Group 1: Stock Performance - SM Energy's stock closed at $27.55, reflecting a -1.36% change from the previous day's closing price, which was less than the S&P 500's daily loss of 0.03% [1] - Over the past month, SM Energy shares gained 17.7%, outperforming the Oils-Energy sector's gain of 5.57% and the S&P 500's gain of 0.6% [1] Group 2: Earnings Projections - SM Energy is projected to report earnings of $1.24 per share, indicating a year-over-year decline of 32.97% [2] - The consensus estimate for revenue is $777.04 million, reflecting a 22.46% increase from the same quarter last year [2] Group 3: Fiscal Year Estimates - For the entire fiscal year, earnings are estimated at $5.67 per share, representing a -16.62% change from the previous year, while revenue is projected at $3.24 billion, indicating a +20.58% change [3] Group 4: Analyst Sentiment - Recent changes to analyst estimates for SM Energy are important, as positive revisions indicate optimism regarding the business and profitability [3][4] - The Zacks Rank system, which incorporates estimate changes, currently ranks SM Energy at 5 (Strong Sell) [5] Group 5: Valuation Metrics - SM Energy has a Forward P/E ratio of 4.93, which is a discount compared to its industry's Forward P/E of 12.04 [6] - The Oil and Gas - Exploration and Production - United States industry is ranked 182 in the Zacks Industry Rank, placing it in the bottom 27% of over 250 industries [6]

SM Energy Company Conference Call Summary Company Overview - **Company**: SM Energy Company (SM) - **Date of Conference**: June 04, 2025 - **Key Speaker**: Wade Purcell, CFO Industry Insights - **Focus**: Oil and Gas Industry, specifically in the Permian Basin, South Texas, and Uinta Basin - **Historical Context**: SM Energy has been operational since 1908, emphasizing its long-standing presence in the industry [7][10] Core Points and Arguments 1. **Asset Portfolio**: - SM Energy operates three top-tier assets: Midland Basin, South Texas, and Uinta Basin [12][13] - The Uinta Basin was added after the last conference and is seen as a significant opportunity due to its multiple intervals and high oil content [17][21] 2. **Operational Efficiency**: - The company has improved drilling and completion times, resulting in cost reductions of 10% in the Midland Basin and 19% in South Texas [12] - The technical team has been crucial in identifying and developing these assets, particularly in the Midland Basin and Uinta Basin [14][17] 3. **Financial Health**: - SM Energy maintains a strong balance sheet with a leverage ratio of 1.3 times, aiming to reduce it to 1.0 times through debt repayment [22][23] - The company has a $3 billion borrowing base with $2 billion in commitments, indicating strong liquidity [23] 4. **Production Strategy**: - Production is expected to grow from Q1 to Q3 of 2025, with a slight decline in Q4 due to a reduction in rig count from nine to six [36][61] - The company aims for a stable production trajectory moving into 2026, focusing on free cash flow generation rather than just oil output [64] 5. **Market Conditions**: - The company is not overly concerned about marketing constraints in the Permian Basin and has hedged its basis to mitigate risks [46][48] - SM Energy is confident in its ability to transport 15% to 20% of its production to local refineries, exceeding expectations in Q1 [48][49] 6. **M&A Opportunities**: - The company is actively looking for both small leasehold additions and larger acquisitions, maintaining strict criteria for any potential deals [55][56] - Current market conditions have created uncertainty in the M&A landscape, but SM Energy continues to evaluate opportunities [57][58] Additional Important Insights - **Technical Innovations**: The company is exploring new operational efficiencies and innovations to enhance productivity, although quantifiable results are expected later [39][40] - **Environmental Commitment**: SM Energy remains committed to ESG initiatives, including gas and methane capture, as part of its operational ethos [70] - **Regulatory Environment**: The current pro-fossil fuel administration has not significantly impacted SM Energy's operations, which are primarily on non-federal acreage [68] This summary encapsulates the key points discussed during the SM Energy conference call, highlighting the company's strategic focus, operational efficiencies, financial health, and market positioning within the oil and gas industry.

Financial Performance & Capital Management - SM Energy's Q1 2025 adjusted EBITDAX was $588.9 million[56] - The company reduced debt by $31 million in Q1 2025 and is progressing towards 1x leverage[39, 51] - SM Energy's net debt as of March 31, 2025, was $2.8 billion[42] - The company has a stock repurchase authorization of $500 million through 2027[45, 46] - Cumulative capital returned to stockholders is $567 million, with over 40% of free cash flow returned[45] Operational Efficiency & Production - Q1 2025 total net production was 197.3 MBoe/d, with 53% oil[51, 56] - The company has seen a 27% increase in average drilling footage per day and an 18% increase in average completed footage per day in the Midland Basin from 2022 to 2024[34] - South Texas has seen a 99% increase in average completed footage per day from 2022 to 2024[34] Asset Portfolio & Strategy - SM Energy holds approximately 111,000 net acres in the Midland Basin, 155,000 net acres in South Texas, and 63,600 net acres in the Uinta Basin[7, 77, 78] - The company plans to process ethane in 2Q and 3Q 2025, and reject it in 4Q 2025[67] - Oil reserves increased by 29% year-end 2024 over year-end 2023[72]

