DENVER, Feb. 17, 2021 /PRNewswire/ -- SM Energy
Company (the "Company") (NYSE: SM) today announced fourth quarter
and full year 2020 operating and financial results, year-end 2020
reserves and the 2021 operating plan. Highlights are as
follows.
The Company's strategic priorities in 2020 were to generate
positive cash flow and reduce absolute debt while meeting operating
objectives for safety and emissions reduction:
- Capital efficiency. Capital efficiency continued to
improve with Midland Basin well costs averaging less than
$500 per lateral foot in the fourth
quarter. For the full year 2020, capital expenditures of
$547.8 million, adjusted for
decreased capital accruals of $8.0
million, totaled $539.8
million. Fourth quarter capital expenditures before capital
accruals were $137.4 million, which
was lower than expected due to lower costs per lateral foot and the
deferral of five well completions.
- Significant cash flows. For the full year 2020, net
cash provided by operating activities of $790.9 million before net change in working
capital of $11.6 million totaled
$779.4 million. Fourth quarter net
cash provided by operating activities before net change in working
capital was $204.9 million. For the
full year 2020, the Company generated free cash flow of
$239.5 million, including fourth
quarter free cash flow of $67.4
million (free cash flow is a non-GAAP measure defined and
reconciled below).
- Absolute debt reduction. During 2020, the outstanding
principal amount of long-term debt was reduced by $492 million, from $2.77
billion to $2.28 billion. At
year-end 2020, Net debt-to-Adjusted EBITDAX was 2.3 times (a
non-GAAP measure defined and reconciled below).
- Strong well performance. 2020 production was 46.4 MMBoe,
or 126.9 MBoe/d, at 50% oil with fourth quarter 2020 production of
11.3 MMBoe, or 122.4 MBoe/d, at 51% oil. Higher than projected
fourth quarter production was predominantly due to
better-than-expected base production from existing Midland Basin
wells.
- Safety is always a top priority. Safety metrics for 2020
exceeded targets and place SM Energy in the top quartile among
industry peers, as compared to available 2019 data. Employee and
contractor safety required new protocols in 2020 with the pandemic;
however, SM Energy field operations and office teams performed
seamlessly and safely.
- Emissions reduction. Preliminary estimates of 2020
flaring were 0.8% of total Company gas production, which reflects a
greater than 75% reduction in flaring from Midland Basin production
from 2019. The reduction was primarily the result of constructing
strategic inter-connections that allow the Company to redirect
natural gas in the event an individual third-party processor is
unable to receive it. Achievement of top quartile safety
performance and reduced flaring volumes are components of the
Company's compensation plan.
The Company's strategic objectives continue in its five-year
plan to:
- Optimize activity level for sustainable free cash
flow. Establish an optimal activity level to maximize free
cash flow and reduce leverage.
-
- Generate positive free cash flow in 2021. The Company's
2021 operating plan is estimated to generate approximately
$100 million in free cash flow (a
non-GAAP measure defined below) based on current strip prices,
positioning the Company to further reduce leverage.
- Achieve sustainable reinvestment rate in 2022 and
beyond. The Company's five-year plan anticipates reducing
leverage to less than 2 times Net debt-to-Adjusted EBITDAX (a
non-GAAP measure defined below) by year-end 2022 and maintaining a
reinvestment rate (a non-GAAP measure defined below) of less than
75% in 2022 and beyond. The plan sets capital activity at the
optimal level to support these targets.
- Demonstrate measurable, top tier ESG stewardship.
Short-term annual cash bonus and long-term incentive compensation
plan targets include key environmental and safety metrics.
President and Chief Executive Officer Herb Vogel comments: "The challenges brought
forth in 2020 were met with exceptional resilience by the SM Energy
team, generating approximately $240
million in free cash flow and reducing long-term debt by
nearly $500 million, well exceeding
pre-pandemic plan goals. At the same time, through delineation we
have advanced the potential of high value inventory growth in the
Austin Chalk in South Texas,
improved upon our excellent safety record and significantly reduced
GHG emissions. This was exceptional performance. Going forward, we
believe our top tier asset base will support a long-term plan that
delivers sustainable free cash flow and value creation to our
stakeholders."
FOURTH QUARTER AND FULL YEAR 2020 RESULTS
PRODUCTION
|
|
Fourth Quarter
2020
|
|
|
|
|
Midland
Basin
|
South
Texas
|
Total
|
Oil (MBbl /
MBbl/d)
|
5,348 /
58.1
|
441 / 4.8
|
5,790 /
62.9
|
Natural Gas (MMcf /
MMcf/d)
|
12,601 /
137.0
|
12,724 /
138.3
|
25,325 /
275.3
|
NGLs (MBbl /
MBbl/d)
|
5 / nm
|
1,249 /
13.6
|
1,254 /
13.6
|
Total (MBoe /
MBoe/d)
|
7,454 /
81.0
|
3,811 /
41.4
|
11,264 /
122.4
|
Note: Totals may
not calculate due to rounding.
|
|
|
- Fourth quarter 2020 production volumes were 122.4 MBoe/d, 51%
oil. Production exceeded guidance, predominantly due to
better-than-expected base production from existing Midland Basin
wells.
|
|
Full Year
2020
|
|
|
|
|
Midland
Basin
|
South
Texas
|
Total
|
Oil (MBbl /
MBbl/d)
|
21,305 /
58.2
|
1,712 /
4.7
|
23,017 /
62.9
|
Natural Gas (MMcf /
MMcf/d)
|
46,567 /
127.2
|
57,327 /
156.6
|
103,894 /
283.9
|
NGLs (MBbl /
MBbl/d)
|
21 / nm
|
6,077 /
16.6
|
6,098 /
16.7
|
Total (MBoe /
MBoe/d)
|
29,088 /
79.5
|
17,343 /
47.4
|
46,431 /
126.9
|
Note: Totals may
not calculate due to rounding.
|
|
|
- Full year 2020 production averaged 126.9 MBoe/d, down 4% from
2019, as development activity was significantly scaled back
starting in the second quarter, and certain production was
curtailed in response to macroeconomic effects of the pandemic and
global supply-demand imbalances. Net well completions were reduced
from 94 in the original budget to 77 for the year.
REALIZED PRICING AND CERTAIN COSTS
|
Fourth Quarter
2020
|
|
Midland
Basin (Pre-hedge)
|
South
Texas (Pre-hedge)
|
Total
(Pre/Post-hedge)
|
Oil
($/Bbl)
|
$40.66
|
$39.11
|
$40.54 /
$52.71
|
Natural Gas
($/Mcf)
|
$2.40
|
$2.53
|
$2.46 /
$2.28
|
NGLs
($/Bbl)
|
nm
|
$18.42
|
$18.43 /
$17.80
|
Per Boe
|
$33.24
|
$19.00
|
$28.42 /
$34.19
|
- Benchmark pricing for the fourth quarter was NYMEX WTI at
$42.66/Bbl, NYMEX Henry Hub natural
gas at $2.66/MMBtu and Hart Composite
NGLs at $21.68/Bbl.
- Realized oil differentials were ($2.00) in the Midland Basin and ($3.55) in South
Texas. The South Texas
differential improved significantly compared with prior quarters,
subsequent to the roll-off of a legacy condensate sales
contract.
- The average realized price per Boe before the effect of hedges
was $28.42, up 17% sequentially and
down 19% compared with the fourth quarter of 2019. Including the
effect of hedges, the average price per Boe was $34.19, up 13% sequentially and down 6% compared
with the fourth quarter of 2019. Realized net hedge gains were
$65.0 million for the quarter.
|
Full Year
2020
|
|
Midland
Basin
(Pre-hedge)
|
South
Texas (Pre-hedge)
|
Total
(Pre/Post-hedge)
|
Oil
($/Bbl)
|
$37.67
|
$29.84
|
$37.08 /
$51.49
|
Natural Gas
($/Mcf)
|
$1.65
|
$1.93
|
$1.80 /
$1.92
|
NGLs
($/Bbl)
|
nm
|
$13.96
|
$13.96 /
$15.24
|
Per Boe
|
$30.24
|
$14.22
|
$24.26 /
$31.82
|
- Benchmark pricing for 2020 was NYMEX WTI at $39.40/Bbl, NYMEX Henry Hub natural gas at
$2.08/MMBtu and Hart Composite NGLs
at $17.96/Bbl, which were down 31%,
21% and 20%, respectively, compared with 2019.
