Core Viewpoint - SM Energy (SM) has experienced a significant downtrend, with a stock decline of 14.3% over the past four weeks, but it is now in oversold territory, suggesting a potential turnaround due to improved earnings expectations from analysts [1]. Group 1: Technical Indicators - The Relative Strength Index (RSI) is a key technical indicator used to identify oversold stocks, with a reading below 30 typically indicating oversold conditions [2]. - SM's current RSI reading is 24.15, indicating that the heavy selling pressure may be exhausting, which could lead to a price rebound [5]. Group 2: Fundamental Indicators - There is a strong consensus among sell-side analysts regarding SM's earnings, with a 7.4% increase in the consensus EPS estimate over the last 30 days, suggesting potential price appreciation [6]. - SM holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a near-term turnaround [7].

Group 1 - The article promotes a free two-week trial for the investment group Distressed Value Investing, which offers exclusive research on various companies and investment opportunities [1] - The author, Aaron Chow, has over 15 years of analytical experience and co-founded a mobile gaming company that was acquired by PENN Entertainment, indicating a strong background in the industry [2] - Distressed Value Investing focuses on value opportunities and distressed plays, particularly in the energy sector, highlighting a specific investment strategy [2] Group 2 - The article emphasizes that past performance is not indicative of future results, which is a common disclaimer in investment discussions [3] - It clarifies that no specific investment recommendations are being made, and the views expressed may not represent the entire platform's opinions [3] - The analysts contributing to the platform include both professional and individual investors, suggesting a diverse range of perspectives [3]

Core Viewpoint - SM Energy Company reported strong fourth-quarter earnings, exceeding expectations, driven by increased production volumes despite higher production expenses [1][2]. Financial Performance - Adjusted earnings for Q4 2024 were $1.91 per share, surpassing the Zacks Consensus Estimate of $1.86, and up from $1.56 in the same quarter last year [1]. - Total revenues for the quarter reached $852 million, an increase from $609 million year-over-year, but slightly below the Zacks Consensus Estimate of $855 million [1]. Operational Performance - Total production for Q4 was 208 thousand barrels of oil equivalent per day (MBoe/d), a 36% increase from 153.5 MBoe/d in the previous year, though it fell short of the consensus estimate of 212 MBoe/d [3]. - Oil production rose 62% year-over-year to 106.9 thousand barrels per day (MBbls/d), missing the estimate of 110 MBbls/d [3]. - Natural gas production was 424.8 million cubic feet per day, up 17% year-over-year, while natural gas liquids contributed 30.3 MBbls/d, a 13% increase [4]. Pricing and Costs - The average realized price per Boe was $43.68, up from $42.99 year-over-year, while the average realized oil price decreased by 10% to $69.34 per barrel [5]. - Average realized natural gas price fell 11% to $2.19 per thousand cubic feet, but natural gas liquids saw a 12% increase to $24.49 per barrel [5]. - Unit lease operating expenses rose 1% to $5.35 per Boe, while general and administrative expenses decreased 16% to $2.19 per Boe [6]. Capital Expenditures and Cash Flow - Capital expenditures for the quarter totaled $362.3 million, with adjusted free cash flow amounting to $188.9 million [7]. Balance Sheet - As of December 31, 2024, SM Energy reported no cash and cash equivalents, with a net debt of $2.8 billion [8]. Guidance - For Q1 2025, production is expected to be between 191-198 MBoe/d, with oil contributing 52-53% [10]. - Full-year 2025 production is anticipated to be in the range of 200-215 MBoe/d, implying a 22% year-over-year increase, with oil production expected to rise by 33% [11]. - Full-year capital expenditures are projected to be approximately $1.3 billion [11].

