ 2.89 |
Diluted net income per common share |
$ 1.82 |
|
$ 1.25 |
|
$ 2.94 |
|
$ 2.88 |
Net dividends declared per common share |
$ 0.18 |
|
$ 0.15 |
|
$ 0.36 |
|
$ 0.30 |
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|
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(1) Non-cash stock-based compensation included in: |
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|
Exploration expense |
$ 1,188 |
|
$ 896 |
|
$ 2,313 |
|
$ 1,847 |
General and administrative expense |
4,600 |
|
3,267 |
|
8,493 |
|
6,634 |
Total non-cash stock-based compensation |
$ 5,788 |
|
$ 4,163 |
|
$ 10,806 |
|
$ 8,481 |
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(2) The net derivative (gain) loss line item consists of the following: |
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Net derivative settlement gain |
$ (16,523) |
|
$ (15,636) |
|
$ (29,797) |
|
$ (20,712) |
Net (gain) loss on fair value changes |
4,405 |
|
3,962 |
|
45,824 |
|
(42,291) |
Total net derivative (gain) loss |
$ (12,118) |
|
$ (11,674) |
|
$ 16,027 |
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$ (63,003) |
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FINANCIAL HIGHLIGHTS (UNAUDITED) |
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Condensed Consolidated Statements of Stockholders' Equity |
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(in thousands, except share data and dividends per share) |
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Additional |
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Retained |
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Accumulated |
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Total |
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Common Stock |
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Shares |
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Amount |
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Balances, |
115,745,393 |
|
$ 1,157 |
|
$ 1,565,021 |
|
$ 2,052,279 |
|
$ (2,607) |
|
$ 3,615,850 |
Net income |
— |
|
— |
|
— |
|
131,199 |
|
— |
|
131,199 |
Other comprehensive income |
— |
|
— |
|
— |
|
— |
|
8 |
|
8 |
Net cash dividends declared, |
— |
|
— |
|
— |
|
(20,707) |
|
— |
|
(20,707) |
Issuance of common stock upon vesting |
1,147 |
|
— |
|
(22) |
|
— |
|
— |
|
(22) |
Stock-based compensation expense |
1,839 |
|
— |
|
5,018 |
|
— |
|
— |
|
5,018 |
Purchase of shares under Stock Repurchase Program |
(712,235) |
|
(7) |
|
(33,088) |
|
— |
|
— |
|
(33,095) |
Balances, |
115,036,144 |
|
$ 1,150 |
|
$ 1,536,929 |
|
$ 2,162,771 |
|
$ (2,599) |
|
$ 3,698,251 |
Net income |
— |
|
— |
|
— |
|
210,293 |
|
— |
|
210,293 |
Other comprehensive income |
— |
|
— |
|
— |
|
— |
|
7 |
|
7 |
Net cash dividends declared, |
— |
|
— |
|
— |
|
(20,532) |
|
— |
|
(20,532) |
Issuance of common stock under |
56,006 |
|
1 |
|
1,843 |
|
— |
|
— |
|
1,844 |
Stock-based compensation expense |
35,691 |
|
1 |
|
5,787 |
|
— |
|
— |
|
5,788 |
Purchase of shares under Stock |
(1,058,956) |
|
(11) |
|
(51,700) |
|
— |
|
— |
|
(51,711) |
Balances, |
114,068,885 |
|
$ 1,141 |
|
$ 1,492,859 |
|
$ 2,352,532 |
|
$ (2,592) |
|
$ 3,843,940 |
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FINANCIAL HIGHLIGHTS (UNAUDITED) |
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Condensed Consolidated Statements of Stockholders' Equity (Continued) |
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(in thousands, except share data and dividends per share) |
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Additional |
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Accumulated |
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Total |
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Common Stock |
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Retained |
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Shares |
|
Amount |
|
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|
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Balances, |
121,931,676 |
|
$ 1,219 |
|
$ 1,779,703 |
|
$ 1,308,558 |
|
$ (4,022) |
|
$ 3,085,458 |
Net income |
— |
|
— |
|
— |
|
198,552 |
|
— |
|
198,552 |