- The average 2020 realized price per Boe before the effect of
hedges was $24.26, down 26% from
$32.84 in 2019. Including the effect
of hedges, the average price per Boe was $31.82, down 5% compared with $33.65 in 2019.
- Lease operating expenses of $3.97
per Boe were down 15% compared with 2019, primarily due to
aggressive cost management, increased operational efficiencies and
fewer workovers. Transportation costs of $3.06 per Boe were down 21% compared with 2019,
primarily due to reduced South
Texas production, where transportation costs are higher, as
well as a relative increase in production from the Austin Chalk,
which has lower transportation costs per Boe.
For additional operating metrics and regional detail, please see
the Financial Highlights section below and the accompanying 4Q20
slide deck.
NET LOSS, LOSS PER SHARE AND NET CASH PROVIDED BY OPERATING
ACTIVITIES
Fourth quarter 2020 net loss was $165.2
million, or $1.44 per diluted
common share, compared with a net loss of $102.1 million, or $0.90 per diluted common share, in the same
period in 2019. The current period included a $152.7 million net derivative loss versus a net
derivative loss of $101.0 million in
the prior year period. For the full year 2020, net loss was
$764.6 million, or $6.72 per diluted common share, compared with a
net loss of $187.0 million, or
$1.66 per diluted common share, in
the same period in 2019. In 2020, the Company recorded impairment
charges of $1.0 billion compared with
$33.8 million in 2019, partially
offset by a $280.1 million gain on
extinguishment of debt in 2020 versus no gain on extinguishment
recorded in 2019.
Fourth quarter 2020 net cash provided by operating activities of
$256.9 million before net change in
working capital of $52.0 million
totaled $204.9 million, which was
down $32.0 million, or 14%, from
$236.9 million in the same period in
2019. For the full year 2020, net cash provided by operating
activities of $790.9 million before
net change in working capital of $11.6
million totaled $779.4
million, which was down $27.3
million, or 3%, from $806.7
million in 2019. For the fourth quarter and full year 2020,
the decline in net cash provided by operating activities before net
change in working capital was primarily due to the decline in
production. Including the effects of realized hedges, the operating
margin for the fourth quarter and full year 2020 were higher than
the corresponding periods in 2019, as lower production costs and
lower general and administrative costs offset lower realized
prices.
ADJUSTED EBITDAX, ADJUSTED NET INCOME AND NET DEBT-TO-ADJUSTED
EBITDAX
The following paragraphs discuss non-GAAP measures including
Adjusted EBITDAX, adjusted net loss, adjusted net loss per diluted
share and Net debt-to-Adjusted EBITDAX. Please reference the
definitions and reconciliations of these measures to the most
directly comparable GAAP financial measures at the end of this
release.
Fourth quarter 2020 Adjusted EBITDAX was $255.4 million, down $30.8
million, or 11%, from $286.2
million in the same period in 2019. The decrease in Adjusted
EBITDAX was due to lower realized prices including the effect of
hedge gains and lower production, partially offset by lower costs
per unit. For the full year 2020, Adjusted EBITDAX was $975.4 million compared with $993.4 million in 2019.
Fourth quarter 2020 adjusted net income was $2.7 million, or $0.02 per diluted common share, which compares
with adjusted net loss of $5.0
million, or $0.04 per diluted
common share, for the same period in 2019. For the full year
2020, adjusted net loss was $25.7
million, or $0.23 per diluted
common share, compared with an adjusted net loss of $53.5 million, or $0.48 per diluted common share, in 2019.
At December 31, 2020, Net
debt-to-Adjusted EBITDAX was 2.3 times (a non-GAAP measure defined
and reconciled below).
FINANCIAL POSITION, LIQUIDITY AND CAPITAL EXPENDITURES
As of December 31, 2020, the
outstanding principal amount of the Company's long-term debt was
$2.28 billion, down from $2.77 billion as of December 31, 2019. Long-term debt was comprised
of $1.67 billion in unsecured senior
notes, $446.7 million in secured
senior notes, $65.5 million in
secured senior convertible notes, plus $93.0
million drawn on the Company's senior secured revolving
credit facility.
As of December 31, 2020, the
Company's borrowing base and commitments under its senior secured
revolving credit facility were $1.1
billion. The Company's available liquidity was $965 million, which includes $93.0 million drawn and a $42 million letter of credit. The cash balance
was approximately zero.
Capital expenditures before capital accruals for the fourth
quarter of 2020 were $137.4 million.
During the fourth quarter 2020, the Company drilled 26 net wells
and added 23 net flowing completions. For the full year 2020,
capital expenditures before capital accruals were $539.8 million and the Company drilled 98 net
wells and added 77 net flowing completions. Fourth quarter capital
expenditures before capital accruals were less than guidance, due
primarily to lower drilling and completion costs per lateral foot
in the Midland Basin and the deferral of five well completions in
South Texas, which were scheduled
to be turned-in-line in 2021.
COMMODITY DERIVATIVES
Commodity hedge positions as of February
17, 2021:
- OIL: Approximately 75-80% of expected 2021 oil production is
hedged to WTI at an average price of $41.37 (weighted average of collar floors and
swaps).
- OIL, Midland Basin differential: Approximately 60-65% of
expected 2021 Midland Basin oil production is hedged to the local
price point at a positive $0.77/Bbl
basis.
- NATURAL GAS: Approximately 85% of expected 2021 natural gas
production is hedged in 2021. ~50,250 BBtu is hedged to HSC at an
average price of $2.44/MMBtu and
~29,490 BBtu is hedged to WAHA at an average price of $1.81/MMBtu.
- NGLs are hedged by individual product and include propane and
normal butane swaps.
A detailed schedule of these and other hedge positions are
provided in the accompanying slide deck.
PROVED RESERVES AT YEAR-END 2020
Proved reserves at year-end 2020 were 405 MMBoe with 43% oil,
43% natural gas and 14% NGLs. Reserves were 57% PD and 43% PUD.
- Proved reserves/production imply a 9-year reserve life.
- Reserve additions through drilling and net performance
revisions were 89 MMBoe, replacing nearly 2 times 2020 annual
production.
- Oil reserves increased from 40% to 43% of total reserves.
- Reserves were down 57 MMBoe compared with year-end 2019,
primarily due to a (65) MMBoe adjustment under the "five-year rule"
as the Company scaled back development activity in its five-year
plan to an optimal activity level aimed at maximizing free cash
flow. The majority of these economic reserves were removed from the
proved category but retained in the Company's longer term
development plans.
- SEC pricing was $39.57 Bbl oil,
$1.99 Mcf natural gas and
$17.64 Bbl NGLs, down 29%, 23% and
22%, respectively, from 2019 SEC pricing. Despite the significant
drop in SEC pricing, pricing revisions totaled only (33) MMBoe,
predominantly South Texas gas
reserves, reflecting the quality of the Company's proved
reserves.
|
|
MMBoe
|
Proved reserves
year-end 2019
|
|
462.0
|
Reserve additions and
performance revisions
|
|
89.3
|
Revisions – 5-year
rule
|
|
(65.0)
|
Revisions –
price
|
|
( 32.6)
|
Production
|
|
(46.4)
|
Net
divestitures
|
|
( 2.7)
|
Proved reserves
year-end 2020
|
|
404.6
|
STANDARDIZED MEASURE
The standardized measure of discounted future net cash flows
from proved reserves was $2.7 billion
at year-end 2020, down from $4.1
billion at year-end 2019. The 35% decline in the
standardized measure compared with year-end 2019 is predominantly
due to the reduction in SEC pricing across commodities used in the
calculation.
