DENVER, June 21,
2023 /PRNewswire/ -- SM Energy Company (the
"Company") announced today certain updates on second quarter 2023
activity.
Repurchased 2.6 million shares – The
Company continued to repurchase shares under its $500 million aggregate stock repurchase program,
resulting in a total of 2.6 million shares, or 2.2% of shares
outstanding (as of March 31, 2023),
repurchased during the second quarter. Since inception of the
program in September 2022, the
Company has repurchased 5.3 million shares. In combination with the
Company's $0.15 per share quarterly
dividend, return of capital since inception of the program has
amounted to $221 million, which is an
approximate 7% yield to current market capitalization over the
9-month period. The Company currently has approximately 118 million
shares outstanding and remaining authorization to repurchase up to
$334 million of its common stock
through 2024.
Positive operations performance –
Second quarter performance to date reflects higher than expected
production in South Texas, lower
than expected costs as a result of deflation, and earlier than
anticipated completion of additional oil handling capacity in
South Texas.
- The Company expects to exceed the high end of its second
quarter production guidance, driven by higher oil, natural gas and
NGL volumes from both new and existing wells in its South Texas program.
- The Company expects to underspend the low end of its second
quarter guidance for capital expenditures and LOE costs as a result
of favorable cost deflation and lower facilities expenditures.
Capital cost savings are expected to be partially applied toward an
additional rig in the Midland Basin starting in October 2023, which is expected to support
stronger oil production volumes in 2024.
- Buildout of South Texas oil
handling capacity is on track to meet planned production volume
needs for this year, which is expected to resolve the need for
periodic curtailment of production when large, oil-rich pads are
brought on-line.
- The Company is revising guidance for the second quarter and
full year to reflect higher production and lower costs.
-
- Second quarter 2023 revised guidance includes:
-
- +4% increase in production (at 42% oil) from the previous
mid-point;
- ($0.50) reduction in LOE per
Boe from the previous mid-point;
- (10%) reduction in capital expenditures before acquisitions
from the previous mid-point.
- Full year 2023 revised guidance includes:
-
- +1 MMBoe increase in production from the previous
mid-point (which includes 0.2 MMBoe production from the high-oil
content acquisition discussed below);
- An increase in the oil percentage to 43%-44%;
- ($0.50) reduction in LOE per
Boe from the previous mid-point;
- ($50) million reduction in
capital expenditures before acquisitions, which includes the
additional rig starting in October
2023.
Midland Basin asset acquisitions –
During the second quarter, the Company:
- Entered into an agreement for the acquisition of 20,000 net
acres located in Dawson and
northern Martin counties, Texas
for $93.5 million, subject to
customary purchase price adjustments and closing conditions. The
acquired assets include 1,250 Boe/d net production that is
approximately 90% oil, plus undeveloped acreage. Based on extensive
geologic data and demonstrated economics from nearby wells, the
Company expects to target the Dean and Middle Spraberry sand
intervals. Upside locations are expected to breakeven at less than
$50/Bbl oil prices (assuming a 10%
discount rate, current capital costs and a $2.50/Mcf natural gas price.) This transaction is
expected to close June 30, 2023, with
an effective date of March 1,
2023.
- Acquired an additional 2,800 net acres adjacent to its
previously announced first quarter acquisition of 6,300 net acres
in the Midland Basin for a combined 9,100 net acres. The location
and acquisition cost are not disclosed.
President and CEO Herb Vogel
comments: "We set forth three, strategic objectives for 2023 and
our second quarter activities deliver on all of them – increasing
the return of capital to our stockholders, elevating operational
execution and driving inventory growth. Our operations,
geosciences, land and finance teams are collaborating to drive
excellent results and value creation."
FORWARD-LOOKING STATEMENT
This release contains forward-looking statements within the
meaning of securities laws. The words "expect," "intend," "plan,"
"targeting," and similar expressions are intended to identify
forward-looking statements. Forward-looking statements in this
release include, among other things: revised guidance for second
quarter and full year 2023 production, oil as a percentage of total
production, LOE and capital expenditures; the expected realization
of certain lower costs through the remainder of 2023; the status
and expected progress of South
Texas oil handling infrastructure; and plans to close an
acreage acquisition in Dawson and
Martin counties, including the expected breakeven price associated
with such acreage. 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. Future results may be impacted by the risks discussed
in the Risk Factors section of SM Energy's most recent 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 release. 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 NGLs in the state of Texas. 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 CONTACTS
Jennifer Martin Samuels,
jsamuels@sm-energy.com, 303-864-2507
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SOURCE SM Energy Company