Other comprehensive income |
— |
|
— |
|
— |
|
— |
|
13 |
|
13 |
Net cash dividends declared, |
— |
|
— |
|
— |
|
(18,078) |
|
— |
|
(18,078) |
Stock-based compensation expense |
— |
|
— |
|
4,318 |
|
— |
|
— |
|
4,318 |
Purchase of shares under Stock |
(1,413,758) |
|
(14) |
|
(40,454) |
|
— |
|
— |
|
(40,468) |
Balances, |
120,517,918 |
|
$ 1,205 |
|
$ 1,743,567 |
|
$ 1,489,032 |
|
$ (4,009) |
|
$ 3,229,795 |
Net income |
— |
|
— |
|
— |
|
149,874 |
|
— |
|
149,874 |
Other comprehensive income |
— |
|
— |
|
— |
|
— |
|
13 |
|
13 |
Net cash dividends declared, |
— |
|
— |
|
— |
|
(17,704) |
|
— |
|
(17,704) |
Issuance of common stock under |
68,210 |
|
1 |
|
1,815 |
|
— |
|
— |
|
1,816 |
Issuance of common stock upon vesting |
774 |
|
— |
|
(7) |
|
— |
|
— |
|
(7) |
Stock-based compensation expense |
56,872 |
|
1 |
|
4,162 |
|
— |
|
— |
|
4,163 |
Purchase of shares under Stock |
(2,550,706) |
|
(26) |
|
(69,457) |
|
— |
|
— |
|
(69,483) |
Other |
19,037 |
|
— |
|
— |
|
— |
|
— |
|
— |
Balances, |
118,112,105 |
|
$ 1,181 |
|
$ 1,680,080 |
|
$ 1,621,202 |
|
$ (3,996) |
|
$ 3,298,467 |
|
|||||||
FINANCIAL HIGHLIGHTS (UNAUDITED) |
|||||||
|
|||||||
|
|||||||
Condensed Consolidated Statements of Cash Flows |
|
|
|
|
|
|
|
(in thousands) |
For the Three Months Ended
|
|
For the Six Months Ended
|
||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Cash flows from operating activities: |
|
|
|
|
|
|
|
Net income |
$ 210,293 |
|
$ 149,874 |
|
$ 341,492 |
|
$ 348,426 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|||||
Depletion, depreciation, amortization, and asset retirement |
179,651 |
|
157,832 |
|
345,839 |
|
312,021 |
Stock-based compensation expense |
5,788 |
|
4,163 |
|
10,806 |
|
8,481 |
Net derivative (gain) loss |
(12,118) |
|
(11,674) |
|
16,027 |
|
(63,003) |
Net derivative settlement gain |
16,523 |
|
15,636 |
|
29,797 |
|
20,712 |
Amortization of deferred financing costs |
1,372 |
|
1,372 |
|
2,743 |
|
2,743 |
Deferred income taxes |
43,516 |
|
44,278 |
|
70,907 |
|
94,246 |
Other, net |
(18,858) |
|
(10) |
|
(17,756) |
|
(4,305) |
Net change in working capital |
50,215 |
|
21,780 |
|
(47,473) |
|
(4,436) |
Net cash provided by operating activities |
476,382 |
|
383,251 |
|
752,382 |
|
714,885 |
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Capital expenditures |
(322,684) |
|
(309,334) |
|
(655,049) |
|
(550,046) |
Acquisition of proved and unproved oil and gas properties |
5 |
|
(88,834) |
|
2 |
|
(88,834) |
Other, net |
— |
|
350 |
|
80 |
|
657 |
Net cash used in investing activities |
(322,679) |
|
(397,818) |
|
(654,967) |
|
(638,223) |
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
Repurchase of common stock |
(51,223) |
|
(68,795) |
|
(83,991) |
|
(108,863) |
Dividends paid |
(20,707) |
|
(18,077) |
|
(41,541) |
|
(36,367) |
Net proceeds from sale of common stock |
1,844 |
|
1,815 |
|
1,844 |
|
1,815 |
Net share settlement from issuance of stock awards |
— |
|
(7) |
|
(22) |
|
(7) |
Net cash used in financing activities |
(70,086) |
|
(85,064) |
|
(123,710) |
|
(143,422) |
|
|
|
|
|
|
|
|
Net change in cash, cash equivalents, and restricted cash |
83,617 |
|
(99,631) |
|
(26,295) |
|
(66,760) |
Cash, cash equivalents, and restricted cash at beginning of period |
506,252 |
|
477,869 |
|
616,164 |
|
444,998 |
Cash, cash equivalents, and restricted cash at end of period |
$ 589,869 |
|
$ 378,238 |
|
$ 589,869 |
|
$ 378,238 |
|
|
|
|
|
|
|
|
Supplemental schedule of additional cash flow information: |
|
|
|
|
|
|
|
Operating activities: |
|
|
|
|
|
|
|
Cash paid for interest, net of capitalized interest |
$ (8,573) |
|
$ (8,798) |
|
$ (41,559) |
|
$ (42,680) |
Net cash paid for income taxes |
$ (10,721) |
|
$ (6,087) |
|
$ (7,429) |
|
$ (6,137) |
Investing activities: |
|
|
|
|
|
|
|
Changes in capital expenditure accruals |
$ 5,078 |
|
$ (42,653) |
|
$ (21,491) |
|
$ 24,220 |
|
|
|
|
|
|
|
|
Reconciliation of cash, cash equivalents, and restricted cash: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ 487,869 |
|
$ 378,238 |
|
$ 487,869 |
|
$ 378,238 |
Restricted cash (1) |
102,000 |
|
— |
|
102,000 |
|
— |
Cash, cash equivalents, and restricted cash at end of period |
