SM Energy (SM) closed the most recent trading day at $37.68, moving +0.37% from the previous trading session. The stock outpaced the S&P 500's daily loss of 0.04%. Meanwhile, the Dow experienced a rise of 0.07%, and the technology-dominated Nasdaq saw a decrease of 0.05%.Heading into today, shares of the independent oil and gas company had lost 16.26% over the past month, lagging the Oils-Energy sector's loss of 8.03% and the S&P 500's gain of 1.05% in that time.The investment community will be paying close ...

Group 1 - SM Energy (NYSE: SM) reported Q3 2024 results with production 3% above the midpoint of its guidance and capital expenditures below guidance [2] - The company is currently integrating its Uinta Basin acquisitions, which may impact Q4 2024 results [2] Group 2 - The article highlights the author's extensive experience in analytical roles, particularly in the energy sector, and mentions a focus on value opportunities and distressed plays [2]

Core Viewpoint - SM Energy Company reported third-quarter 2024 adjusted earnings of $1.62 per share, exceeding the Zacks Consensus Estimate of $1.52, but down from $1.73 in the same quarter last year. Total revenues of $644 million increased slightly from $641 million year-over-year but fell short of the Zacks Consensus Estimate of $651 million [1]. Operational Performance - SM Energy's production for the third quarter reached 170 thousand barrels of oil equivalent per day (MBoe/d), a nearly 11% increase from 153.7 MBoe/d in the previous year, surpassing the Zacks Consensus Estimate of 166 MBoe/d [3]. - Oil production rose 15% year-over-year to 77.4 thousand barrels per day (MBbls/d), exceeding the Zacks Consensus Estimate of 76 MBbls/d [3]. - Natural gas production was 375.4 million cubic feet per day, up 5% year-over-year, while natural gas liquids contributed 30.1 MBbls/d, an 11% increase from the previous year [4]. Realized Prices - The average realized price per Boe before derivative settlements was $41.08, down from $45.24 in the prior year. The average realized oil price decreased by 8% to $74.72 per barrel, while the average realized price of natural gas fell 41% to $1.46 per thousand cubic feet [5]. Costs & Expenses - Unit lease operating expenses decreased by 7% year-over-year to $4.73 per Boe. General and administrative expenses increased by 9% to $2.25 per Boe, and transportation expenses rose by 3% to $2.13 per Boe [6]. - Total hydrocarbon production expenses were $148.4 million, compared to $138.3 million in the previous year, while total exploration expenses increased to $12.1 million from $10.2 million [6]. Capital Expenditure - Capital expenditure for the quarter totaled $302.1 million, with adjusted free cash flow amounting to $129.8 million [7]. Balance Sheet - As of September 30, 2024, SM Energy had cash and cash equivalents of $1.7 billion and a net debt of $1.1 billion [8]. Guidance - For the fourth quarter of 2024, SM Energy expects production to be between 18.9-20.2 MMBoe, with oil expected to contribute 51% of total production. Capital expenditures are estimated to be in the range of $320-$340 million [9]. - For the full year 2024, the company anticipates net production volume between 62.2-63.5 MMBoe, with oil accounting for 47% of total production [10].

分组1 - SM Energy reported quarterly earnings of $1.62 per share, exceeding the Zacks Consensus Estimate of $1.52 per share, but down from $1.73 per share a year ago, representing an earnings surprise of 6.58% [1] - The company posted revenues of $643.61 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 1.15%, and showing a slight increase from $640.9 million year-over-year [2] - SM Energy has surpassed consensus EPS estimates four times over the last four quarters, but has only topped consensus revenue estimates once in the same period [2] 分组2 - The stock has gained approximately 9.8% since the beginning of the year, while the S&P 500 has increased by 21.9% [3] - The current consensus EPS estimate for the upcoming quarter is $2.25 on revenues of $882.15 million, and for the current fiscal year, it is $7.05 on revenues of $2.74 billion [7] - The Zacks Industry Rank for Oil and Gas - Exploration and Production - United States is currently in the bottom 10% of over 250 Zacks industries, indicating potential underperformance compared to higher-ranked industries [8]

