DENVER, April 17, 2018 /PRNewswire/ -- SM Energy
Company (the "Company") (NYSE: SM) today announced certain
operating results for the first quarter of 2018 including
production, realized pricing and total capital spend. Highlights
include:
- 10.14 MMBoe total production, exceeding the high end of
guidance
- 42% oil production in the commodity mix
- 18% sequential and 100% year-over-year growth in Midland Basin
production
- $37.76 per Boe average realized
price, highest level in 14 quarters
- Costs incurred $372 million and
total capital spend $367 million,
slightly ahead of guidance primarily due to increased ownership
interests in certain RockStar wells, as a result of land trades and
unitizations
- Outperformance driven by better than expected performance from
first quarter well completions in the Midland Basin
President and Chief Executive Officer Jay Ottoson comments: "Combine our exceptional
operations team with some of the best assets in the Midland Basin
and the result is continued outperformance. We have ramped up our
Midland operations to nine rigs and five completions crews with
extremely impressive execution. 2018 is off to a great start."
FIRST QUARTER OF 2018 PRODUCTION AND REALIZED PRICES
PRODUCTION:
|
|
|
|
|
|
Permian
|
Eagle
Ford
|
Rocky
Mountain
|
Total
|
Production
from
Assets Sold or
Pending Sale
|
Production
from
Retained
Assets
|
Oil - MBbl
|
3,315
|
354
|
592
|
4,262
|
(661)
|
3,601
|
Natural gas -
MMcf
|
5,631
|
18,731
|
861
|
25,222
|
(1,022)
|
24,200
|
NGLs -
MBbl
|
5
|
1,641
|
27
|
1,673
|
(27)
|
1,646
|
Total -
MBoe
|
4,259
|
5,117
|
763
|
10,139
|
(858)
|
9,281
|
|
Note: Totals may not
sum due to rounding
|
- Assets sold or pending sale include the Powder River Basin
divestiture that closed in March 2018
and announced asset sales in Divide
County, North Dakota and Upton
County, Texas (third-party operated) that are expected to
close in the second quarter of 2018.
- Permian volumes exceeded expectations, up 18% compared with the
fourth quarter of 2017 and reflect the benefit of better than
expected production from new wells.
- Eagle Ford volumes declined sequentially as expected due to no
new completions between October 2017
and January 2018 and to previously
reported downtime at a third party pipeline during February 2018.
REALIZED
PRICES:
|
|
|
|
Permian
|
Eagle
Ford
|
Rocky
Mountain
|
Totals
Pre/Post-Hedge
|
Oil/$Bbl
|
62.07
|
55.27
|
60.27
|
61.25/56.39
|
Natural
gas/$Mcf
|
4.42
|
2.82
|
1.74
|
3.14/3.39
|
NGLs/$Bbl
|
nm
|
25.45
|
30.36
|
25.53/19.44
|
Per Boe
|
$54.19
|
$22.29
|
$49.84
|
$37.76/$35.34
|
- Benchmark pricing for the quarter included NYMEX WTI at
$62.87/Bbl, NYMEX Henry Hub natural
gas $3.00/MMBtu and Hart Composite
NGLs at $30.87/Bbl.
- The average realized price per Boe of $37.76 is before the effect of hedges. Including
the effect of realized hedges, the average price was $35.34, resulting in approximately $24.5 million of realized net hedge losses for
the quarter.
COSTS INCURRED AND TOTAL CAPITAL SPEND
Costs incurred for the first quarter of 2018 were $372 million. During the quarter, total capital
spend (a non-GAAP measure defined as costs incurred less ARO,
capitalized interest and acquisitions, reconciled below) was
$367 million. The Company drilled 33
net wells and completed approximately 17 net wells in the Permian
and drilled 8 net wells and completed 5 net wells in the Eagle
Ford, during the first quarter. Total capital spend was aligned
with guidance of approximately $350
million, coming in slightly high primarily due to higher
ownership interests in certain wells than initially budgeted.
CASH AND LIQUIDITY
The Company's cash balance as of March
31, 2018 was $643.3 million.
The Company's undrawn credit facility plus cash on hand provided
$1.6 billion in liquidity as of the
end of the first quarter.
GUIDANCE UPDATE
As previously announced, the pending asset sales in North Dakota and Texas are expected to reduce 2018 production
volumes (partial 2Q18-4Q18) by 1.2 MMBoe, 81% oil and 19% natural
gas. Combined with first quarter production that came in 0.1 MMBoe
above the guidance range, with a higher weighting of oil
production, full year 2018 production guidance is adjusted from
42-46 MMBoe to 40.9-44.9 MMBoe having an average of just over 40%
oil in the mix.
Second quarter 2018 production is projected to be 9.7-10.1 MMBoe
and include 40% oil in the commodity mix. Second quarter production
guidance considers:
- The completion of 36 net wells in the Permian Basin and 9 net
wells in the Eagle Ford. As previously reported, the vast majority
of the Permian Basin, and all of the Eagle Ford, completions are
expected to come on-line during May and June. The timing of
completions results in a lower sequential production growth rate at
retained assets compared with the first quarter.
- Second quarter production is also affected by shut-ins related
to offset operator activity and asset sales.
-
- (0.1) MMBoe reduction in Eagle Ford production due to shut-ins
associated with offset operator fracturing operations and repairs
to a third-party pipeline that were not part of the Company's
original 2018 plan.
- The sale of Powder River Basin assets as of the end of the
first quarter.
- (0.2) MMBoe reduction from pending asset sales. The sale of the
North Dakota (remainder of the
Rocky Mountain region) and Texas
(Permian region) assets are expected to close during the second
quarter, reducing full quarter production from these areas.
- Assets sold and pending sale have 77% oil production.
Second quarter 2018 total capital spend is projected to be
similar to the first quarter of 2018, and includes approximately
double the number of net well completions. As previously stated,
the Company's 2018 capital expenditure program is weighted to the
first half of the year. Total capital spend (before acquisitions)
is a non-GAAP measure. The Company is unable to present a
quantitative reconciliation of this forward-looking, non-GAAP
financial measure without unreasonable effort because acquisition
costs are inherently unpredictable.
SCHEDULE FOR FIRST QUARTER REPORTING
May 3, 2018 – After market close,
the Company plans to release its complete first quarter 2018
results, along with the Company's first quarter 2018 earnings
release, a pre-recorded webcast discussion of first 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.
May 4, 2018 – Please join SM
Energy management at 8:00 a.m. Mountain
time/10:00 a.m. Eastern time
for the first 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 9188439) - Domestic toll
free/International: 866-393-4306/734-385-2616
- Replay (conference ID 9188439) - Domestic toll
free/International: 855-859-2056/404-537-3406
The call replay will be available approximately one hour after
the call until May 11, 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, operational and capital spend guidance, the
effect of pending transactions on production guidance, and
consummation of pending divestitures. 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.
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
March 31,
|
|
2018
|
Costs incurred in
oil and gas activities (GAAP):
|
$
|
372.2
|
|
Asset retirement
obligation
|
(0.9)
|
|
Capitalized
interest
|
(4.5)
|
|
Total capital
spend (Non-GAAP):
|
$
|
366.7
|
|
|
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.
|
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