Financial Data and Key Metrics Changes - Over the last five years, production has grown over 60%, with oil production increasing over 70% and proved reserves also rising over 60% [3][4] - The total shares outstanding remained unchanged at 114 million, indicating no dilution during this growth period [4] - Leverage decreased from 2.3 times to closer to one time, demonstrating a deleveraging trend [4][19] Business Line Data and Key Metrics Changes - The company operates in three top-tier assets: Midland Basin, South Texas, and Uinta Basin, each showcasing unique technical success stories [2][9] - In the Midland Basin, the number of wells drilled increased from a few to over 5,000, with production outperforming peers [6][10] - The Austin Chalk asset has shown significant improvement, with 465 locations identified and returns comparable to the Permian Basin [9][10] Market Data and Key Metrics Changes - The Uinta Basin has been identified as a promising area with a production profile similar to the Midland Basin, despite transportation challenges [14][15] - The Uinta Basin's margin per barrel of oil equivalent (BOE) is nearly the same as that of the Midland Basin, primarily due to high oil content [15] Company Strategy and Development Direction - The company emphasizes a returns-based technical focus, differentiating itself from competitors by leveraging technical expertise [2][22] - Future plans include continued growth without dilution or increased leverage, focusing on capital efficiency [4][19] - The company is open to M&A opportunities that meet their criteria for top-tier assets, but does not seek scale for its own sake [28][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the technical team's ability to identify and develop high-potential assets, particularly in the Uinta Basin [24][25] - The company is cautious about macroeconomic uncertainties but remains optimistic about its cash flow generation and return of capital strategy [32][33] Other Important Information - The company has a strong balance sheet with a $2 billion undrawn borrowing base and $100 million in cash [18][19] - A fixed dividend has been established, currently at $0.20 per quarter, with a $500 million share buyback program in place [21][22] Q&A Session Summary Question: What did the company see at the time of the Uinta Basin acquisition? - The technical team identified characteristics similar to the Permian Basin, including thick stack pay and high oil content, which justified the acquisition [23][24] Question: Does the company see potential for further growth in the Uinta Basin? - The company is open to expanding its position in the Uinta Basin if opportunities arise that meet their returns-based criteria [27][28] Question: How does the company plan to allocate free cash flow moving forward? - As leverage approaches one time, the company will prioritize share buybacks, while also considering dividend increases based on cash flow visibility [32][33]

SM Energy Company Conference Summary Company Overview - SM Energy is an independent exploration and production (E&P) company based in Denver, operating in the Midland Basin (West Texas), Maverick Basin (South Texas), and Uinta Basin (Northeast Utah) [1] Core Points and Arguments Growth and Performance - SEC proved reserves increased by 68% from 405 million to 678 million barrels of oil equivalent from year-end 2020 to year-end 2024 [5] - Oil equivalent production grew by 64% from 127,000 barrels per day to 208,000 barrels per day during the same period [5] - Oil production specifically increased by 76% from 63,000 to 111,000 barrels per day [5] - Shareholder dilution was avoided, maintaining around 114 million shares since 2020 [6] - Leverage reduced from 2.3 times EBITDAX to 1.2 times [6] Technical Focus and Differentiation - Emphasis on a returns-based technical focus as a key differentiator in achieving growth and operational efficiency [7] - Development of capabilities in geosciences, engineering, and data analytics over 17 years [7][8] - Successful identification of economic plays on previously overlooked acreage, leading to significant inventory growth [9] Specific Basin Insights Midland Basin - Significant growth in Howard County, from 79 horizontal wells in 2015 to over 5,150 today, with low breakevens [10][12] - In the Austin Chalk of the Western Eagle Ford, breakevens improved to about $44 per barrel, with 465 locations identified on SM's acreage [13] Uinta Basin - Acquired XCL Resources, adding over 63,000 acres, with a focus on optimizing co-development using existing subsurface data [21][22] - Oil takeaway capacity has doubled since 2021, with production reaching 160,000 barrels per day [24] - Uinta Basin delivered higher margins than the Midland Basin, surprising many investors [25] Operational Innovations - Continuous operational improvements, including faster drilling and reduced well costs [20] - Innovations from predecessor operator XCL, such as recycling water and remote fracking, have enhanced operational efficiency [27] Financial Health and Return of Capital - Strong balance sheet with over $100 million in cash and a plan to reduce leverage below one times by year-end [32][33] - Increased dividend from $0.15 to $0.20 per share per quarter since September 2022, with $370 million in share buybacks [34] Additional Important Insights - Commitment to sustainability and community engagement, highlighted by an A rating from MSCI [31] - The company’s strategy is underpinned by confidence in asset quality and a supportive macro environment for growth [34] - The focus on a returns-based technical approach is emphasized as a key to long-term sustainability and operational success [35]