Financial Data and Key Metrics Changes - The company reported strong production volumes, exceeding the high end of guidance and consensus expectations, with production volumes 3% ahead of the midpoint of guidance [24][25] - Notable beats were achieved in consensus EBITDAX, adjusted EPS, and adjusted free cash flow due to higher than expected production and lower than expected costs [26] Business Line Data and Key Metrics Changes - The Uinta acquisitions resulted in a significant increase in core acreage by over 93,000 net acres, or about 40%, and an expected sequential increase in net oil production of around 40% [5][8] - In the Midland Basin, new Woodford-Barnett tests showed that the company's two test wells outperformed peer tests by more than 50% normalized to 10,000 foot laterals [16] - In South Texas, the Austin Chalk wells demonstrated strong performance, with two wells averaging 2,317 Boe per day, per well, with 22% oil and 63% liquids [20][22] Market Data and Key Metrics Changes - The Uinta Basin's high-quality crude oil, with around 40 degrees API, is expected to attract a premium to WTI due to its low sulfur and low nitrogen content [11] - The company anticipates that Utah oil realizations will reflect a couple of dollars off WTI [36] Company Strategy and Development Direction - The company aims to expand its high-quality, low breakeven cost portfolio, focusing on operational execution to deliver high returning wells and returning capital to stockholders through dividends and share repurchases [4][7] - Following the Uinta acquisitions, the company is emphasizing debt reduction and plans to return the leverage ratio closer to one times before resuming share buybacks [29][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operational execution and financial results, positioning the company for substantially increased inventory and scale going forward [24][41] - The fourth quarter production guidance is set at 205,000 to 220,000 Boe per day, which would be the highest production rate in the company's history [33] Other Important Information - The company completed successful upsized bond offerings totaling $1.5 billion and redeemed $349 million of senior notes due in 2025 [27][28] - The company has a cash balance of $21 million and restricted cash of $36 million following the Uinta acquisitions [28] Q&A Session Summary Question: What are the expectations for production growth in the fourth quarter? - The company expects production volumes to increase sequentially by around 25% on a Boe basis and around 40% on oil, with the highest production rate in company history anticipated [32] Question: How will the Uinta Basin acquisitions impact operational costs? - Operating costs for the fourth quarter are expected to range between $4.90 to $5.10 per Boe, incorporating efficiencies gained in the third quarter [37]

Financial Performance - The company reported 3Q24 net production of 170.0 MBoe/d [10, 22] - Adjusted EBITDAX for 3Q24 was $481.5 million [23] - Adjusted free cash flow for 3Q24 was $129.8 million [24] - Adjusted EPS for 3Q24 was $1.62 [24] Portfolio and Acreage - Uinta Acquisitions increased acreage by approximately 63,300 net acres [5, 10] - The company's acreage increased by approximately 40% over the last 12-18 months [10] - Midland Basin net acres are approximately 111,000 [5, 40] - South Texas net acres are approximately 155,000 [5, 40] Hedging - Approximately 40+% of expected 4Q net oil production is hedged at an average price of $72.08/Bbl to $78.27/Bbl [28] - Approximately 20% of expected 4Q net natural gas production is hedged at an average price of $3.32/MMBtu [29] - 30-35% of total expected 2024 net production is hedged [32] Guidance - Capital expenditures for full year 2024 are guided at $1.24–$1.26 billion [33] - Total net production for full year 2024 is guided at 170–174 MBoe/d [33] - Oil percentage for full year 2024 is expected to be approximately 47% [33]