2021 OPERATING PLAN AND GUIDANCE
Discussion in this release of the Company's 2021 operating plan
guidance includes the terms "free cash flow" and "Net
debt-to-Adjusted EBITDAX," both of which are non-GAAP measures. In
addition, guidance for net cash provided by operating activities
and capital expenditures are defined to include adjustments for
working capital and capital accruals, respectively. The Company is
unable to provide reconciliations of these forward-looking non-GAAP
measures because components of the calculations are inherently
unpredictable, such as changes to current assets and liabilities,
the timing of changes in capital accruals, unknown future events,
and estimating future certain GAAP measures. The inability to
project certain components of the calculation would significantly
affect the accuracy of a reconciliation.
OUTLOOK
2021 GOALS
- Generate positive free cash flow and apply to debt
reduction.
- Continue efforts to increase inventory and inventory value
through testing new intervals and optimizing spacing, drilling and
completion designs.
- Meet AXPC top quartile rank for safety, spills and GHG
emissions.
KEY ASSUMPTIONS
- Price deck: $52.00 Bbl WTI;
$2.80 MMBtu natural gas; $25.00 Bbl NGLs.
- Hedges currently in place.
- Capital program sized to optimize free cash flow and debt
reduction over 5-year plan. Capital expenditures (as adjusted for
capital accruals) of between $650-$675 million.
Drilling and completion costs are expected to make-up approximately
90% of total capital, with approximately 70% allocated to Midland
Basin operations and 30% to South
Texas operations. Compared to preliminary 2021 capital
plans, the number of wells expected to be drilled is increased to
take advantage of drilling efficiencies, and certain wells
partially completed in 2021 are pushed to flowing completions in
2022.
-
- Midland Basin: Anticipate drilling approximately 55 net wells
and completing approximately 72 net wells. Midland Basin activity
will continue to co-develop zones and will include activity across
the RockStar position as well as in Sweetie Peck.
- South Texas: Anticipate
drilling approximately 39 net wells and completing approximately 21
net wells. Activity will be concentrated on Austin Chalk
development, where wells are expected to be economically
competitive with the Midland Basin program.
GUIDANCE FULL YEAR 2021:
- Production: Approximately 47-50 MMBoe or 129-137 MBoe/d at
52-53% oil; assumes ethane rejection for the full year.
-
- This projects approximately 5% production growth, including
approximately 11% oil production growth.
- This projects lower year-over-year production volumes from
South Texas; however, higher oil
volumes from South Texas, as
activity will concentrate on the higher liquids content Austin
Chalk formation.
- The 2021 expected production growth rate over 2020 is lower
compared with previous projections, largely due to
higher-than-expected 2020 production, as a result of better well
performance, and the timing of completions.
- Production costs: LOE $4.50-5.00/Boe, which reflects increased oil
production and a range of potential economic workover activity;
transportation $2.80-3.00/Boe
reflecting lower total South Texas
natural gas volumes and better contractual rates that become
effective in July 2021.
- G&A: ~$100 million.
- Exploration/Capitalized overhead: ~$50
million.
- DD&A: $16-$18/Boe.
- Production and ad valorem taxes: ~$2.15/Boe.
GUIDANCE FIRST QUARTER 2021
- Capital expenditures: ~$180
million.
- As of this report date, the Company is assessing the effects to
operations from the frigid cold and snow storms in Texas that caused widespread power outages,
road closures and other impacts to oil and gas operations.
UPCOMING EVENTS
EARNINGS Q&A WEBCAST AND CONFERENCE CALL
February 17, 2021 - In conjunction
with this release, the Company posts to its website a pre-recorded
webcast discussion, a written transcript of the webcast, and an
associated IR presentation. Please visit ir.sm-energy.com.
February 18, 2021 – Please join SM
Energy management at 8:00 a.m. Mountain
time/10:00 a.m. Eastern time
for the fourth quarter and full year 2020 financial and operating
results and 2021 operating plan 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 Call Registration:
http://www.directeventreg.com/registration/event/4080946
- Replay (conference ID 4080946) - Domestic toll
free/International: 800-585-8367/416-621-4642
The call replay will be available approximately one hour after
the call and until February 25,
2021.
CONFERENCE PARTICIPATION
- March 1, 2021 - JP Morgan
Leveraged Finance Conference. Executive Vice President and Chief
Financial Officer Wade Pursell will
present at 2:45 p.m. Eastern time.
The presentation will not be webcast. An investor presentation for
this event will be posted to the Company's website before market
open on March 1, 2021.
- March 2, 2021 - Credit Suisse
26th Annual Energy Summit. President and Chief Executive
Officer Herb Vogel will present at
1:20 p.m. Eastern time. The
presentation will be webcast, accessible from the Company's website
and available for replay for a limited time.
DISCLOSURES
FORWARD LOOKING STATEMENTS
This release contains forward-looking statements within the
meaning of securities laws. The words "assumes," "anticipate,"
"estimate," "expect," "forecast," "generate," "guidance,"
"implied," "intend," "maintain," "plan," "project," "objectives,"
"outlook," "sustainable," "target," "will" and similar expressions
are intended to identify forward-looking statements.
Forward-looking statements in this release include, among other
things, the Company's operating plan and guidance for 2021, the
Company's future goals and strategic objectives. 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, specifically the
most recent Form 10-Q. 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.
RESERVE DISCLOSURE
The SEC requires oil and natural gas companies, in their filings
with the SEC, to disclose proved reserves, which are those
quantities of oil, natural gas and NGLs, that, by analysis of
geoscience and engineering data, can be estimated with reasonable
certainty to be economically producible-from a given date forward,
from known reservoirs and under existing economic conditions (using
the trailing 12-month average first-day-of-the-month prices),
operating methods and government regulations-prior to the time at
which contracts providing the right to operate expire, unless
evidence indicates that renewal is reasonably certain, regardless
of whether deterministic or probabilistic methods are used for the
estimation. The SEC also permits the disclosure of separate
estimates of probable or possible reserves that meet SEC
definitions for such reserves; however, the Company currently does
not disclose probable or possible reserves in its SEC filings.
Proved reserves attributable to the Company at December 31, 2020, are estimated utilizing SEC
reserve recognition standards and pricing assumptions based on the
trailing 12-month average first-day-of-the-month prices of
$39.57 per Bbl of oil, $1.99 per MMBtu of natural gas, and $17.64 per Bbl of NGLs. At least 80% of the PV-10
of the Company's estimate of its total proved reserves as of
December 31, 2020, was audited by
Ryder Scott Company, L.P.