$ 589,869 |
|
$ 378,238 |
|
$ 589,869 |
|
$ 378,238 |
____________________________________________ |
|
(1) |
Represents a deposit held in a third-party escrow account related to the XCL Resources Acquisition and is included in the acquisition deposit held in escrow line item on the unaudited condensed consolidated balance sheets as of |
DEFINITIONS OF NON-GAAP MEASURES AND METRICS AS CALCULATED BY THE COMPANY
To supplement the presentation of its financial results prepared in accordance with
Adjusted EBITDAX : Adjusted EBITDAX is calculated as net income before interest expense, interest income, income taxes, depletion, depreciation, amortization and asset retirement obligation liability accretion expense, exploration expense, property abandonment and impairment expense, non-cash stock-based compensation expense, derivative gains and losses net of settlements, gains and losses on divestitures, gains and losses on extinguishment of debt, and certain other items. Adjusted EBITDAX excludes certain items that the Company believes affect the comparability of operating results and can exclude items that are generally non-recurring in nature or whose timing and/or amount cannot be reasonably estimated. Adjusted EBITDAX is a non-GAAP measure that the Company believes provides useful additional information to investors and analysts, as a performance measure, for analysis of the Company's ability to internally generate funds for exploration, development, acquisitions, and to service debt. The Company is also subject to financial covenants under the Company's Credit Agreement, a material source of liquidity for the Company, based on Adjusted EBITDAX ratios. Please reference the Company's second quarter 2024 Form 10-Q and the most recent Annual Report on Form 10-K for discussion of the Credit Agreement and its covenants.
Adjusted free cash flow : Adjusted free cash flow is calculated as net cash provided by operating activities before net change in working capital less capital expenditures before changes in accruals. The Company uses this measure as representative of the cash from operations, in excess of capital expenditures that provides liquidity to fund discretionary obligations such as debt reduction, returning cash to stockholders or expanding the business.
Adjusted net income and Adjusted net income per diluted common share : Adjusted net income and Adjusted net income per diluted common share excludes certain items that the Company believes affect the comparability of operating results, including items that are generally non-recurring in nature or whose timing and/or amount cannot be reasonably estimated. These items include non-cash and other adjustments, such as derivative gains and losses net of settlements, impairments, net (gain) loss on divestiture activity, gains and losses on extinguishment of debt, and accruals for non-recurring matters. The Company uses these measures to evaluate the comparability of the Company's ongoing operational results and trends and believes these measures provide useful information to investors for analysis of the Company's fundamental business on a recurring basis.
Net debt : Net debt is calculated as the total principal amount of outstanding senior notes plus amounts drawn on the revolving credit facility less cash and cash equivalents (also referred to as total funded debt). The Company uses net debt as a measure of financial position and believes this measure provides useful additional information to investors to evaluate the Company's capital structure and financial leverage.
Net debt-to-Adjusted EBITDAX : Net debt-to-Adjusted EBITDAX is calculated as Net Debt (defined above) divided by Adjusted EBITDAX (defined above) for the trailing twelve-month period (also referred to as "leverage ratio" or "Adjusted EBITDAX multiple"). A variation of this calculation is a financial covenant under the Company's Credit Agreement. The Company and the investment community may use this metric in understanding the Company's ability to service its debt and identify trends in its leverage position. The Company reconciles the two non-GAAP measure components of this calculation.