Production and Operations - Net production for Q3 2024 was 15.6 MMBoe (170.0 MBoe/d), with 46% oil (77.4 MBbl/d), exceeding guidance due to strong performance in the Midland Basin and South Texas[2] - The company expects Q4 2024 oil and total production volumes to grow by 40% and 25%, respectively, driven by the integration of Utah operations[4] - Full year 2024 net production guidance is 62.2-63.5 MMBoe, or 170-174 MBoe/d, including Uinta Basin operations[15] - Oil production is expected to account for 47% of total production in 2024, with higher oil content from Uinta Basin in Q4[16] - Q4 2024 net production guidance is 18.9-20.2 MMBoe, or 205-220 MBoe/d, with 51% oil content[16] - Net production volumes for oil in Q3 2024 were 7.1 MMBbl, an 8% increase from Q2 2024 and a 15% increase from Q3 2023[33] - Average net daily production for oil in Q3 2024 was 77.4 MBbl per day, a 6% increase from Q2 2024 and a 15% increase from Q3 2023[33] Financial Performance - Net income for Q3 2024 was $240.5 million, or $2.09 per diluted share, with Adjusted EBITDAX of $481.5 million, driven by strong oil production and lower operating costs[2] - Adjusted free cash flow for Q3 2024 was $129.8 million, up 32% from Q2 2024[2] - Net income for the three months ended September 30, 2024, was $240.52 million, compared to $222.34 million in the same period in 2023[24] - Diluted net income per common share for the nine months ended September 30, 2024, was $5.03, up from $4.75 in the same period in 2023[24] - Net income for the nine months ended September 30, 2024, was $582.02 million, compared to $570.77 million in the same period in 2023[24] - Net income for Q3 2024 was $240.5 million, compared to $222.3 million in Q3 2023[29] - Adjusted EBITDAX for the three months ended September 30, 2024, was $481.5 million, compared to $475.6 million in the same period in 2023[35] - Adjusted net income for the three months ended September 30, 2024, was $186.4 million, compared to $205.0 million in the same period in 2023[37] - Net cash provided by operating activities for the nine months ended September 30, 2024, was $1.20 billion, compared to $1.10 billion in the same period in 2023[42] - Adjusted free cash flow for the three months ended September 30, 2024, was $129.8 million, down from $207.7 million in the same period in 2023[42] Capital Expenditures and Investments - Q3 2024 capital expenditures totaled $290.4 million, with 37 net wells drilled and 35 net flowing completions added[7] - Full year 2024 capital expenditures are projected to be $1.24-$1.26 billion, with 137 net wells drilled and 134 completed[16] - Q4 2024 capital expenditures are expected to range between $320-$340 million, with 40 net wells drilled and 36 turned-in-line[16] - Capital expenditures for Q3 2024 were $302.1 million, compared to $216.7 million in Q3 2023[29] - Capital expenditures for the nine months ended September 30, 2024, were $957.2 million, up from $766.8 million in the same period in 2023[42] Acquisitions and Debt - The company completed a $2.1 billion acquisition of an 80% interest in the Uinta Basin, adding 63,300 net acres and high oil content production, expected to be accretive to financial metrics[2] - The company issued $1.5 billion in senior notes to fund the Uinta Basin Acquisitions, with long-term debt at $2.93 billion post-acquisition[11] - Net debt-to-Adjusted EBITDAX stood at 0.5 times as of September 30, 2024[7] - Total principal amount of debt as of September 30, 2024, was $2.74 billion, with net debt at $1.00 billion[41] - Net cash provided by financing activities for Q3 2024 was $1.098 billion, driven by $1.477 billion in net proceeds from Senior Notes[29] - A $102.0 million deposit related to the Uinta Basin Acquisitions was held in a third-party escrow account as of September 30, 2024[31] Hedging and Derivatives - For Q4 2024, 40% of expected oil production is hedged at an average price of $72.08/Bbl to $78.27/Bbl, and 20% of natural gas production is hedged at $3.32/MMBtu[12] - Net derivative (gain) loss for the three months ended September 30, 2024, was $(86.28) million, compared to $75.36 million in the same period in 2023[24] - Net derivative settlement gain in Q3 2024 was $1.05 per Boe, a 9% decrease from Q2 2024 but a 5,350% increase from Q3 2023[33] Shareholder Returns and Equity - The company returned $20.6 million to stockholders through dividends in Q3 2024 and has repurchased 10.1 million shares since September 2022, returning $521.3 million in total[10] - Total stockholders' equity as of September 30, 2024, was $4.06 billion, up from $3.62 billion as of December 31, 2023[26] - Net cash dividends declared per common share for the three months ended September 30, 2024, were $0.20, compared to $0.15 in the same period in 2023[24] - The company repurchased $97.2 million worth of common stock under its Stock Repurchase Program in Q3 2023[28] - The company paid $20.6 million in dividends in Q3 2024, up from $17.8 million in Q3 2023[29] Costs and Expenses - Q4 2024 LOE is projected to be $4.90-$5.10 per Boe, transportation expense $4.30-$4.60 per Boe, and ad valorem and production taxes $2.40-$2.50 per Boe[16] - Q4 2024 G&A expenses, including non-cash compensation, are expected to be $35-$38 million[16] - Lease operating expense per Boe in Q3 2024 was $4.73, a 2% decrease from Q2 2024 and a 7% decrease from Q3 2023[33] - Depletion, depreciation and amortization expenses for Q3 2024 were $202.9 million, compared to $189.4 million in Q3 2023[29] - Total non-cash stock-based compensation for the nine months ended September 30, 2024, was $17.39 million, compared to $14.52 million in the same period in 2023[24] - Stock-based compensation expense for the three months ended September 30, 2024, was $6.59 million[26] Cash and Liquidity - As of September 30, 2024, the company's cash and cash equivalents were $1,735,313 thousand, up from $616,164 thousand at the end of 2023[23] - Total assets as of September 30, 2024 were $8,027,772 thousand, compared to $6,379,985 thousand at the end of 2023[23] - Retained earnings increased to $2,570,108 thousand as of September 30, 2024, up from $2,052,279 thousand at the end of 2023[23] - Cash, cash equivalents and restricted cash at the end of Q3 2024 was $1.837 billion, up from $402.0 million at the end of Q3 2023[29] - Total cash provided by operating activities for Q3 2024 was $452.3 million, up from $383.0 million in Q3 2023[29] Revenue and Sales - Oil, gas, and NGL production revenue for the three months ended September 30, 2024, was $642.38 million, compared to $639.70 million in the same period in 2023[24] - Total operating revenues and other income for the nine months ended September 30, 2024, reached $1.84 billion, up from $1.77 billion in the same period in 2023[24] - Realized sales price for oil before derivative settlements was $74.72 per Bbl in Q3 2024, a 7% decrease from Q2 2024 and an 8% decrease from Q3 2023[33] Financial Metrics and Definitions - Adjusted EBITDAX is calculated as net income before interest expense, interest income, income taxes, depletion, depreciation, amortization, and other specific items, providing a performance measure for the company's ability to generate funds for exploration, development, acquisitions, and debt servicing[32] - Adjusted free cash flow is calculated as net cash provided by operating activities before net change in working capital less capital expenditures, representing liquidity to fund discretionary obligations such as debt reduction or business expansion[32] - Adjusted net income and Adjusted net income per diluted common share exclude certain non-recurring items to evaluate the company's ongoing operational results and trends[32] - Net debt is calculated as total principal amount of outstanding senior notes plus amounts drawn on the revolving credit facility less cash and cash equivalents, used to evaluate the company's capital structure and financial leverage[32] - Net debt-to-Adjusted EBITDAX is calculated as Net Debt divided by Adjusted EBITDAX for the trailing twelve-month period, used to assess the company's ability to service its debt[32]