ABOUT THE COMPANY
SM Energy Company is an independent energy company engaged in
the acquisition, exploration, development, and production of oil,
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, Vice President –
Investor Relations, jsamuels@sm-energy.com, 303-864-2507
Jeremy Kline, Manager – Investor
Relations, jkline@sm-energy.com, 303-863-4313
SM ENERGY
COMPANY
|
FINANCIAL
HIGHLIGHTS
|
December 31,
2020
|
|
Production
Data
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
December
31,
|
|
For the Twelve
Months Ended
December
31,
|
|
2020
|
|
2019
|
|
Percent
Change
|
|
2020
|
|
2019
|
|
Percent
Change
|
Realized sales
price (before the effects of derivative
settlements):
|
|
|
|
|
|
|
|
|
|
|
|
Oil (per
Bbl)
|
$
|
40.54
|
|
|
$
|
56.09
|
|
|
(28)
|
%
|
|
$
|
37.08
|
|
|
$
|
54.10
|
|
|
(31)
|
%
|
Gas (per
Mcf)
|
$
|
2.46
|
|
|
$
|
2.42
|
|
|
2
|
%
|
|
$
|
1.80
|
|
|
$
|
2.39
|
|
|
(25)
|
%
|
NGLs (per
Bbl)
|
$
|
18.43
|
|
|
$
|
17.84
|
|
|
3
|
%
|
|
$
|
13.96
|
|
|
$
|
17.26
|
|
|
(19)
|
%
|
Equivalent (per
Boe)
|
$
|
28.42
|
|
|
$
|
35.17
|
|
|
(19)
|
%
|
|
$
|
24.26
|
|
|
$
|
32.84
|
|
|
(26)
|
%
|
Realized sales
price (including the effects of derivative
settlements):
|
|
|
|
|
|
|
|
|
|
|
|
Oil (per
Bbl)
|
$
|
52.71
|
|
|
$
|
55.22
|
|
|
(5)
|
%
|
|
$
|
51.49
|
|
|
$
|
53.20
|
|
|
(3)
|
%
|
Gas (per
Mcf)
|
$
|
2.28
|
|
|
$
|
2.75
|
|
|
(17)
|
%
|
|
$
|
1.92
|
|
|
$
|
2.60
|
|
|
(26)
|
%
|
NGLs (per
Bbl)
|
$
|
17.80
|
|
|
$
|
23.93
|
|
|
(26)
|
%
|
|
$
|
15.24
|
|
|
$
|
21.69
|
|
|
(30)
|
%
|
Equivalent (per
Boe)
|
$
|
34.19
|
|
|
$
|
36.38
|
|
|
(6)
|
%
|
|
$
|
31.82
|
|
|
$
|
33.65
|
|
|
(5)
|
%
|
Net production
volumes: (1)
|
|
|
|
|
|
|
|
|
|
|
|
Oil (MMBbl)
|
5.8
|
|
|
6.2
|
|
|
(6)
|
%
|
|
23.0
|
|
|
21.9
|
|
|
5
|
%
|
Gas (Bcf)
|
25.3
|
|
|
28.1
|
|
|
(10)
|
%
|
|
103.9
|
|
|
109.8
|
|
|
(5)
|
%
|
NGLs
(MMBbl)
|
1.3
|
|
|
1.9
|
|
|
(34)
|
%
|
|
6.1
|
|
|
8.1
|
|
|
(25)
|
%
|
MMBoe
|
11.3
|
|
|
12.8
|
|
|
(12)
|
%
|
|
46.4
|
|
|
48.3
|
|
|
(4)
|
%
|
Average net daily
production: (1)
|
|
|
|
|
|
|
|
|
|
|
|
Oil
(MBbls/d)
|
62.9
|
|
|
67.3
|
|
|
(6)
|
%
|
|
62.9
|
|
|
59.9
|
|
|
5
|
%
|
Gas
(MMcf/d)
|
275.3
|
|
|
305.7
|
|
|
(10)
|
%
|
|
283.9
|
|
|
300.8
|
|
|
(6)
|
%
|
NGLs
(MBbls/d)
|
13.6
|
|
|
20.5
|
|
|
(34)
|
%
|
|
16.7
|
|
|
22.2
|
|
|
(25)
|
%
|
MBoe/d
|
122.4
|
|
|
138.8
|
|
|
(12)
|
%
|
|
126.9
|
|
|
132.3
|
|
|
(4)
|
%
|
Per Boe
data:
|
|
|
|
|
|
|
|
|
|
|
|
Realized price (before
the effects of derivative settlements)
|
$
|
28.42
|
|
|
$
|
35.17
|
|
|
(19)
|
%
|
|
$
|
24.26
|
|
|
$
|
32.84
|
|
|
(26)
|
%
|
Lease operating
expense
|
4.10
|
|
|
4.67
|
|
|
(12)
|
%
|
|
3.97
|
|
|
4.67
|
|
|
(15)
|
%
|
Transportation
costs
|
2.89
|
|
|
3.46
|
|
|
(16)
|
%
|
|
3.06
|
|
|
3.88
|
|
|
(21)
|
%
|
Production
taxes
|
1.15
|
|
|
1.48
|
|
|
(22)
|
%
|
|
0.99
|
|
|
1.35
|
|
|
(27)
|
%
|
Ad valorem tax
expense
|
0.38
|
|
|
0.37
|
|
|
3
|
%
|
|
0.41
|
|
|
0.48
|
|
|
(15)
|
%
|
General and
administrative (2)
|
1.78
|
|
|
2.92
|
|
|
(39)
|
%
|
|
2.14
|
|
|
2.75
|
|
|
(22)
|
%
|
Operating margin
(before the effects of derivative settlements)
|
18.12
|
|
|
22.27
|
|
|
(19)
|
%
|
|
13.69
|
|
|
19.71
|
|
|
(31)
|
%
|
Derivative settlement
gain
|
5.77
|
|
|
1.20
|
|
|
381
|
%
|
|
7.57
|
|
|
0.81
|
|
|
835
|
%
|
Operating margin
(including the effects of derivative settlements)
|
$
|
23.89
|
|
|
$
|
23.47
|
|
|
2
|
%
|
|
$
|
21.26
|
|
|
$
|
20.52
|
|
|
4
|
%
|
Depletion,
depreciation, amortization, and asset retirement obligation
liability accretion
|
$
|
16.77
|
|
|
$
|
17.91
|
|
|
(6)
|
%
|
|
$
|
16.91
|
|
|
$
|
17.06
|
|
|
(1)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amounts and percentage changes
may not calculate due to rounding.
|
(2)
Includes non-cash stock-based compensation expense per Boe of
$(0.10) and $0.38 for the three months ended December 31,
2020, and 2019, respectively, and $0.25 and $0.41 for the twelve
months ended December 31, 2020, and 2019,
respectively.