Post-hedge: Post-hedge is calculated as the average realized price after the effects of commodity net derivative settlements. The Company believes this metric is useful to management and the investment community to understand the effects of commodity net derivative settlements on average realized price.
|
|||||||||||||||
FINANCIAL HIGHLIGHTS (UNAUDITED) |
|||||||||||||||
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months |
|
Percent Change Between |
|
For the Six Months |
|
Percent |
||||||||
|
|
|
|
|
|
|
2Q24 & |
|
2Q24 & |
|
|
|
|
|
|
|
2024 |
|
2024 |
|
2023 |
|
|
|
2024 |
|
2023 |
|
|||
Realized sales price (before the effect of net derivative settlements): |
|||||||||||||||
Oil (per Bbl) |
$ 80.48 |
|
$ 76.09 |
|
$ 72.12 |
|
6 % |
|
12 % |
|
$ 78.43 |
|
$ 73.19 |
|
7 % |
Gas (per Mcf) |
$ 1.40 |
|
$ 2.18 |
|
$ 2.07 |
|
(36) % |
|
(32) % |
|
$ 1.78 |
|
$ 2.48 |
|
(28) % |
NGLs (per Bbl) |
$ 22.86 |
|
$ 22.94 |
|
$ 20.83 |
|
— % |
|
10 % |
|
$ 22.90 |
|
$ 23.29 |
|
(2) % |
Equivalent (per Boe) |
$ 43.92 |
|
$ 42.39 |
|
$ 38.89 |
|
4 % |
|
13 % |
|
$ 43.19 |
|
$ 41.03 |
|
5 % |
Realized sales price (including the effect of net derivative settlements): |
|||||||||||||||
Oil (per Bbl) |
$ 80.31 |
|
$ 76.52 |
|
$ 72.04 |
|
5 % |
|
11 % |
|
$ 78.54 |
|
$ 72.61 |
|
8 % |
Gas (per Mcf) |
$ 1.95 |
|
$ 2.57 |
|
$ 2.50 |
|
(24) % |
|
(22) % |
|
$ 2.26 |
|
$ 2.87 |
|
(21) % |
NGLs (per Bbl) |
$ 22.86 |
|
$ 22.28 |
|
$ 21.44 |
|
3 % |
|
7 % |
|
$ 22.58 |
|
$ 23.62 |
|
(4) % |
Equivalent (per Boe) |
$ 45.07 |
|
$ 43.40 |
|
$ 40.00 |
|
4 % |
|
13 % |
|
$ 44.27 |
|
$ 41.79 |
|
6 % |
Net production volumes: (1) |
|||||||||||||||
Oil (MMBbl) |
6.6 |
|
5.8 |
|
5.9 |
|
14 % |
|
13 % |
|
12.4 |
|
11.5 |
|
8 % |
Gas (Bcf) |
32.2 |
|
31.1 |
|
33.7 |
|
3 % |
|
(4) % |
|
63.4 |
|
65.9 |
|
(4) % |
NGLs (MMBbl) |
2.4 |
|
2.2 |
|
2.6 |
|
10 % |
|
(5) % |
|
4.7 |
|
4.7 |
|
(1) % |
Equivalent (MMBoe) |
14.4 |
|
13.2 |
|
14.1 |
|
9 % |
|
3 % |
|
27.6 |
|
27.2 |
|
1 % |
Average net daily production: (1) |
|||||||||||||||
Oil (MBbl per day) |
72.7 |
|
63.7 |
|
64.5 |
|
14 % |
|
13 % |
|
68.2 |
|
63.7 |
|
7 % |
Gas (MMcf per day) |
354.0 |
|
342.3 |
|
370.4 |
|
3 % |
|
(4) % |
|
348.1 |
|
364.3 |
|
(4) % |
NGLs (MBbl per day) |
26.8 |
|
24.4 |
|
28.2 |
|
10 % |
|
(5) % |
|
25.6 |
|
26.0 |
|
(2) % |
Equivalent (MBoe per day) |
158.5 |
|
145.1 |
|
154.4 |
|
9 % |
|
3 % |
|
151.8 |
|
150.5 |
|
1 % |
Per Boe data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating expense |
$ 4.82 |
|
$ 5.54 |
|
$ 4.98 |
|
(13) % |
|
(3) % |
|
$ 5.16 |
|
$ 5.07 |
|
2 % |
Transportation costs |
$ 1.94 |
|
$ 2.07 |
|
$ 2.89 |
|
(6) % |
|
(33) % |
|
$ 2.00 |
|
$ 2.85 |
|
(30) % |
Production taxes |
$ 1.89 |
|
$ 1.90 |
|
$ 1.66 |
|
(1) % |
|
14 % |
|
$ 1.90 |
|
$ 1.84 |
|
3 % |
Ad valorem tax expense |
$ 0.82 |
|
$ 0.89 |
|
$ 0.83 |
|
(8) % |
|
(1) % |
|
$ 0.86 |
|
$ 0.82 |
|
5 % |
General and administrative (2) |
$ 2.16 |
|
$ 2.29 |
|
$ 1.96 |
|
(6) % |
|
10 % |
|
$ 2.22 |
|
$ 2.03 |
|
9 % |
Net derivative settlement gain |
$ 1.15 |
|
$ 1.01 |
|
$ 1.11 |
|
14 % |
|
4 % |
|
$ 1.08 |
|
$ 0.76 |
|
42 % |
Depletion, depreciation, amortization, and asset retirement obligation liability accretion |