Core Insights - SM Energy Company reported strong operational and financial results for Q3 2024, driven by excellent execution and higher-than-expected oil production [1][2][3] - The company completed a significant acquisition in the Uinta Basin, enhancing its portfolio and expected production growth [1][2][5] Production and Financial Performance - Net production for Q3 2024 was 15.6 million barrels of oil equivalent (MMBoe), averaging 170.0 thousand barrels of oil equivalent per day (MBoe/d), with 46% of production being oil [1][2] - Net income reached $240.5 million, or $2.09 per diluted share, an increase from $222.3 million in Q3 2023 [3][4] - Adjusted net income was $186.4 million, or $1.62 per diluted share, compared to $205.0 million, or $1.73 per diluted share, in the same period last year [5] Capital Expenditures and Cash Flow - Capital expenditures for Q3 2024 totaled $302.1 million, adjusted to $290.4 million after changes in accruals [5][6] - Adjusted free cash flow was $129.8 million, up 32% from Q2 2024 [1][6] - Net cash provided by operating activities was $452.3 million, compared to $383.0 million in Q3 2023 [4][6] Acquisition and Portfolio Expansion - The company completed a $2.1 billion acquisition of an 80% interest in Uinta Basin assets, adding approximately 63,300 net acres and significant drilling inventory [1][2][5] - Recent wells in Utah achieved peak production rates averaging 870 Boe/d, with 94% being oil [1][2] Financial Position and Liquidity - As of September 30, 2024, the company had $1.74 billion in cash and cash equivalents and $2.74 billion in long-term debt [7][8] - The borrowing base was increased to $3.0 billion, supporting the company's financial flexibility [1][7] Guidance and Future Outlook - Full-year 2024 production guidance is set at 62.2-63.5 MMBoe, with oil production expected to be approximately 47% of total production [9][10] - For Q4 2024, net production is projected to be 18.9-20.2 MMBoe, with capital expenditures expected between $320-$340 million [11][12]