Financial Performance - The company aims to generate cash flows that enable fixed dividend payments, debt repayments, and a Stock Repurchase Program[64]. - Oil, gas, and NGL production revenue increased by 13% to $2.7 billion for the year ended December 31, 2024, compared to $2.4 billion in 2023[74]. - The fixed dividend was increased to $0.80 per share annually, with $0.74 per share paid in 2024, up from $0.60 per share in 2023[71]. - Costs incurred for the year ended December 31, 2024, increased by 184% to $3.5 billion, primarily due to capital activity related to the Uinta Basin acquisition[80]. - The standardized measure of discounted future net cash flows (GAAP) as of December 31, 2024, was $7,267.9 million, compared to $6,280.1 million in 2023[92]. - Total proved PV-10 (non-GAAP) as of December 31, 2024, was $8,355.7 million, up from $7,376.5 million in 2023[94]. - Estimated future development costs for net proved undeveloped reserves total $2.8 billion, with expected expenditures of approximately $1.0 billion in 2025[104]. Production and Reserves - Average net daily equivalent production rose by 12% to 170.5 MBOE in 2024, with oil production as a percentage of total production increasing to 47% from 43% in 2023[73]. - Total estimated net proved reserves increased by 12% to 678.3 MMBOE as of December 31, 2024, compared to 604.9 MMBOE in 2023[70]. - Estimated net proved reserves in the Midland Basin decreased by 14% to 230.5 MMBOE as of December 31, 2024, from 268.5 MMBOE in 2023[82]. - Estimated net proved reserves in South Texas increased by 3% to 347.9 MMBOE as of December 31, 2024, from 336.4 MMBOE in 2023[87]. - As of December 31, 2024, net proved reserves in the Uinta Basin included 103.2 MMBOE, with net equivalent production at 3.3 MMBOE, leaving 99.9 MMBOE of estimated net proved reserves remaining[89]. - Estimated net proved undeveloped reserves increased by 10.7 MMBOE, or 4%, from 263.6 MMBOE at the beginning of 2024 to 274.3 MMBOE at year-end[97]. - In 2024, net production volumes included 29.4 MMBbl of oil, 137.0 Bcf of gas, and 10.2 MMBbl of NGLs, resulting in a total equivalent of 62.4 MMBOE, representing a 12.5% increase from 2023[108]. Capital Expenditures and Investments - The company plans a capital program of approximately $1.3 billion for 2025, focusing on economic oil development projects in its Midland Basin, South Texas, and Uinta Basin assets[78]. - Future capital expenditures will be influenced by commodity price resilience and liquidity availability[4]. - The company is exploring potential acquisitions and divestitures to enhance its asset portfolio[4]. - The company acquired approximately 63,300 net acres of proved oil and gas assets in Utah for an unadjusted purchase price of $2.1 billion, adding 103.2 MMBOE of existing net proved reserves[67]. - In Q4 2024, total costs incurred were $2.3 billion, with over $2.1 billion related to acquisition costs; 19 gross (15 net) wells were drilled and 11 gross (8 net) wells completed[89]. Operational Strategy and Risks - The Uinta Basin Acquisition is a key strategy for future growth and operational integration[64]. - The integration of the Uinta Basin Acquisition poses risks that could affect expected benefits and operational stability[4]. - The company is assessing the impact of geopolitical instability on operations and market conditions[4]. - Expected future production volumes and identified drilling locations are critical for the company's growth strategy[4]. - The company focuses on operational execution and disciplined capital spending to maximize returns and increase asset value[65]. Environmental, Social, and Governance (ESG) Commitments - The company is committed to environmental, social, and governance (ESG) goals as part of its operational strategy[4]. - The company has set annual goals for minimizing safety incidents and reducing greenhouse gas emissions intensity as part of its ESG initiatives[149]. - Capital costs related to environmental compliance are included in the overall capital budget, reflecting ongoing commitments to regulatory adherence[149]. - The company is committed to diversity and equal employment opportunities, regularly analyzing workforce demographics and conducting pay equity testing[121]. Compliance and Regulatory Environment - The company’s operations are subject to complex federal, state, tribal, and local laws and regulations, which may increase operational costs and affect profitability[128]. - Environmental regulations, including the Clean Air Act and Clean Water Act, impose strict controls on emissions and discharges, affecting operational practices[141][139]. - The company’s operations in the Uinta Basin are subject to tribal laws and regulations, which may impose additional compliance requirements[130]. - The company is subject to the federal Endangered Species Act, which may impact operations in areas with protected species, potentially delaying drilling and production activities[143]. - Compliance with OSHA and similar state laws is maintained, ensuring workplace safety and health standards are met[144]. - Hydraulic fracturing is routinely utilized in drilling programs, but increased regulation could lead to higher compliance costs and operational delays[145]. - Stricter local and state environmental regulations are anticipated, while the outlook for federal regulations remains uncertain[147]. Workforce and Corporate Culture - As of January 31, 2025, the company had 663 full-time employees, none of whom were subject to a collective bargaining agreement[121]. - In 2024, employees participated in over 7,000 hours of leadership and talent development training, excluding safety and specialized technical training[118]. - The company received two Leadership Development awards in 2024, including a Gold Award for innovative competency building and a Bronze Award for overall excellence[118]. - The company offers competitive, performance-based compensation, including short-term and long-term incentive plans, and an employee stock purchase program[120]. - The company emphasizes integrity and ethical behavior as core values, with policies promoting ethical conduct and safety management tied to employee compensation[116][117]. - The company’s management, including the CEO and CFO, is responsible for reviewing and verifying the reasonableness and accuracy of proved reserves estimates[107]. Market Conditions and Competition - The oil and gas industry is highly competitive, with the company facing competition from major and independent firms with larger resources[124]. - The company’s sales of gas are influenced by the availability and cost of gas pipeline transportation, regulated by the Federal Energy Regulatory Commission (FERC)[132]. - Interest rate risk and commodity price risk disclosures are included in the financial report, highlighting market risk factors[405].