|
SM ENERGY
COMPANY
|
FINANCIAL
HIGHLIGHTS
|
December 31,
2020
|
|
Consolidated
Balance Sheets
|
|
|
|
(in thousands, except
share data)
|
December
31,
|
ASSETS
|
2020
|
|
2019
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
10
|
|
|
$
|
10
|
|
Accounts
receivable
|
162,455
|
|
|
184,732
|
|
Derivative
assets
|
31,203
|
|
|
55,184
|
|
Prepaid expenses and
other
|
10,001
|
|
|
12,708
|
|
Total current
assets
|
203,669
|
|
|
252,634
|
|
Property and
equipment (successful efforts method):
|
|
|
|
Proved oil and gas
properties
|
8,608,522
|
|
|
8,934,020
|
|
Accumulated depletion,
depreciation, and amortization
|
(4,886,973)
|
|
|
(4,177,876)
|
|
Unproved oil and gas
properties
|
714,602
|
|
|
1,005,887
|
|
Wells in
progress
|
233,498
|
|
|
118,769
|
|
Other property and
equipment, net of accumulated depreciation of $63,662 and $64,032,
respectively
|
32,217
|
|
|
72,848
|
|
Total property and
equipment, net
|
4,701,866
|
|
|
5,953,648
|
|
Noncurrent
assets:
|
|
|
|
Derivative
assets
|
23,150
|
|
|
20,624
|
|
Other noncurrent
assets
|
47,746
|
|
|
65,326
|
|
Total noncurrent
assets
|
70,896
|
|
|
85,950
|
|
Total
assets
|
$
|
4,976,431
|
|
|
$
|
6,292,232
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued expenses
|
$
|
371,670
|
|
|
$
|
402,008
|
|
Derivative
liabilities
|
200,189
|
|
|
50,846
|
|
Other current
liabilities
|
11,880
|
|
|
19,189
|
|
Total current
liabilities
|
583,739
|
|
|
472,043
|
|
Noncurrent
liabilities:
|
|
|
|
Revolving credit
facility
|
93,000
|
|
|
122,500
|
|
Senior Notes,
net
|
2,121,319
|
|
|
2,610,298
|
|
Asset retirement
obligations
|
83,325
|
|
|
84,134
|
|
Deferred income
taxes
|
—
|
|
|
189,386
|
|
Derivative
liabilities
|
22,331
|
|
|
3,444
|
|
Other noncurrent
liabilities
|
56,557
|
|
|
61,433
|
|
Total noncurrent
liabilities
|
2,376,532
|
|
|
3,071,195
|
|
Stockholders'
equity:
|
|
|
|
Common stock, $0.01
par value - authorized: 200,000,000 shares; issued and outstanding:
114,742,304 and 112,987,952 shares, respectively
|
1,147
|
|
|
1,130
|
|
Additional paid-in
capital
|
1,827,914
|
|
|
1,791,596
|
|
Retained
earnings
|
200,697
|
|
|
967,587
|
|
Accumulated other
comprehensive loss
|
(13,598)
|
|
|
(11,319)
|
|
Total stockholders'
equity
|
2,016,160
|
|
|
2,748,994
|
|
Total liabilities
and stockholders' equity
|
$
|
4,976,431
|
|
|
$
|
6,292,232
|
|
SM ENERGY
COMPANY
|
FINANCIAL
HIGHLIGHTS
|
December 31,
2020
|
|
Consolidated
Statements of Operations
|
(in thousands, except
per share data)
|
For the Three
Months Ended
December
31,
|
|
For the Twelve
Months Ended
December
31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Operating revenues
and other income:
|
|
|
|
|
|
|
|
Oil, gas, and NGL
production revenue
|
$
|
320,153
|
|
|
$
|
449,001
|
|
|
$
|
1,126,188
|
|
|
$
|
1,585,750
|
|
Net gain on
divestiture activity
|
—
|
|
|
539
|
|
|
91
|
|
|
862
|
|
Other operating
revenues
|
139
|
|
|
2,146
|
|
|
394
|
|
|
3,493
|
|
Total operating
revenues and other income
|
320,292
|
|
|
451,686
|
|
|
1,126,673
|
|
|
1,590,105
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Oil, gas, and NGL
production expense
|
95,963
|
|
|
127,312
|
|
|
391,217
|
|
|
500,709
|
|
Depletion,
depreciation, amortization, and asset retirement obligation
liability accretion
|
188,934
|
|
|
228,597
|
|
|
784,987
|
|
|
823,798
|
|
Exploration
(1)
|
11,314
|
|
|
17,649
|
|
|
40,997
|
|
|
51,500
|
|
Impairment
|
8,750
|
|
|
8,750
|
|
|
1,016,013
|
|
|
33,842
|
|
General and
administrative (1)
|
20,034
|
|
|
37,213
|
|
|
99,160
|
|
|
132,797
|
|
Net derivative (gain)
loss (2)
|
152,693
|
|
|
101,002
|
|
|
(161,576)
|
|
|
97,539
|
|
Other operating
expense, net
|
14,651
|
|
|
19,466
|
|
|
24,825
|
|
|
19,888
|
|
Total operating
expenses
|
492,339
|
|
|
539,989
|
|
|
2,195,623
|
|
|
1,660,073
|
|
Loss from
operations
|
(172,047)
|
|
|
(88,303)
|
|
|
(1,068,950)
|
|
|
(69,968)
|
|
Interest
expense
|
(40,507)
|
|
|
(40,911)
|
|
|
(163,892)
|
|
|
(159,102)
|
|
Gain on
extinguishment of debt
|
15,535
|
|
|
—
|
|
|
280,081
|
|
|
—
|
|
Other non-operating
expense, net
|
(1,585)
|
|
|
(547)
|
|
|
(3,944)
|
|
|
(1,974)
|
|
Loss before income
taxes
|
(198,604)
|
|
|
(129,761)
|
|
|
(956,705)
|
|
|
(231,044)
|
|
Income tax
benefit
|
33,429
|
|
|
27,706
|
|
|
192,091
|
|
|
44,043
|
|
Net
loss
|
$
|
(165,175)
|
|
|
$
|
(102,055)
|
|
|
$
|
(764,614)
|
|
|
$
|
(187,001)
|
|
|
|
|
|
|
|
|
|
Basic
weighted-average common shares outstanding
|
114,528
|
|
|
112,847
|
|
|
113,730
|
|
|
112,544
|
|
Diluted
weighted-average common shares outstanding
|
114,528
|
|
|
112,847
|
|
|
113,730
|
|
|
112,544
|
|
Basic net loss per
common share
|
$
|
(1.44)
|
|
|
$
|
(0.90)
|
|
|
$
|
(6.72)
|
|
|
$
|
(1.66)
|
|
Diluted net loss per
common share
|
$
|
(1.44)
|
|
|
$
|
(0.90)
|
|
|
$
|
(6.72)
|
|
|
$
|
(1.66)
|
|
Dividends per common
share
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.02
|
|
|
$
|
0.10
|
|
|
|
|
|
|
|
|
|
(1)
Non-cash stock-based compensation included in:
|
|
|
|
|
|
|
|
Exploration
expense
|
$
|
743
|
|
|
$
|
724
|
|
|
$
|
3,456
|
|
|
$
|
4,505
|
|
General and
administrative expense
|
(1,181)
|
|
|
4,836
|
|
|
11,543
|
|
|
19,813
|
|
Total non-cash
stock-based compensation
|
$
|
(438)
|
|
|
$
|
5,560
|
|
|
$
|
14,999
|
|
|
$
|
24,318
|
|
|
|
|
|
|
|
|
|
(2)
The net derivative (gain) loss line item consists of the
following:
|
|
|
|
|
|
|
|
Settlement
gain
|
$
|
(64,991)
|
|
|
$
|
(15,379)
|
|
|
$
|
(351,261)
|
|
|
$
|
(39,222)
|
|
Loss on fair value
changes
|
217,684
|
|
|
116,381
|
|
|
189,685
|
|
|
136,761
|
|
Total net derivative
(gain) loss
|
$
|
152,693
|
|
|
$
|
101,002
|
|
|
$
|
(161,576)
|
|
|
$
|
97,539
|
|
SM ENERGY
COMPANY
|
FINANCIAL
HIGHLIGHTS
|
December 31,
2020
|
|
Consolidated
Statements of Stockholders' Equity
|
(in thousands, except
share data and dividends per share)
|
|
|
|
Additional
Paid-in
Capital
|
|
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
Stockholders'
Equity
|
|
Common
Stock
|
|
|
Retained
Earnings
|
|
|
|
Shares
|
|
Amount
|
|
|
|
|
Balances, December
31, 2018
|
112,241,966
|
|
|
$
|
1,122
|
|
|
$
|
1,765,738
|
|
|
$
|
1,165,842
|
|
|
$
|
(12,380)
|
|
|
$
|
2,920,322
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(187,001)
|
|
|
—
|
|
|
(187,001)
|
|
Other comprehensive
income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,061
|
|
|
1,061
|
|
Cash dividends, $0.10
per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,254)
|
|
|
—
|
|
|
(11,254)
|
|
Issuance of common
stock under Employee Stock Purchase Plan
|
