SM Energy(SM) - 2025 Q2 - Quarterly Results

Highlights and CEO Commentary SM Energy reported record Q2 2025 production from Uinta Basin assets, enabling full revolving credit facility payoff and progress towards 1.0x leverage Q2 2025 Key Performance Indicators | Metric | Value | Note | | :--- | :--- | :--- | | Net Production | 19.0 MMBoe (209.1 MBoe/d) | 5% above guidance midpoint | | Oil Production | 115.7 MBbls/d (55% of total) | 59% YoY increase | | Net Income | $201.7 million | - | | Adjusted Net Income | $171.9 million | - | | Adjusted EBITDAX | $569.6 million | - | | Adjusted Free Cash Flow | $113.9 million | - | - The company fully paid down its revolving credit facility, ending the quarter with a zero balance and a cash balance of $101.9 million[5] - CEO Herb Vogel emphasized the successful integration and move to optimization of the Uinta Basin assets, which are expected to continue driving value[4] - The company expects to reach its target leverage metric of 1.0x by year-end based on current commodity prices[4][5] Financial Performance Strong Q2 2025 financial performance, with operating cash flow up 18% and Adjusted EBITDAX up 17%, driven by higher production and oil mix Net Income and Earnings Per Share Q2 2025 net income slightly decreased to $201.7 million ($1.76/share) due to lower realized oil prices and higher interest expense Net Income and EPS Comparison (Q2) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income | $201.7 million | $210.3 million | | Diluted EPS | $1.76/share | $1.82/share | | Adjusted Net Income | $171.9 million | $214.4 million | | Adjusted Diluted EPS | $1.50/share | $1.85/share | Cash Flow and Adjusted EBITDAX Net cash from operating activities before working capital increased 18% to $501.9 million, with Adjusted EBITDAX up 17% Cash Flow and EBITDAX (Q2 YoY) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Cash from Ops (before WC) | $501.9 M | $426.2 M | +18% | | Adjusted EBITDAX | $569.6 M | $485.9 M | +17% | Capital Expenditures and Adjusted Free Cash Flow Q2 2025 capital expenditures totaled $388.0 million, resulting in $113.9 million of adjusted free cash flow Q2 2025 Capital & Free Cash Flow | Metric | Value | | :--- | :--- | | Capital Expenditures (adjusted) | $388.0 million | | Adjusted Free Cash Flow | $113.9 million | - Faster than expected drilling and completion times accelerated certain costs into Q2 2025, resulting in more wells being drilled and completed than planned[14] Operational Performance Record Q2 2025 production of 19.0 MMBoe (209.1 MBoe/d), up 32% YoY, driven by Uinta Basin's high oil cut Production Q2 2025 total net production was 19.0 MMBoe, with Uinta Basin outperforming at 48.0 MBoe/d and 87% oil cut Q2 2025 Production by Operating Area (MBoe/d) | Basin | Oil (MBbl/d) | Gas (MMcf/d) | NGLs (MBbl/d) | Total (MBoe/d) | | :--- | :--- | :--- | :--- | :--- | | Midland Basin | 53.9 | 177.9 | — | 83.6 | | South Texas | 19.9 | 183.5 | 26.9 | 77.4 | | Uinta Basin | 41.9 | 36.9 | — | 48.0 | | Total | 115.7 | 398.3 | 26.9 | 209.1 | - Total net daily production increased 32% and net daily oil production rose 59% compared to the second quarter of 2024[5] Realized Prices and Hedges Average realized price was $41.27/Boe pre-hedge, $43.36/Boe post-hedge, with Midland Basin gas prices impacted by WAHA differentials Q2 2025 Realized Prices per Boe | Metric | Price per Boe | | :--- | :--- | | Pre-hedge | $41.27/Boe | | Post-hedge | $43.36/Boe | | Net Derivative Gain | $2.09/Boe | - Realized gas prices in the Midland Basin were negatively affected by pipeline constraints pressuring WAHA basis differentials, a challenge expected to continue into 