Financial Data and Key Metrics Changes - Record daily oil production increased by 23% year-over-year, with total production up 12%, resulting in $2 billion in adjusted EBITDAX and $485 million in adjusted free cash flow [45][99] - The sustainable annual fixed dividend was increased to $0.80 per share, marking a record high [45][99] - The 2025 budget is based on $70 WTI, $3.25 gas, and $27 NGLs, with a forecasted year-over-year increase in free cash flow of more than 40% [45][99] Business Line Data and Key Metrics Changes - The addition of Utah assets is expected to generate over 20% production growth and over 30% oil production growth year-over-year [71] - Year-end estimated net proved reserves totaled 678 million barrels of oil equivalent, a 12% increase from 2023, with oil reserves growing by 29% [73] - The 2025 capital program is expected to approximate $1.3 billion, with plans to drill approximately 105 net wells and complete approximately 150 net wells [76][81] Market Data and Key Metrics Changes - Production is forecasted to average between 200,000 to 215,000 BOE per day in 2025, up approximately 20% from 2024 [100] - Oil production is estimated to be 51% to 52% of total production, translating to 102,000 to 112,000 barrels per day, which is over 30% higher than the 2024 average [100] Company Strategy and Development Direction - The 2025 strategy focuses on operational execution, returning capital to stockholders, and expanding the portfolio of top-tier economic drilling inventory [15][69] - The company aims to optimize free cash flow over time and maintain a strong balance sheet while integrating the Uinta Basin expansion [57][112] - The operational plan emphasizes capital efficiency and maximizing returns from all three core assets [82] Management's Comments on Operating Environment and Future Outlook - Management highlighted the growing demand for energy and electricity, projecting a 50% increase in primary energy demand by 2050 [11][65] - The company is positioned to support this growth with a focus on safety, emissions, and operational excellence [12][66] - Management expressed confidence in the company's ability to create opportunities and expand inventory over the long term [15][68] Other Important Information - The company reduced the balance on its revolver by $121.5 million, demonstrating a commitment to debt reduction [106] - Since the inception of the return of capital program, the company has returned over $540 million, which is more than 40% of free cash flow to stockholders [108] Q&A Session Summary Question: What are the expectations for production growth in 2025? - The company expects over 20% production growth and over 30% oil production growth year-over-year due to the addition of Utah assets [71] Question: How does the company plan to manage capital expenditures in 2025? - The capital program is expected to approximate $1.3 billion, with a focus on drilling and completion capital allocation across core assets [76][81] Question: What is the company's approach to debt management? - The company aims to prioritize debt reduction to meet leverage targets before directing free cash flow towards share buybacks [106][107]