Core Viewpoint - SM Energy Company is expected to report its third-quarter 2024 results on October 31, with previous earnings exceeding estimates due to increased production and high realized prices [1]. Earnings Performance - The company has consistently beaten earnings estimates in the last four quarters, with an average surprise of 11.92% [2]. - The Zacks Consensus Estimate for the upcoming quarter's earnings per share is $1.52, reflecting a 12.1% decline from the previous year's reported figure [2]. Revenue Expectations - The Zacks Consensus Estimate for third-quarter revenues is $651.1 million, indicating a nearly 2% improvement from the year-ago figure [3]. Market Conditions - Average spot prices for West Texas Intermediate crude were $81.80 per barrel in July, $76.68 in August, and $70.24 in September, suggesting a favorable pricing environment for exploration and production activities during the third quarter [4]. - Favorable commodity prices are expected to have positively impacted SM's exploration and production activities, with total production estimated at 15.17 million barrels of oil equivalent (MMBoe), an increase from 14.1 MMBoe in the prior-year quarter [5]. Earnings Prediction - Current analysis does not predict an earnings beat for SM Energy, as the company has an Earnings ESP of -6.29% and a Zacks Rank of 4 (Sell) [6].

Core Viewpoint - The market anticipates a year-over-year decline in SM Energy's earnings despite an increase in revenues, with the upcoming earnings report expected to be released on October 31, 2024 [1] Earnings Expectations - SM Energy is projected to report quarterly earnings of $1.56 per share, reflecting a year-over-year decrease of 9.8% [2] - Revenues are expected to reach $660.16 million, which is a 3% increase from the same quarter last year [2] Estimate Revisions - The consensus EPS estimate for SM Energy has been revised down by 5.87% over the last 30 days, indicating a bearish sentiment among analysts [3] - The Most Accurate Estimate for SM Energy is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -7.01% [6] Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a favorable Zacks Rank [5] - SM Energy currently holds a Zacks Rank of 4, which complicates the prediction of an earnings beat [6] Historical Performance - In the last reported quarter, SM Energy exceeded the expected earnings of $1.57 per share by delivering $1.85, resulting in a surprise of +17.83% [7] - Over the past four quarters, SM Energy has consistently beaten consensus EPS estimates [7] Industry Context - In the broader industry context, Comstock Resources is expected to report a loss of $0.15 per share, indicating a significant year-over-year decline of 475% [9] - Comstock's revenue is projected to be $317.33 million, down 15.8% from the previous year, with an Earnings ESP of -8.89% [9]