2026[11] Financial Position and Shareholder Returns Company strengthened financial position with zero revolving credit facility balance, $101.9 million cash, and reduced net debt to $2.63 billion (1.2x leverage) - As of June 30, 2025, the company had paid its revolving credit facility down to zero and held a cash balance of $101.9 million[17] Debt and Leverage Metrics (as of June 30, 2025) | Metric | Value | | :--- | :--- | | Long-Term Debt | $2.74 billion | | Net Debt | $2.63 billion | | Net debt-to-Adjusted EBITDAX | 1.2x | - Returned $22.9 million to stockholders through a $0.20 per share quarterly fixed dividend[16] Outlook and Guidance SM Energy updated 2025 guidance, increasing oil mix and capex, while significantly reducing cash taxes to $10 million due to OBBBA legislation Full Year 2025 Guidance Full-year 2025 production guidance maintained at 200-215 MBoe/d, with oil mix increased to 53-54% and capex to ~$1.375 billion Full Year 2025 Guidance Updates | Metric | Previous Guidance | Updated Guidance | | :--- | :--- | :--- | | Net Production | 200-215 MBoe/d | Unchanged | | Oil as % of Total | 51-52% | 53-54% | | Capital Expenditures | ~$1.3 B | ~$1.375 B | | DD&A Expense | ~$15/Boe | ~$16/Boe | Third Quarter 2025 Guidance Q3 2025 production guided to 209-215 MBoe/d, capex $300-$320 million, with 2025 cash taxes reduced to ~$10 million due to OBBBA Q3 2025 Guidance | Metric | Guidance | | :--- | :--- | | Net Production | 209-215 MBoe/d | | Oil as % of Total | 53-54% | | Capital Expenditures | $300 M - $320 M | - The company reduced its estimated cash taxes for 2025 to approximately $10 million (from $75-$95 million) due to the expected benefits of the One Big Beautiful Bill Act (OBBBA)[24] Financial Statements and Non-GAAP Reconciliations This section presents unaudited condensed consolidated financial statements and detailed reconciliations for non-GAAP measures like Adjusted EBITDAX and Free Cash Flow Condensed Consolidated Financial Statements Unaudited condensed consolidated Balance Sheets, Statements of Operations, Stockholders' Equity, and Cash Flows are presented Balance Sheet Highlights (June 30, 2025 vs Dec 31, 2024) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $8.99 B | $8.58 B | | Total Liabilities | $4.40 B | $4.34 B | | Total Stockholders' Equity | $4.59 B | $4.24 B | Statement of Operations Highlights (Three Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total Operating Revenues | $792.9 M | $634.6 M | | Income from Operations | $294.9 M | $279.4 M | | Net Income | $201.7 M | $210.3 M | Statement of Cash Flows Highlights (Three Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $571.1 M | $476.4 M | | Net Cash used in Investing Activities | ($410.2 M) | ($322.7 M) | | Net Cash used in Financing Activities | ($59.1 M) | ($70.1 M) | Non-GAAP Reconciliations Reconciliations for non-GAAP measures like Adjusted EBITDAX, Adjusted Net Income, Net Debt, and Adjusted Free Cash Flow are provided - The company uses non-GAAP measures like Adjusted EBITDAX, Adjusted Net Income, Net Debt, and Adjusted Free Cash Flow to help investors assess financial condition, results of operations, and cash flows, and to compare performance[41] Reconciliation of Net Income to Adjusted EBITDAX (Q2) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income (GAAP) | $201.7 M | $210.3 M | | Adjustments | +$367.9 M | +$275.6 M | | Adjusted EBITDAX (non-GAAP) | $569.6 M | $485.9 M | Reconciliation of Net Income to Adjusted Net Income (Q2) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Income (GAAP) | $201.7 M | $210.3 M | | Adjustments | -$29.7 M | +$4.1 M | | Adjusted Net Income (non-GAAP) | $171.9 M | $214.4 M |