Production and Reserves - Record oil production for the full year 2024 was 29.4 MMBbls, or 80.2 MBbls/d, up 23% from 2023; total net production was 62.4 MMBoe, or 170.5 MBoe/d, up 12% from 2023[5]. - Year-end estimated net proved reserves reached 678 MMBoe, up 12% from year-end 2023, with a ratio of estimated net proved reserves to 2024 net production of 10.9 years[5][11]. - The Uinta Basin acquisitions added approximately 100 MMBoe in estimated net proved reserves, with 38% of those being developed[13]. - Total estimated net proved reserves at year-end 2024 were 678.3 MMBoe, with 60% classified as proved developed[68]. Financial Performance - Net income for the full year 2024 was $770.3 million, or $6.67 per diluted common share; adjusted net income was $6.80 per diluted common share[5]. - Fourth quarter 2024 net income was $188.3 million, or $1.64 per diluted common share, down from $247.1 million, or $2.12 per diluted common share in Q4 2023[22]. - Full year 2024 net income totaled $770.3 million, or $6.67 per diluted common share, compared to $817.9 million, or $6.86 per diluted common share in 2023, reflecting a 12% increase in production volumes[22]. - Adjusted EBITDAX for Q4 2024 was $610.8 million, up 37% from $445.1 million in Q4 2023, while full year 2024 Adjusted EBITDAX was $1.99 billion compared to $1.71 billion in 2023[24]. - Adjusted free cash flow for Q4 2024 was $188.9 million, with full year 2024 adjusted free cash flow totaling $485.0 million[25]. - Basic net income per common share decreased to $6.71 in 2024 from $6.89 in 2023, a decline of about 2.6%[44]. Capital Expenditures and Investments - Capital expenditures for the full year 2024 totaled $1.29 billion, with 142 net wells drilled and 135 net flowing completions[21]. - Capital expenditures for 2025 are expected to approximate $1.3 billion, excluding acquisitions and certain non-operated activities[33]. - The company plans to drill approximately 105 net wells and complete approximately 150 net wells in 2025[33]. - Capital expenditures for Q4 2024 totaled $353.5 million, compared to $222.7 million in Q4 2023, reflecting a 58.8% increase[48]. - Capital expenditures before changes in accruals (non-GAAP) for the twelve months ended December 31, 2024, were $1,286.3 million, up from $1,070.2 million in 2023, an increase of 20.2%[72]. Debt and Liquidity - The company reduced the balance on its revolving credit facility by $121.5 million, from $190.0 million at October 1, 2024, to $68.5 million at year-end 2024[5]. - At year-end 2024, the company's long-term debt was $2.80 billion, with a net debt-to-Adjusted EBITDAX ratio of 1.4[26][27]. - Total principal amount of debt (GAAP) increased to $2,804.5 million in 2024 from $1,585.1 million in 2023, reflecting a significant rise of 77.0%[70]. - Net Debt (non-GAAP) surged to $2,804.5 million in 2024 compared to $968.0 million in 2023, marking an increase of 189.5%[70]. - The company’s net debt-to-Adjusted EBITDAX ratio is a critical metric for understanding its ability to service debt[56]. Revenue and Operating Performance - Operating revenues for the twelve months ended December 31, 2024, reached $2,690,259,000, up from $2,373,886,000 in 2023, marking an increase of about 13.3%[44]. - Oil, gas, and NGL production revenue for the three months ended December 31, 2024, was $835,858,000, up from $606,857,000 in 2023, indicating an increase of approximately 37.6%[44]. - Operating cash flow for the twelve months ended December 31, 2024, was $1.78 billion, up 13.2% from $1.57 billion in 2023[48]. - The company’s total net cash provided by operating activities (GAAP) for the twelve months ended December 31, 2024, was $1,782,514, up from $1,574,394 in 2023[62]. Stockholder Returns - The Company returned $169.0 million to stockholders in 2024 through dividends and share buybacks, representing an approximate 4% yield to current market capitalization[5]. - The company declared net cash dividends of $0.76 per share in 2024, up from $0.63 per share in 2023, an increase of approximately 20.6%[46].

Core Insights - SM Energy Company reported record financial and operational results for 2024, achieving significant increases in oil production, estimated net proved reserves, and gross drilling locations [2][4][5]. Financial Performance - Net income for the full year 2024 was $770.3 million, or $6.67 per diluted common share, compared to $817.9 million, or $6.86 per diluted common share in 2023 [21][25]. - Adjusted net income for 2024 was $785.1 million, or $6.80 per diluted common share, up from $702.5 million, or $5.89 per diluted common share in 2023 [25]. - Adjusted EBITDAX for 2024 was $1.99 billion, compared to $1.71 billion in 2023 [23]. Production and Reserves - Record oil production for 2024 was 29.4 million barrels (MMBbls), or 80.2 thousand barrels per day (MBbls/d), a 23% increase from 2023 [5][17]. - Total net production for 2024 was 62.4 million barrels of oil equivalent (MMBoe), or 170.5 MBoe/d, up 12% from 2023 [5][17]. - Estimated net proved reserves at year-end 2024 were 678 MMBoe, a 12% increase from year-end 2023 [8][11]. Capital Expenditures and Shareholder Returns - Capital expenditures for 2024 totaled $1.29 billion, with 142 net wells drilled and 135 net flowing completions [20]. - The company returned $169 million to shareholders in 2024 through dividends and share buybacks, achieving an approximate 4% yield to market capitalization [5][4]. Operational Strategy and Future Outlook - The 2025 operational plan aims to optimize capital efficiency and is expected to increase net production by over 20% and oil production by over 30% year-over-year [5][6]. - The company plans to focus on integrating Uinta Basin operations, generating free cash flow, and reducing debt to a target leverage of 1 times [6][32]. Leadership Changes - The company announced the retirement of Jennifer Martin Samuels, Vice President - Investor Relations and ESG Stewardship, effective March 7, 2025, with new officer appointments effective March 2, 2025 [7][10]. Market Conditions and Pricing - The average realized price for oil in 2024 was $74.49 per barrel, while natural gas averaged $2.27 per MMBtu [24][36]. - The company hedged approximately 30% of expected 2025 net oil and natural gas production at favorable prices [34]. Financial Position and Liquidity - At year-end 2024, the company's long-term debt was $2.80 billion, with a net debt-to-adjusted EBITDAX ratio of 1.4 [27][28]. - Available liquidity was reported at $1.93 billion, indicating a strong financial position [28].