314,868
|
|
|
3
|
|
|
3,206
|
|
|
—
|
|
|
—
|
|
|
3,209
|
|
Issuance of common
stock upon vesting of RSUs, net of shares used for tax
withholdings
|
334,399
|
|
|
4
|
|
|
(1,665)
|
|
|
—
|
|
|
—
|
|
|
(1,661)
|
|
Stock-based
compensation expense
|
96,719
|
|
|
1
|
|
|
24,317
|
|
|
—
|
|
|
—
|
|
|
24,318
|
|
Balances, December
31, 2019
|
112,987,952
|
|
|
$
|
1,130
|
|
|
$
|
1,791,596
|
|
|
$
|
967,587
|
|
|
$
|
(11,319)
|
|
|
$
|
2,748,994
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(764,614)
|
|
|
—
|
|
|
(764,614)
|
|
Other comprehensive
loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,279)
|
|
|
(2,279)
|
|
Cash dividends, $0.02
per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,276)
|
|
|
—
|
|
|
(2,276)
|
|
Issuance of common
stock under Employee Stock Purchase Plan
|
464,757
|
|
|
4
|
|
|
1,460
|
|
|
—
|
|
|
—
|
|
|
1,464
|
|
Issuance of common
stock upon vesting of RSUs and settlement of PSUs, net of shares
used for tax withholdings
|
1,022,019
|
|
|
10
|
|
|
(1,570)
|
|
|
—
|
|
|
—
|
|
|
(1,560)
|
|
Stock-based
compensation expense
|
267,576
|
|
|
3
|
|
|
14,996
|
|
|
—
|
|
|
—
|
|
|
14,999
|
|
Issuance of
Warrants
|
—
|
|
|
—
|
|
|
21,520
|
|
|
—
|
|
|
—
|
|
|
21,520
|
|
Other
|
—
|
|
|
—
|
|
|
(88)
|
|
|
—
|
|
|
—
|
|
|
(88)
|
|
Balances, December
31, 2020
|
114,742,304
|
|
|
$
|
1,147
|
|
|
$
|
1,827,914
|
|
|
$
|
200,697
|
|
|
$
|
(13,598)
|
|
|
$
|
2,016,160
|
|
SM ENERGY
COMPANY
|
FINANCIAL
HIGHLIGHTS
|
December 31,
2020
|
|
Consolidated
Statements of Cash Flows
|
|
|
|
|
|
|
(in
thousands)
|
For the Three
Months Ended
December
31,
|
|
For the Twelve
Months Ended
December
31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net loss
|
$
|
(165,175)
|
|
|
$
|
(102,055)
|
|
|
$
|
(764,614)
|
|
|
$
|
(187,001)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Net gain on
divestiture activity
|
—
|
|
|
(539)
|
|
|
(91)
|
|
|
(862)
|
|
Depletion,
depreciation, amortization, and asset retirement obligation
liability accretion
|
188,934
|
|
|
228,597
|
|
|
784,987
|
|
|
823,798
|
|
Impairment
|
8,750
|
|
|
8,750
|
|
|
1,016,013
|
|
|
33,842
|
|
Stock-based
compensation expense
|
(438)
|
|
|
5,560
|
|
|
14,999
|
|
|
24,318
|
|
Net derivative (gain)
loss
|
152,693
|
|
|
101,002
|
|
|
(161,576)
|
|
|
97,539
|
|
Derivative settlement
gain
|
64,991
|
|
|
15,379
|
|
|
351,261
|
|
|
39,222
|
|
Amortization of debt
discount and deferred financing costs
|
4,620
|
|
|
3,920
|
|
|
17,704
|
|
|
15,474
|
|
Gain on extinguishment
of debt
|
(15,535)
|
|
|
—
|
|
|
(280,081)
|
|
|
—
|
|
Deferred income
taxes
|
(33,476)
|
|
|
(28,215)
|
|
|
(192,540)
|
|
|
(41,835)
|
|
Other, net
|
(506)
|
|
|
4,511
|
|
|
(6,709)
|
|
|
2,220
|
|
Changes in working
capital:
|
|
|
|
|
|
|
|
Accounts
receivable
|
(15,408)
|
|
|
(38,922)
|
|
|
29,100
|
|
|
(39,556)
|
|
Prepaid expenses and
other
|
354
|
|
|
9,019
|
|
|
5,873
|
|
|
6,130
|
|
Accounts payable and
accrued expenses
|
67,056
|
|
|
34,974
|
|
|
(23,382)
|
|
|
50,278
|
|
Net cash provided
by operating activities
|
256,860
|
|
|
241,981
|
|
|
790,944
|
|
|
823,567
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Net proceeds from the
sale of oil and gas properties
|
—
|
|
|
539
|
|
|
92
|
|
|
13,059
|
|
Capital
expenditures
|
(128,008)
|
|
|
(235,127)
|
|
|
(547,785)
|
|
|
(1,023,769)
|
|
Acquisition of proved
and unproved oil and gas properties
|
(798)
|
|
|
—
|
|
|
(7,873)
|
|
|
(2,581)
|
|
Net cash used in
investing activities
|
(128,806)
|
|
|
(234,588)
|
|
|
(555,566)
|
|
|
(1,013,291)
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Proceeds from
revolving credit facility
|
281,500
|
|
|
464,500
|
|
|
1,447,000
|
|
|
1,589,000
|
|
Repayment of revolving
credit facility
|
(366,500)
|
|
|
(471,000)
|
|
|
(1,476,500)
|
|
|
(1,466,500)
|
|
Debt issuance costs
related to 10.0% Senior Secured Notes due 2025
|
(183)
|
|
|
—
|
|
|
(13,069)
|
|
|
—
|
|
Cash paid to
repurchase Senior Notes
|
(42,228)
|
|
|
—
|
|
|
(189,998)
|
|
|
—
|
|
Net proceeds from sale
of common stock
|
517
|
|
|
1,250
|
|
|
1,464
|
|
|
3,209
|
|
Dividends
paid
|
(1,146)
|
|
|
(5,642)
|
|
|
(2,276)
|
|
|
(11,254)
|
|
Other, net
|
(14)
|
|
|
(2)
|
|
|
(1,999)
|
|
|
(2,686)
|
|
Net cash provided
by (used in) financing activities
|
(128,054)
|
|
|
(10,894)
|
|
|
(235,378)
|
|
|
111,769
|
|
|
|
|
|
|
|
|
|
Net change in cash,
cash equivalents, and restricted cash
|
—
|
|
|
(3,501)
|
|
|
—
|
|
|
(77,955)
|
|
Cash, cash
equivalents, and restricted cash at beginning of period
|
10
|
|
|
3,511
|
|
|
10
|
|
|
77,965
|
|
Cash, cash
equivalents, and restricted cash at end of period
|
$
|
10
|
|
|
$
|
10
|
|
|
$
|
10
|
|
|
$
|
10
|
|
SM ENERGY
COMPANY
|
FINANCIAL
HIGHLIGHTS
|
December 31,
2020
|
|
Consolidated
Statements of Cash Flows (Continued)
|
(in
thousands)
|
For the Three
Months Ended
December
31,
|
|
For the Twelve
Months Ended
December
31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Supplemental
schedule of additional cash flow information and non-cash
activities:
|
|
|
|
|
|
|
|
Operating
activities:
|
|
|
|
|
|
|
|
Cash paid for
interest, net of capitalized interest
|
$
|
(18,319)
|
|
|
$
|
(28,780)
|
|
|
$
|
(140,493)
|
|
|
$
|
(141,902)
|
|
Net cash (paid)
refunded for income taxes
|
$
|
(61)
|
|
|
$
|
7,578
|
|
|
$
|
6,664
|
|
|
$
|
6,109
|
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
Increase (decrease) in
capital expenditure accruals and other
|
$
|
9,440
|
|
|
$
|
(59,167)
|
|
|
$
|
(7,965)
|
|
|
$
|
(24,289)
|
|
DEFINITIONS OF NON-GAAP MEASURES AS CALCULATED BY THE
COMPANY
The following non-GAAP measures are presented in addition to
financial statements as the Company believes these metrics and
performance measures are widely used by the investment community,
including investors, research analysts and others, to evaluate and
compare investments among upstream oil and gas companies in making
investment decisions or recommendations. These measures, as
presented, may have differing calculations among companies and
investment professionals and may not be directly comparable to the
same measures provided by others. A non-GAAP measure should
not be considered in isolation or as a substitute for the related
GAAP measure or any other measure of a company's financial or
operating performance presented in accordance with GAAP. A
reconciliation of each of these non-GAAP measures to the most
directly comparable GAAP measure or measures is presented
below. These measures may not be comparable to similarly
titled measures of other companies.