$ 12.46 |
|
$ 12.59 |
|
$ 11.23 |
|
(1) % |
|
11 % |
|
$ 12.52 |
|
$ 11.46 |
|
9 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amounts and percentage changes may not calculate due to rounding. |
|||||||||||||||
(2) Includes non-cash stock-based compensation expense per Boe of |
|
|||||||||
FINANCIAL HIGHLIGHTS (UNAUDITED) |
|||||||||
|
|||||||||
|
|
|
|||||||
Adjusted EBITDAX Reconciliation (1) |
|
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net income (GAAP) and net cash |
For the Three Months |
|
For the Six Months Ended |
|
For the Trailing |
||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
2024 |
Net income (GAAP) |
$ 210,293 |
|
$ 149,874 |
|
$ 341,492 |
|
$ 348,426 |
|
$ 810,946 |
Interest expense |
21,807 |
|
22,148 |
|
43,680 |
|
44,607 |
|
90,703 |
Interest income |
(6,333) |
|
(4,994) |
|
(13,103) |
|
(9,696) |
|
(23,261) |
Income tax expense |
53,590 |
|
42,092 |
|
85,659 |
|
97,598 |
|
84,383 |
Depletion, depreciation, amortization, and asset |
179,651 |
|
157,832 |
|
345,839 |
|
312,021 |
|
724,299 |
Exploration (2) |
15,906 |
|
14,064 |
|
33,362 |
|
31,541 |
|
57,154 |
Stock-based compensation expense |
5,788 |
|
4,163 |
|
10,806 |
|
8,481 |
|
22,575 |
Net derivative (gain) loss |
(12,118) |
|
(11,674) |
|
16,027 |
|
(63,003) |
|
10,876 |
Net derivative settlement gain |
16,523 |
|
15,636 |
|
29,797 |
|
20,712 |
|
36,006 |
Other, net |
823 |
|
1,079 |
|
1,420 |
|
927 |
|
1,990 |
Adjusted EBITDAX (non-GAAP) |
$ 485,930 |
|
$ 390,220 |
|
$ 894,979 |
|
$ 791,614 |
|
$ 1,815,671 |
Interest expense |
(21,807) |
|
(22,148) |
|
(43,680) |
|
(44,607) |
|
(90,703) |
Interest income |
6,333 |
|
4,994 |
|
13,103 |
|
9,696 |
|
23,261 |
Income tax expense |
(53,590) |
|
(42,092) |
|
(85,659) |
|
(97,598) |
|
(84,383) |
Exploration (2)(3) |
(14,897) |
|
(14,473) |
|
(24,436) |
|
(22,654) |
|
(48,249) |
Amortization of deferred financing costs |
1,372 |
|
1,372 |
|
2,743 |
|
2,743 |
|
5,486 |
Deferred income taxes |
43,516 |
|
44,278 |
|
70,907 |
|
94,246 |
|
64,917 |
Other, net |
(20,690) |
|
(680) |
|
(28,102) |
|
(14,119) |
|
(26,521) |
Net change in working capital |
50,215 |
|
21,780 |
|
(47,473) |
|
(4,436) |
|
(47,588) |
Net cash provided by operating activities (GAAP) |
$ 476,382 |
|
$ 383,251 |
|
$ 752,382 |
|
$ 714,885 |
|
$ 1,611,891 |
|
|
|
|
|
|
|
|
|
|
(1) See "Definitions of non-GAAP Measures and Metrics as Calculated by the Company" above. |
|||||||||
(2) Stock-based compensation expense is a component of the exploration expense and general and administrative expense line items on the unaudited condensed consolidated statements of operations. Therefore, the exploration line items shown in the reconciliation above will vary from the amount shown on the unaudited condensed consolidated statements of operations for the component of stock-based compensation expense recorded to exploration expense. |
|||||||||
(3) For the periods presented, amounts exclude certain capital expenditures related to unsuccessful exploration activity. |
|
|||||||
FINANCIAL HIGHLIGHTS (UNAUDITED) |
|||||||
|
|||||||
|
|||||||
Reconciliation of Net Income to Adjusted Net Income (1) |