Core Viewpoint - SM Energy (SM) is anticipated to report a year-over-year increase in earnings driven by higher revenues, with a consensus EPS estimate of $1.93 per share, reflecting a +23.7% change, and revenues expected to reach $868.32 million, up 42.6% from the previous year [1][3]. Earnings Expectations - The upcoming earnings report is scheduled for February 19, and the stock may rise if the reported numbers exceed expectations, while a miss could lead to a decline [2]. - The consensus EPS estimate has been revised 7.54% higher in the last 30 days, indicating a positive reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model shows a positive Earnings ESP of +0.36% for SM Energy, suggesting a likelihood of beating the consensus EPS estimate [10][11]. - A strong predictor of an earnings beat is a positive Earnings ESP combined with a Zacks Rank of 1 (Strong Buy), which SM Energy currently holds [8][11]. Historical Performance - SM Energy has a history of exceeding consensus EPS estimates, having beaten expectations in the last four quarters, including a +6.58% surprise in the most recent quarter [12][13]. Industry Comparison - In the same industry, EQT Corporation is expected to report earnings of $0.50 per share, reflecting a +4.2% year-over-year change, with revenues projected at $1.73 billion, up 12% [17]. - EQT's consensus EPS estimate has been revised 11.2% lower recently, but a higher Most Accurate Estimate results in a positive Earnings ESP of 7.44%, indicating a potential earnings beat [18].

Core Insights - SM Energy is well-positioned to continue its earnings-beat streak, having a history of exceeding earnings estimates, particularly in the last two quarters with an average surprise of 12.21% [1][3] Earnings Performance - For the last reported quarter, SM Energy achieved earnings of $1.62 per share, surpassing the Zacks Consensus Estimate of $1.52 per share, resulting in a surprise of 6.58% [2] - In the previous quarter, the company reported earnings of $1.85 per share against an expectation of $1.57 per share, delivering a surprise of 17.83% [2] Earnings Estimates - Recent estimates for SM Energy have been trending upward, with a positive Earnings ESP of +0.36%, indicating increased analyst optimism regarding the company's earnings prospects [3][6] - The combination of a positive Earnings ESP and a Zacks Rank 1 (Strong Buy) suggests a high likelihood of another earnings beat in the upcoming report [6] Predictive Metrics - Stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have historically produced a positive surprise nearly 70% of the time, indicating a strong predictive power for earnings performance [4][5] - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate reflecting the latest analyst revisions [5]

Core Viewpoint - SM Energy (SM) has experienced a significant decline in stock performance, returning -12.7% over the past month, while the Zacks S&P 500 composite increased by +1.9% [2]. Earnings Estimate Revisions - For the current quarter, SM Energy is expected to post earnings of $1.93 per share, reflecting a year-over-year increase of +23.7%. The Zacks Consensus Estimate has risen by +13.2% in the last 30 days [5]. - The consensus earnings estimate for the current fiscal year stands at $6.78, indicating a year-over-year change of +15.1%, with a +12.1% increase in estimates over the past month [5]. - For the next fiscal year, the consensus earnings estimate is $8.10, representing a +19.4% change from the previous year, with a +12.2% increase in estimates recently [6]. - SM Energy holds a Zacks Rank 1 (Strong Buy) due to significant changes in consensus estimates and other related factors [7]. Revenue Growth - The consensus sales estimate for the current quarter is $868.32 million, indicating a year-over-year increase of +42.6%. For the current and next fiscal years, the revenue estimates are $2.75 billion and $3.47 billion, reflecting changes of +15.7% and +26.2%, respectively [9]. Last Reported Results - In the last reported quarter, SM Energy generated revenues of $643.61 million, a year-over-year increase of +0.4%. The EPS was $1.62, compared to $1.73 a year ago, with a revenue surprise of -1.15% and an EPS surprise of +6.58% [11]. Valuation - SM Energy is graded A in the Zacks Value Style Score, indicating it is trading at a discount compared to its peers [15].