Core Viewpoint - SM Energy Company is actively engaging with investors through a series of upcoming conferences, showcasing its commitment to transparency and investor relations [1][4]. Company Overview - SM Energy Company is an independent energy firm focused on the acquisition, exploration, development, and production of crude oil, natural gas, and natural gas liquids (NGLs) primarily in Texas and Utah [3]. Upcoming Investor Conferences - June 2, 2025: President and CEO Herb Vogel will meet with investors in a virtual one-on-one setting, which will not be webcast [4]. - June 3, 2025: CFO Wade Pursell will host a breakout session at 9:20 a.m. Mountain time and will also engage in one-on-one meetings with investors. An investor presentation will be posted on the company's website [4]. - June 4, 2025: CFO Wade Pursell will host a breakout session at 8:40 a.m. Mountain time, with one-on-one meetings and a webcast available for replay [4]. - June 24, 2025: CEO Herb Vogel will present at 12:55 p.m. Mountain time, with one-on-one meetings and a webcast available for replay [4].

Group 1 - SM Energy's Q1 2025 production was near the high-end of expectations despite rising lease operating expenses [2] - Oil prices have decreased to the mid-to-high $50s range [2] - The company does not plan to adjust its strategies in response to the current oil price trends [2]

Core Viewpoint - SM Energy Company reported strong first-quarter 2025 results, with adjusted earnings and revenues exceeding expectations, driven by increased production volumes and higher realized prices [1][2][4]. Financial Performance - Adjusted earnings per share for Q1 2025 were $1.76, surpassing the Zacks Consensus Estimate of $1.60 and up from $1.41 in the previous year [1]. - Total revenues reached $845 million, exceeding the Zacks Consensus Estimate of $822 million and significantly higher than $560 million in the year-ago quarter [1]. Operational Performance - Production volumes for Q1 2025 were 197.3 MBoe/d, a 36% increase from 145.1 MBoe/d in the previous year, with oil comprising almost 53% of total production [2]. - Oil production rose approximately 63% year over year to 103.7 MBbls/d, exceeding the Zacks Consensus Estimate of 103 MBbls/d [2]. - Natural gas production was 404.2 million cubic feet per day, an 18% increase year over year, while natural gas liquids production improved 8% to 26.2 MBbls/d [3]. Realized Prices - The average realized price per Boe was $47.29, up from $42.39 in the year-ago quarter [4]. - The average realized oil price decreased by 7% to $70.56 per barrel, while the average realized natural gas price increased by 51% to $3.30 per thousand cubic feet [4]. Costs & Expenses - Unit lease operating expenses increased by 11% year over year to $6.13 per Boe, while general and administrative expenses decreased by 3% to $2.22 per Boe [5]. - Transportation expenses surged by 89% to $3.92 per Boe, with total hydrocarbon production expenses amounting to $225 million compared to $137.4 million in the previous year [5]. Capital Expenditures - Capital expenditures for the quarter totaled $440.8 million, with adjusted free cash flow of $73.8 million [6]. Balance Sheet - As of March 31, 2025, SM Energy had cash and cash equivalents of $54,000 and a net debt of $2.77 billion [7]. Guidance - For Q2 2025, production is expected to be between 197-203 MBoe/d, with oil contributing 54-55% [9]. - Full-year 2025 net production volume is anticipated to be in the range of 200-215 MBoe/d, implying a year-over-year increase of approximately 22% [10].