|
|
|
|
|||
(in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Six Months Ended
|
||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Net income (GAAP) |
$ 210,293 |
|
$ 149,874 |
|
$ 341,492 |
|
$ 348,426 |
Net derivative (gain) loss |
(12,118) |
|
(11,674) |
|
16,027 |
|
(63,003) |
Net derivative settlement gain |
16,523 |
|
15,636 |
|
29,797 |
|
20,712 |
Other, net |
823 |
|
1,079 |
|
1,420 |
|
927 |
Tax effect of adjustments (2) |
(1,134) |
|
(1,094) |
|
(10,252) |
|
8,976 |
Adjusted net income (non-GAAP) |
$ 214,387 |
|
$ 153,821 |
|
$ 378,484 |
|
$ 316,038 |
|
|
|
|
|
|
|
|
Diluted net income per common share (GAAP) |
$ 1.82 |
|
$ 1.25 |
|
$ 2.94 |
|
$ 2.88 |
Net derivative (gain) loss |
(0.10) |
|
(0.10) |
|
0.14 |
|
(0.52) |
Net derivative settlement gain |
0.14 |
|
0.13 |
|
0.26 |
|
0.17 |
Other, net |
— |
|
0.01 |
|
0.01 |
|
0.01 |
Tax effect of adjustments (2) |
(0.01) |
|
(0.01) |
|
(0.09) |
|
0.07 |
Adjusted net income per diluted common share (non-GAAP) |
$ 1.85 |
|
$ 1.28 |
|
$ 3.26 |
|
$ 2.61 |
|
|
|
|
|
|
|
|
Basic weighted-average common shares outstanding |
114,634 |
|
119,408 |
|
115,138 |
|
120,533 |
Diluted weighted-average common shares outstanding |
115,715 |
|
120,074 |
|
116,092 |
|
121,175 |
|
|
|
|
|
|
|
|
Note: Amounts may not calculate due to rounding. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See "Definitions of non-GAAP Measures and Metrics as Calculated by the Company" above. |
|||||||
(2) The tax effect of adjustments for each of the three and six months ended |
Reconciliation of Total Principal Amount of Debt to Net Debt (1) |
|
(in thousands) |
|
|
As of |
Principal amount of Senior Notes (2) |
$ 1,585,144 |
Revolving credit facility (2) |
— |
Total principal amount of debt (GAAP) |
1,585,144 |
Less: Cash and cash equivalents |
487,869 |
Net Debt (non-GAAP) |
$ 1,097,275 |
|
|
(1) See "Definitions of non-GAAP Measures and Metrics as Calculated by the Company" above. |
|
(2) Amounts are from Note 5 - Long-Term Debt in Part I, Item I of the Company's Form 10-Q as of |
|
||||||||
FINANCIAL HIGHLIGHTS (UNAUDITED) |
||||||||
|
||||||||
|
||||||||
Adjusted Free Cash Flow (1) |
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Six Months Ended
|
||||
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Net cash provided by operating activities (GAAP) |
|
$ 476,382 |
|
$ 383,251 |
|
$ 752,382 |
|
$ 714,885 |
Net change in working capital |
|
(50,215) |
|
(21,780) |
|
47,473 |
|
4,436 |
Cash flow from operations before net change in working capital (non-GAAP) |
|
426,167 |
|
361,471 |
|
799,855 |
|
719,321 |
|
|
|
|
|
|
|
|
|
Capital expenditures (GAAP) |
|
322,684 |
|
309,334 |
|
655,049 |
|
550,046 |
Changes in capital expenditure accruals |
|
5,078 |
|
(42,653) |
|
(21,491) |
|
24,220 |
Capital expenditures before changes in accruals (non-GAAP) |
|
327,762 |
|
266,681 |
|
633,558 |
|
574,266 |
|
|
|
|
|
|
|
|
|
Adjusted free cash flow (non-GAAP) |
|
$ 98,405 |
|
$ 94,790 |
|
$ 166,297 |
|
$ 145,055 |
|
|
|
|
|
|
|
|
|
(1) See "Definitions of non-GAAP Measures and Metrics as Calculated by the Company" above. |
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