DENVER, July 19, 2018 /PRNewswire/ -- SM Energy
Company (the "Company") (NYSE: SM) today announced certain
operating results for the second quarter of 2018 including
production, realized pricing and total capital spend. Highlights
include:
- 10.5 MMBoe (115 MBoe/d) total production and 42% oil in the
commodity mix
- 14% sequential and 117% year-over-year growth in Midland Basin
production from retained assets
- $38.40 per Boe average realized
price (pre-hedge), highest level in 15 quarters
- Costs incurred $460 million and
total capital spend $429 million, in
accordance with recent Company estimates (capital spend guidance of
$400-440 million) and reflecting
acceleration of certain drilling, completion and infrastructure
spending
- Outperformance driven by continued better than expected well
performance in the Midland Basin
President and Chief Executive Officer Jay Ottoson comments: "Production for the
quarter exceeded our expectations and commenced a steep upward
trajectory for production growth following our recent asset
divestitures. Liquids volumes were 60% of total production
and operating margins were particularly strong. We expect
that our high investment returns, driven by outstanding well
results and execution, will allow us to deliver significant cash
flow growth per debt-adjusted share going forward."
SECOND QUARTER OF
2018 PRODUCTION AND REALIZED PRICES
|
|
PRODUCTION:
|
|
|
|
|
|
Permian
|
Eagle
Ford
|
Rocky
Mountain
|
Total
|
Production
from
Assets Sold
|
Production
from
Retained
Assets
|
Oil - MBbl
|
3,731
|
332
|
298
|
4,361
|
(321)
|
4,040
|
Natural gas -
MMcf
|
6,201
|
18,807
|
316
|
25,323
|
(370)
|
24,953
|
NGLs -
MBbl
|
5
|
1,894
|
1
|
1,900
|
(1)
|
1,899
|
Total -
MBoe
|
4,770
|
5,360
|
352
|
10,482
|
(384)
|
10,098
|
Note: Totals may not sum due to rounding
- Non-core assets sold during the second quarter (transactions
closed in May) included remaining assets in Divide County, North Dakota and third-party
operated assets in Upton County,
Texas.
- Permian volumes exceeded expectations, up 14% sequentially
(based on retained assets), while Eagle Ford volumes were up 5%
sequentially.
REALIZED
PRICES:
|
|
|
|
|
|
|
Permian
|
Eagle
Ford
|
Rocky
Mountain
|
Totals
Pre/Post-Hedge
|
Oil/$Bbl
|
61.01
|
58.20
|
64.29
|
61.02/55.42
|
Natural
gas/$Mcf
|
5.12
|
2.78
|
0.30
|
3.32/3.29
|
NGLs/$Bbl
|
nm
|
27.59
|
nm
|
27.55/21.51
|
Per Boe
|
$54.41
|
$23.10
|
$54.61
|
$38.40/$34.91
|
- Benchmark pricing for the quarter included NYMEX WTI at
$67.88/Bbl, NYMEX Henry Hub natural
gas $2.80/MMBtu and Hart Composite
NGLs at $33.10/Bbl.
- The average realized price per Boe of $38.40 is before the effect of hedges. Including
the effect of realized hedges, the average price was $34.91, resulting in approximately $36.7 million of realized net hedge losses for
the quarter.
- Eagle Ford realizations were particularly strong, benefiting
from increased LLS and NGL pricing.
- Permian realizations exceeded the Company's 2018 plan by 13%,
despite an increased Midland-WTI Cushing differential that averaged
($6.87)/Bbl, before the effects of
basis hedges, for the quarter.
COSTS INCURRED AND TOTAL CAPITAL SPEND
Costs incurred for the second quarter of 2018 were $460 million. Costs incurred included the
acquisition of 720 contiguous net acres of unproved properties
adjacent to our RockStar acreage in Martin County, Texas for $24.6 million.
Total capital spend (a non-GAAP measure defined as costs
incurred less ARO, capitalized interest and acquisitions,
reconciled below) for the quarter was $429
million. During the second quarter, the Company drilled 28
net wells and completed 38 net wells in the Permian and drilled 6
net wells and completed 9 net wells in the Eagle Ford. Total
capital spend was aligned with recent guidance of $400-$440 million,
reflecting the acceleration of the Company's drilling and
completion expenditures due to a faster than expected pace.