Adjusted EBITDAX: Adjusted EBITDAX is
calculated as net income (loss) before interest expense, interest
income, income taxes, depletion, depreciation, amortization and
asset retirement obligation liability accretion expense,
exploration expense, property abandonment and impairment expense,
non-cash stock-based compensation expense, derivative gains and
losses net of settlements, gains and losses on divestitures, gains
and losses on extinguishment of debt, and certain other
items. Adjusted EBITDAX excludes certain items that the
Company believes affect the comparability of operating results,
including items that are generally non-recurring in nature or whose
timing and/or amount cannot be reasonably estimated. Adjusted
EBITDAX is also important as it is considered among financial
covenants under the Company's Credit Agreement, a material source
of liquidity for the Company. Please reference the Company's
2020 Form 10-K for discussion of the Credit Agreement and its
covenants.
Adjusted net income (loss): Adjusted net
income (loss) excludes certain items that the Company believes
affect the comparability of operating results, including items that
are generally non-recurring in nature or whose timing and/or amount
cannot be reasonably estimated. These items include non-cash
and other adjustments, such as derivative gains and losses net of
settlements, impairments, net (gain) loss on divestiture activity,
gains and losses on extinguishment of debt, and accruals for
non-recurring matters.
Free cash flow: Free cash flow is calculated as
net cash provided by operating activities before net change in
working capital less capital expenditures before increase
(decrease) in capital expenditure accruals and other.
Net Debt: The total principal amount of
outstanding senior secured notes and senior unsecured notes plus
amounts drawn on the revolving credit facility (also referred to as
total funded debt) less cash and cash equivalents.
Net debt-to-Adjusted EBITDAX: Net
debt-to-Adjusted EBITDAX is calculated as Net Debt (defined above)
divided by Adjusted EBITDAX (defined above). A variation of
this calculation is a financial covenant under the Company's Credit
Agreement for its revolving credit facility beginning in the fourth
quarter of 2018.
Pre-Tax PV-10: Pre-Tax PV-10 is the present
value of estimated future revenue to be generated from the
production of estimated net proved reserves, net of estimated
production and future development costs, based on prices used in
estimating the proved reserves and costs in effect as of the date
indicated (unless such costs are subject to change pursuant to
contractual provisions), without giving effect to non-property
related expenses such as general and administrative expenses, debt
service, future income tax expenses, or depreciation, depletion,
and amortization, discounted using an annual discount rate of 10
percent. While this measure does not include the effect of
income taxes as it would in the use of the standardized measure of
discounted future net cash flows calculation, it does provide an
indicative representation of the relative value of the Company on a
comparative basis to other companies and from period to period.
This measure 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 Pre-Tax PV-10 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. Pre-Tax PV-10 should not be considered
in isolation or as a substitute for other measures prepared under
GAAP.
Reinvestment rate: Reinvestment rate is calculated
as capital expenditures before increase (decrease) in capital
expenditure accruals and other divided by net cash provided by
operating activities before net change in working capital.
SM ENERGY
COMPANY
|
FINANCIAL
HIGHLIGHTS
|
December 31,
2020
|
|
Adjusted EBITDAX
Reconciliation (1)
|
(in
thousands)
|
|
|
|
|
|
|
|
|
Reconciliation of net
loss (GAAP) and net cash provided by operating activities (GAAP) to
Adjusted EBITDAX (non-GAAP)
|
For the Three
Months Ended December 31,
|
|
For the Twelve
Months Ended December 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net loss
(GAAP)
|
$
|
(165,175)
|
|
|
$
|
(102,055)
|
|
|
$
|
(764,614)
|
|
|
$
|
(187,001)
|
|
Interest
expense
|
40,507
|
|
|
40,911
|
|
|
163,892
|
|
|
159,102
|
|
Income tax
benefit
|
(33,429)
|
|
|
(27,706)
|
|
|
(192,091)
|
|
|
(44,043)
|
|
Depletion,
depreciation, amortization, and asset retirement obligation
liability accretion
|
188,934
|
|
|
228,597
|
|
|
784,987
|
|
|
823,798
|
|
Exploration
(2)
|
10,571
|
|
|
16,925
|
|
|
37,541
|
|
|
46,995
|
|
Impairment
|
8,750
|
|
|
8,750
|
|
|
1,016,013
|
|
|
33,842
|
|
Stock-based
compensation expense
|
(438)
|
|
|
5,560
|
|
|
14,999
|
|
|
24,318
|
|
Net derivative (gain)
loss
|
152,693
|
|
|
101,002
|
|
|
(161,576)
|
|
|
97,539
|
|
Derivative settlement
gain
|
64,991
|
|
|
15,379
|
|
|
351,261
|
|
|
39,222
|
|
Net gain on
divestiture activity
|
—
|
|
|
(539)
|
|
|
(91)
|
|
|
(862)
|
|
Gain on extinguishment
of debt
|
(15,535)
|
|
|
—
|
|
|
(280,081)
|
|
|
—
|
|
Other, net
|
3,514
|
|
|
(648)
|
|
|
5,165
|
|
|
481
|
|
Adjusted EBITDAX
(non-GAAP)
|
$
|
255,383
|
|
|
$
|
286,176
|
|
|
$
|
975,405
|
|
|
$
|
993,391
|
|
Interest
expense
|
(40,507)
|
|
|
(40,911)
|
|
|
(163,892)
|
|
|
(159,102)
|
|
Income tax
benefit
|
33,429
|
|
|
27,706
|
|
|
192,091
|
|
|
44,043
|
|
Exploration
(2)
|
(10,571)
|
|
|
(16,925)
|
|
|
(37,541)
|
|
|
(46,995)
|
|
Amortization of debt
discount and deferred financing costs
|
4,620
|
|
|
3,920
|
|
|
17,704
|
|
|
15,474
|
|
Deferred income
taxes
|
(33,476)
|
|
|
(28,215)
|
|
|
(192,540)
|
|
|
(41,835)
|
|
Other, net
|
(4,020)
|
|
|
5,159
|
|
|
(11,874)
|
|
|
1,739
|
|
Net change in working
capital
|
52,002
|
|
|
5,071
|
|
|
11,591
|
|
|
16,852
|
|
Net cash provided
by operating activities (GAAP)
|
$
|
256,860
|
|
|
$
|
241,981
|
|
|
$
|
790,944
|
|
|
$
|
823,567
|
|
|
|
|
|
|
|
|
|
(1) See
"Definitions of non-GAAP Measures as Calculated by the Company"
above.
|
|
(2)
Stock-based compensation expense is a component of the exploration
expense and general and administrative expense line items on the
accompanying consolidated statements of operations.