Financial Data and Key Metrics Changes - The company is pleased with its performance, reporting a 30% increase in oil production and a 20% increase in total production for 2025 [5] - The first quarter oil cut was 53%, with expectations for a modest increase in the second quarter, but no changes to the full-year guidance [7][10] Business Line Data and Key Metrics Changes - The company is focusing 90% of its program on the lower cube in the Uinta Basin, with strong confidence in the forecast from this zone [18][19] - The remaining 10% is focused on the upper cube, with positive results expected from the Douglas Creek area [19] Market Data and Key Metrics Changes - The company typically sells about 15% to 20% of its crude oil to Salt Lake City refineries, which has lower transportation costs [42] - The balance of oil is transported by rail, with efforts to maximize sales to local refineries [42] Company Strategy and Development Direction - The company aims to maintain a disciplined approach to capital allocation, prioritizing debt reduction until leverage returns to a one-time area [12][13] - There are no specific plans for 2026 yet, but multiple scenarios are being modeled based on commodity prices [50][51] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Uinta Basin assets, noting that they have exceeded original expectations [36] - The company is comfortable with its current plans at a price of $55 per barrel, generating significant free cash flow [52] Other Important Information - The company has filed its first quarter 10-Q and is committed to transparency regarding forward-looking statements and non-GAAP measures [3] - The company is not providing specific guidance on rig plans at this time, focusing instead on production timelines [27] Q&A Session Summary Question: Clarification on oil production shape for 2025 - Management indicated no material changes to the full-year plan, with a modest increase in oil cut expected from Q1 to Q2 [8][10] Question: Cash returns and share repurchases - Management confirmed prioritization of debt reduction over share repurchases until leverage metrics improve [12][13] Question: Uinta Basin productivity expectations - Management stated that 90% of the program is focused on the lower cube, with confidence in achieving underwritten assumptions [18] Question: LOE impacts and cost expectations - Management noted that some cost increases may be one-time in nature, while others could persist [21] Question: Rig count and operational plans - Management is not providing specific timelines for rig drops but will adjust based on program needs [27] Question: Capital allocation between regions - Management indicated that returns between regions have not changed significantly, and no immediate changes to capital allocation are expected [32] Question: Oil sales to local refineries - Management confirmed that 15% to 20% of crude is sold to local refineries, optimizing transportation costs [42] Question: CapEx plans for the year - Management expects a similar run rate in the second half of the year as in the first half, with no material changes to the CapEx guidance [44] Question: Operational plans for 2026 - Management stated that no specific plans for 2026 are in place, but multiple scenarios are being considered based on market conditions [50][51]

Financial Data and Key Metrics Changes - The company is pleased with its performance, particularly in the integration of Uinta Basin assets, projecting a 30% increase in oil production and a 20% increase in total production for 2025 [6]. Business Line Data and Key Metrics Changes - The company anticipates a modest increase in production rates from Q1 to Q2, with a significant increase expected in Q3, driven by more Uinta wells coming online [10][11]. Market Data and Key Metrics Changes - The company is focused on maximizing sales to local Salt Lake City refineries, which typically account for 15% to 20% of crude sales, due to lower transportation costs [42]. Company Strategy and Development Direction - The company is prioritizing debt reduction to achieve a leverage ratio of one times, with a disciplined approach to allocating free cash flow [12][13]. - The company is not providing specific guidance on rig plans but will drop rigs based on program needs, emphasizing production timelines over rig counts [28]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Uinta Basin assets, noting that they have exceeded expectations and that the company is focused on optimizing drilling and completion designs for future operations [36][37]. - The company is modeling various scenarios for 2026 based on commodity prices and cost environments, indicating flexibility in operational plans [51][52]. Other Important Information - The company has filed its first quarter 10-Q and is committed to transparency regarding forward-looking statements and non-GAAP measures [4]. Q&A Session Summary Question: Clarification on oil production and guidance for 2025 - Management confirmed no material changes to the full year plan, with an expected increase in oil cut from Q1 to Q2 and a major increase in Q3 [9][10]. Question: Cash returns and share repurchases - Management indicated a focus on debt reduction over share repurchases, although they remain open to supporting the stock if necessary [12][13]. Question: Uinta Basin productivity and co-development expectations - Management stated that 90% of their program focuses on the lower cube, with confidence in achieving forecasted results [19]. Question: LOE impacts and cost expectations - Management noted that some cost increases are expected to be one-time, while others may persist, but all have been included in the adjusted full year guidance [22]. Question: Rig count and capital allocation - Management clarified that while they are reducing rig counts, they do not foresee immediate changes in capital allocation based on current commodity prices [32][34]. Question: Oil sales to local refineries - Management confirmed that they aim to maximize sales to local refineries due to lower transportation costs, with no specific contracts governing the split [42][43]. Question: Production sales and revenue recognition - Management explained that there will always be slight lags between production and sales due to transportation timing, but this is expected to be a consistent discrepancy [65].