TOTAL CAPITAL
SPEND RECONCILIATION:
|
|
($ in
millions)
|
|
|
|
|
|
Reconciliation of
costs incurred in oil & gas activities (GAAP) to total capital
spend (Non-GAAP)(1)
|
For the Three
Months Ended
June 30,
|
|
For the Six Months
Ended
June 30,
|
|
|
|
|
2018
|
|
2018
|
|
Costs incurred in
oil and gas activities (GAAP):
|
$
|
460.2
|
|
|
$
|
832.4
|
|
|
Less:
|
|
|
|
|
Asset retirement
obligation
|
(1.0)
|
|
|
(1.9)
|
|
|
Capitalized
interest
|
(6.0)
|
|
|
(10.5)
|
|
|
Unproved property
acquisitions
|
(24.6)
|
|
|
(24.6)
|
|
|
Other
|
0.4
|
|
|
0.4
|
|
|
Total capital
spend (Non-GAAP):
|
$
|
429.1
|
|
|
$
|
795.8
|
|
|
|
|
|
|
|
Note: Totals may not
sum due to rounding
|
|
(1) The non-GAAP
measure of total capital spend is presented because management
believes it provides useful information to investors for analysis
of SM Energy's fundamental business on a recurring basis. In
addition, management believes that total capital spend is widely
used by professional research analysts and others in the valuation,
comparison, and investment recommendations of companies in the oil
and gas exploration and production industry, and many investors use
the published research of industry research analysts in making
investment decisions. Total capital spend should not be considered
in isolation or as a substitute for Costs Incurred or other capital
spending measures prepared under GAAP. The total capital spend
amounts presented may not be comparable to similarly titled
measures of other companies.
|
CASH AND LIQUIDITY
As of June 30, 2018, the Company's
cash balance was $616 million and,
when combined with the Company's undrawn credit facility, provided
$1.6 billion in liquidity.
Subsequent to quarter-end, the Company completed the redemption
of $344.6 million of 6.5% senior
notes due 2021. The current principal value of senior notes
outstanding (including the convertible notes) is $2.63 billion, down from $2.97 billion at quarter-end.
SCHEDULE FOR SECOND QUARTER REPORTING
August 1, 2018 – After market
close, the Company plans to release its second quarter 2018
earnings release, a pre-recorded webcast discussion of the second
quarter 2018 financial and operating results, and an associated
presentation, all of which will be posted to the Company's website
at ir.sm-energy.com.
August 2, 2018 – Please join SM
Energy management at 8:00 a.m. Mountain
time/10:00 a.m. Eastern time
for the second quarter 2018 financial and operating results Q&A
session. This discussion will be accessible via webcast (available
live and for replay) on the Company's website at ir.sm-energy.com
or by telephone at:
- Live (conference ID 4891245) - Domestic toll
free/International: 844-343-4183/647-689-5129
- Replay (conference ID 4891245) - Domestic toll
free/International: 800-585-8367/416-621-4642
The call replay will be available approximately one hour after
the call until August 9, 2018.
FORWARD LOOKING STATEMENTS
This release contains forward-looking statements within the
meaning of securities laws. The words "anticipate," "budget,"
"estimate," "expect," "forecast," "guidance," "plan," "project,"
"will" and similar expressions are intended to identify
forward-looking statements. These statements involve known and
unknown risks, which may cause SM Energy's actual results to differ
materially from results expressed or implied by the forward-looking
statements. Forward-looking statements in this release include,
among other things, projected growth in cash flow per debt adjusted
share. General risk factors include the availability of and access
to capital markets; the availability, proximity and capacity of
gathering, processing and transportation facilities; the volatility
and level of oil, natural gas, and natural gas liquids prices,
including any impact on the Company's asset carrying values or
reserves arising from price declines; uncertainties inherent in
projecting future rates of production or other results from
drilling and completion activities; the imprecise nature of
estimating oil and natural gas reserves; uncertainties inherent in
projecting future drilling and completion activities, costs or
results; the uncertainty of negotiations to result in an agreement
or a completed transaction; the uncertain nature of acquisition,
divestiture, joint venture, farm down or similar efforts and the
ability to complete any such transactions; the uncertain nature of
expected benefits from the actual or expected acquisition,
divestiture, joint venture, farm down or similar efforts; the
availability of additional economically attractive exploration,
development, and acquisition opportunities for future growth and
any necessary financings; unexpected drilling conditions and
results; unsuccessful exploration and development drilling results;
the availability of drilling, completion, and operating equipment
and services; the risks associated with the Company's commodity
price risk management strategy; uncertainty regarding the ultimate
impact of potentially dilutive securities; and other such matters
discussed in the Risk Factors section of SM Energy's 2017 Annual
Report on Form 10-K, as such risk factors may be updated from time
to time in the Company's other periodic reports filed with the
Securities and Exchange Commission. The forward-looking statements
contained herein speak as of the date of this announcement.
Although SM Energy may from time to time voluntarily update its
prior forward-looking statements, it disclaims any commitment to do
so except as required by securities laws.
ABOUT THE COMPANY
SM Energy Company is an independent energy company engaged in
the acquisition, exploration, development, and production of crude
oil, natural gas, and natural gas liquids in onshore North
America. SM Energy routinely posts important information
about the Company on its website. For more information about SM
Energy, please visit its website at www.sm-energy.com.
SM ENERGY INVESTOR CONTACT
Jennifer Martin Samuels,
jsamuels@sm-energy.com, 303-864-2507
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SOURCE SM Energy Company