Therefore, the exploration line items shown in the reconciliation
above will vary from the amount shown on the accompanying
consolidated statements of operations for the component of
stock-based compensation expense recorded to exploration
expense.
|
SM ENERGY
COMPANY
|
FINANCIAL
HIGHLIGHTS
|
December 31,
2020
|
|
Adjusted Net
Income (Loss)
Reconciliation (1)
|
(in thousands, except
per share data)
|
|
|
|
|
|
|
|
|
Reconciliation of net
loss (GAAP) to adjusted net income (loss) (non-GAAP):
|
For the Three
Months Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net loss
(GAAP)
|
$
|
(165,175)
|
|
|
$
|
(102,055)
|
|
|
$
|
(764,614)
|
|
|
$
|
(187,001)
|
|
Net derivative (gain)
loss
|
152,693
|
|
|
101,002
|
|
|
(161,576)
|
|
|
97,539
|
|
Derivative settlement
gain
|
64,991
|
|
|
15,379
|
|
|
351,261
|
|
|
39,222
|
|
Net gain on
divestiture activity
|
—
|
|
|
(539)
|
|
|
(91)
|
|
|
(862)
|
|
Impairment
|
8,750
|
|
|
8,750
|
|
|
1,016,013
|
|
|
33,842
|
|
Gain on extinguishment
of debt
|
(15,535)
|
|
|
—
|
|
|
(280,081)
|
|
|
—
|
|
Other, net
(2)
|
3,554
|
|
|
(647)
|
|
|
5,321
|
|
|
700
|
|
Tax effect of
adjustments (3)
|
(46,536)
|
|
|
(26,896)
|
|
|
(201,994)
|
|
|
(36,986)
|
|
Valuation allowance on
deferred tax assets
|
—
|
|
|
—
|
|
|
10,017
|
|
|
—
|
|
Adjusted net
income (loss) (non-GAAP)
|
$
|
2,742
|
|
|
$
|
(5,006)
|
|
|
$
|
(25,744)
|
|
|
$
|
(53,546)
|
|
|
|
|
|
|
|
|
|
Diluted net loss
per common share (GAAP)
|
$
|
(1.44)
|
|
|
$
|
(0.90)
|
|
|
$
|
(6.72)
|
|
|
$
|
(1.66)
|
|
Net derivative (gain)
loss
|
1.33
|
|
|
0.90
|
|
|
(1.42)
|
|
|
0.87
|
|
Derivative settlement
gain
|
0.57
|
|
|
0.14
|
|
|
3.09
|
|
|
0.35
|
|
Net gain on
divestiture activity
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01)
|
|
Impairment
|
0.08
|
|
|
0.08
|
|
|
8.93
|
|
|
0.30
|
|
Gain on extinguishment
of debt
|
(0.14)
|
|
|
—
|
|
|
(2.46)
|
|
|
—
|
|
Other, net
(2)
|
0.03
|
|
|
(0.01)
|
|
|
0.05
|
|
|
0.01
|
|
Tax effect of
adjustments (3)
|
(0.41)
|
|
|
(0.25)
|
|
|
(1.79)
|
|
|
(0.34)
|
|
Valuation allowance on
deferred tax assets
|
—
|
|
|
—
|
|
|
0.09
|
|
|
—
|
|
Adjusted net
income (loss) per diluted common share (non-GAAP)
|
$
|
0.02
|
|
|
$
|
(0.04)
|
|
|
$
|
(0.23)
|
|
|
$
|
(0.48)
|
|
|
|
|
|
|
|
|
|
Basic
weighted-average common shares outstanding
|
114,528
|
|
|
112,847
|
|
|
113,730
|
|
|
112,544
|
|
Diluted
weighted-average common shares outstanding
|
114,528
|
|
|
112,847
|
|
|
113,730
|
|
|
112,544
|
|
|
|
|
|
|
|
|
|
Note: Amounts may not
calculate due to rounding.
|
|
|
|
|
|
|
|
|
(1) See
"Definitions of non-GAAP Measures as Calculated by the Company"
above.
|
(2) For
the three and twelve months ended December 31, 2020, other
adjustments related to bad debt expense, pension settlement
expense, the change in net profits plan liability, and impairments
of materials inventory and other property. For the three
months ended December 31, 2019, other adjustments related to
the change in net profits plan liability and impairments of
materials inventory. For the twelve months ended
December 31, 2019, other adjustments related to bad debt
expense, the change in net profits plan liability, and impairments
of materials inventory and other property.
|
(3) The
tax effect of adjustments for each of the three and twelve months
ended December 31, 2020, and 2019, was calculated using a tax
rate of 21.7%. This rate approximates the Company's statutory
tax rate for the respective periods, as adjusted for ordinary
permanent differences.
|
SM ENERGY
COMPANY
|
FINANCIAL
HIGHLIGHTS
|
December 31,
2020
|
|
|
|
|
|
|
|
Regional proved
oil and gas reserve quantities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Midland
Basin
|
|
South
Texas
|
|
Total
|
Year-end 2020
proved reserves
|
|
|
|
|
|
|
Oil (MMBbl)
|
|
150.9
|
|
21.8
|
|
172.7
|
Gas (Bcf)
|
|
425.3
|
|
626.8
|
|
1,052.0
|
NGL (MMBbl)
|
|
0.2
|
|
56.4
|
|
56.6
|
Total
(MMBoe)
|
|
222.0
|
|
182.6
|
|
404.6
|
% Proved
developed
|
|
58%
|
|
55%
|
|
57%
|
|
|
|
|
|
|
|
Note: Amounts may not
calculate due to rounding.
|
Pre-Tax PV-10
Reconciliation (1)
|
|
|
(in
millions)
|
|
|
|
|
As of December
31,
|
Reconciliation of
standardized measure (GAAP) to PV-10 (non-GAAP)
|
2020
|
|
2019
|
Standardized
measure of discounted future net cash flows (GAAP):
|
$
|
2,682.5
|
|
|
$
|
4,104.0
|
|
Add: 10 percent annual
discount, net of income taxes
|
1,856.3
|
|
|
2,955.3
|
|
Add: future
undiscounted income taxes
|
—
|
|
|
579.8
|
|
Pre-tax undiscounted
future net cash flows
|
4,538.8
|
|
|
7,639.1
|
|
Less: 10 percent
annual discount without tax effect
|
(1,856.3)
|
|
|
(3,276.3)
|
|
Pre-Tax PV-10
(non-GAAP):
|
$
|
2,682.5
|
|
|
$
|
4,362.8
|
|
|
|
|
|
(1) See
"Definitions of non-GAAP Measures as Calculated by the Company"
above.
|
Reconciliation of
Total Long-Term Debt to Net Debt (1)
|
|
(in
thousands)
|
|
|
As of December 31,
2020
|
Senior Secured Notes
(2)
|
$
|
512,160
|
|
Senior Unsecured
Notes (2)
|
1,674,581
|
|
Revolving credit
facility (2)
|
93,000
|
|
Total funded
debt
|
2,279,741
|
|
Less: Cash and cash
equivalents
|
10
|
|
Net
Debt
|
$
|
2,279,731
|
|
|
|
(1) See
"Definitions of non-GAAP Measures as Calculated by the Company"
above.
|
(2)
Amounts are from Note 5 - Long-term Debt in Part II, Item 8 of the
Company's Form 10-K for the year ended December 31,
2020.
|
Free Cash Flow
(1)
|
(in
thousands)
|
|
For the Three
Months Ended
December
31,
|
|
For the Twelve
Months Ended
December
31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net cash provided by
operating activities (GAAP)
|
$
|
256,860
|
|
|
$
|
241,981
|
|
|
$
|
790,944
|
|
|
$
|
823,567
|
|
Net change in working
capital
|
(52,002)
|
|
|
(5,071)
|
|
|
(11,591)
|
|
|
(16,852)
|
|
Cash flow from
operations before net change in working capital
|
$
|
204,858
|
|
|
$
|
236,910
|
|
|
$
|
779,353
|
|
|
$
|
806,715
|
|
|
|
|
|
|
|
|
|
Capital expenditures
(GAAP)
|
128,008
|
|
|
235,127
|
|
|
547,785
|
|
|
1,023,769
|
|
Increase (decrease) in
capital expenditure accruals and other
|
9,440
|
|
|
(59,167)
|
|
|
(7,965)
|
|
|
(24,289)
|
|
Capital expenditures
before accruals and other
|
$
|
137,448
|
|
|
$
|
175,960
|
|
|
$
|
539,820
|
|
|
$
|
999,480
|
|
|
|
|
|
|
|
|
|
Free cash
flow
|
$
|
67,410
|
|
|
$
|
60,950
|
|
|
$
|
239,533
|
|
|
$
|
(192,765)
|
|
|
|
|
|
|
|
|
|
(1) See
"Definitions of non-GAAP Measures as Calculated by the Company"
above.
|
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SOURCE SM Energy Company