Financial Performance - For Q1 2025, oil, gas, and NGL production revenue increased to $839,620,000, up 50% from $559,596,000 in Q1 2024[17] - Total operating revenues and other income for Q1 2025 were $844,544,000, compared to $559,870,000 in Q1 2024, reflecting a 50.8% increase[17] - Net income for Q1 2025 was $182,269,000, a 38.9% increase from $131,199,000 in Q1 2024[18] - Basic net income per common share rose to $1.59 in Q1 2025, compared to $1.13 in Q1 2024, representing a 40.7% increase[17] - Net income for the three months ended March 31, 2025, was $182.3 million, compared to $131.2 million for the same period in 2024, representing an increase of 38.9%[23] - Total operating revenues and other income for Q1 2025 reached $844.544 million, a 50.8% increase from $559.870 million in Q1 2024[70] - E&P Segment net income for Q1 2025 was $182.269 million, up 38.9% from $131.199 million in Q1 2024[70] Operating Expenses - Total operating expenses for Q1 2025 were $568,256,000, compared to $381,475,000 in Q1 2024, indicating a 48.9% increase[17] - Lease operating expenses increased to $108.863 million in Q1 2025, compared to $73.105 million in Q1 2024, reflecting a 48.9% rise[70] - Interest expense for Q1 2025 was $44.373 million, significantly higher than $21.873 million in Q1 2024, marking a 102.5% increase[70] - Depletion, depreciation, and amortization expenses rose to $269.900 million in Q1 2025 from $166.188 million in Q1 2024, an increase of 62.3%[70] - General and administrative expenses increased to $39.339 million in Q1 2025, compared to $30.178 million in Q1 2024, a rise of 30.3%[70] - Income tax expense for Q1 2025 was $49.732 million, up from $32.069 million in Q1 2024, reflecting a 55.1% increase[70] Assets and Equity - Total assets as of March 31, 2025, were $8,787,665,000, an increase from $8,576,647,000 as of December 31, 2024[15] - Total stockholders' equity increased to $4,403,733,000 as of March 31, 2025, up from $4,237,257,000 at the end of 2024[15] - Cash and cash equivalents increased to $54,000,000 as of March 31, 2025, compared to zero as of December 31, 2024[15] Capital Expenditures and Investments - Capital expenditures for Q1 2025 totaled $413.9 million, up from $332.4 million in Q1 2024, reflecting a 24.5% increase[23] - The final adjusted purchase price for the Uinta Basin Acquisition was $2.1 billion, with no material changes to asset and liability allocation[72] - The company plans to continue evaluating potential acquisitions and divestitures to enhance operational efficiency and growth[13] Derivative Contracts and Financial Instruments - The company reported a net derivative loss of $17,216,000 in Q1 2025, down from a loss of $28,145,000 in Q1 2024[17] - The net derivative settlement loss for the three months ended March 31, 2025, was $7.751 million, an improvement from a loss of $13.274 million in the same period of 2024[60] - The Company has entered into oil derivatives contracts with NYMEX WTI volumes of 502 MBbl for Q3 2025 and 948 MBbl for Q4 2025, with a weighted-average floor price of $55.00 per Bbl[55] - The Company has gas derivatives contracts with NYMEX HH volumes of 2,887 BBtu for Q3 2025, with a weighted-average contract price of $4.00 per MMBtu[55] - The Company does not designate its commodity derivative contracts as hedging instruments, and all derivative instruments are subject to master netting arrangements[58] Debt and Financing - As of April 24, 2025, the available borrowing capacity under the Credit Agreement is $1,998,000,000, an increase from $1,960,500,000 as of March 31, 2025[42] - The total amount of Senior Notes as of March 31, 2025, is $2,736,026,000, with unamortized deferred financing costs totaling $26,442,000[44] - The fair value of the Company's Senior Notes obligations as of March 31, 2025, includes 6.75% Senior Notes due 2026 with a principal amount of $419.235 million[66] - The total aggregate revolving lender commitment amount remains unchanged at $2,000,000,000 as of the reporting dates[42] Risk Management - The company is exposed to interest rate risk and commodity price risk, as detailed in the management's discussion and analysis section of the 2024 Form 10-K[166] - The Company is in compliance with all financial and non-financial covenants as of March 31, 2025[45]

Core Insights - SM Energy reported revenue of $844.54 million for the quarter ended March 2025, marking a 50.9% increase year-over-year, with EPS at $1.76 compared to $1.41 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $821.97 million by 2.75%, and the EPS also surpassed the consensus estimate of $1.60 by 10% [1] Financial Performance Metrics - Average daily production totaled 197.3 million barrels of oil equivalent, slightly above the five-analyst average estimate of 196.49 million barrels [4] - Average daily crude oil production was 103.7 million barrels, exceeding the four-analyst average estimate of 102.64 million barrels [4] - Average daily natural gas production reached 404.2 million cubic feet, surpassing the four-analyst average estimate of 397.64 million cubic feet [4] - Average realized price for crude oil was $70.87 per barrel, higher than the $70.67 estimated by two analysts [4] - Operating revenue from oil, gas, and NGL production was $839.62 million, exceeding the two-analyst average estimate of $823.02 million, reflecting a year-over-year increase of 50% [4] Stock Performance - SM Energy's shares have declined by 25.3% over the past month, while the Zacks S&P 500 composite has only decreased by 0.7% [3] - The stock currently holds a Zacks Rank 5 (Strong Sell), indicating potential underperformance compared to the broader market in the near term [3]