DENVER, April 17, 2019 /PRNewswire/ -- SM Energy
Company (the "Company") (NYSE: SM) today announced certain
operating and financial results for the first quarter of 2019,
including production, realized pricing and total capital spend.
Highlights include:
- 10.7 MMBoe (118.7 MBoe/d) total production came in at the
mid-point of guidance. Permian production was up 34%
year-over-year.
- 45% oil in the commodity mix; 63% liquids.
- Costs incurred in oil and gas activities of $322 million and total capital spend of
$316 million (a non-GAAP measure,
reconciled below).
President and Chief Executive Officer Jay Ottoson comments: "Successful execution at
the Merlin Maximus development underpins our full year objective of
approximately 20% growth in Permian production. In addition, with
over 60% liquids production and more than one-half of total
production for the quarter from our Permian assets, we continue
marching towards higher overall operating margins and cash
flow."
At 10.7 MMBoe/118.7 MBoe/d, first quarter production was at the
mid-point of guidance. As previously reported, first quarter
production volumes met expectations despite impacts totaling (0.2)
MMBoe in March from severe weather and from third-party processing
plant delays in reaching full capacity following a force majeure
event.
Realized pricing during the first quarter of 2019 benefited from
improved regional oil differentials in the Permian Basin, which
were offset by lower regional natural gas prices and a lower
realized NGL uplift from Permian production impacted by force
majeure events. For the next two quarters, the Company expects
pricing for both oil and natural gas in the Permian Basin to be
volatile as a result of tight pipeline capacity. The Company sells
its Permian oil and natural gas production to purchasers (that are
obligated to take forecast volumes) who own or have access to firm
transportation. In addition, the Company has put in place
Midland-Cushing basis hedges for approximately 60-65% of Permian
oil production and has hedged Waha gas prices for approximately 85%
of Permian natural gas production through the next two
quarters.
FIRST QUARTER OF
2019 PRODUCTION AND REALIZED PRICES
|
|
PRODUCTION:
|
|
|
Permian
|
South
Texas
|
Total
|
Oil - MBbl
|
4,546
|
286
|
4,832
|
Natural gas -
MMcf
|
6,884
|
17,009
|
23,893
|
NGLs -
MBbl
|
1
|
1,871
|
1,872
|
Total -
MBoe
|
5,695
|
4,992
|
10,687
|
Total -
MBoe/d
|
63.3
|
55.5
|
118.7
|
Note: Totals may not
sum due to rounding
|
- Permian volumes were up 34% year-over-year and flat
sequentially.
- At the Merlin Maximus development, all 25 wells were drilled
and completed as planned. 24 of the 25 wells (one well was
intentionally shut-in to monitor sub-surface pressure) are on
production as scheduled and the development is expected to reach
peak production around mid-year.
REALIZED
PRICES:
|
|
|
Permian
|
South
Texas
|
Totals
Pre/Post-Hedge
|
Oil/$Bbl
|
$49.54
|
$48.30
|
$49.47/$49.19
|
Natural
gas/$Mcf
|
2.27
|
2.91
|
2.73/2.55
|
NGLs/$Bbl
|
nm
|
19.39
|
19.39/19.67
|
Per Boe
|
$42.29
|
$19.96
|
$31.86/$31.39
|
- Benchmark pricing for the quarter included NYMEX WTI at
$54.90/Bbl, NYMEX Henry Hub natural
gas at $3.15/MMBtu and Hart Composite
NGLs at $26.28/Bbl.
- The average realized price per Boe of $31.86 is before the effect of hedges. Including
the effect of realized hedges, the average price was $31.39, resulting in approximately $5.0 million of realized net hedge losses for the
quarter.
FINANCIAL POSITION, LIQUIDITY AND TOTAL CAPITAL SPEND
On March 31, 2019, the outstanding
principal amount of the Company's long-term debt was $2.5 billion in senior notes plus $172.5 million in senior convertible notes, with
$46.5 million drawn on the Company's
senior secured credit facility.
Costs incurred in oil and gas activities for the first quarter
of 2019 were $322 million. Total
capital spend (a non-GAAP measure defined as costs incurred less
asset retirement obligations, capitalized interest and proved
property acquisitions, is reconciled below) for the quarter was
$316 million. During the first
quarter, the Company drilled 28 net wells and completed 27 net
wells in the Permian, and drilled seven net wells and completed two
net wells in its South Texas
region.
TOTAL CAPITAL
SPEND RECONCILIATION:
|
|
Reconciliation of
costs incurred in oil & gas activities (GAAP) to total capital
spend (non-GAAP)(1)
|
|
($ in
millions)
|
For the Three
Months Ended
March 31, 2019
|
Costs incurred in
oil and gas activities (GAAP):
|
$
|
322.0
|
Less:
|
|
Asset retirement
obligation
|
|
(0.5)
|
Capitalized
interest
|
|
(4.9)
|
Proved property
acquisitions
|
|
0.3
|
Other
|
|
(1.4)
|
Total capital
spend (non-GAAP):
|
$
|
315.5
|
|
|
|
|
(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.
|
SCHEDULE FOR FIRST QUARTER REPORTING
May 1, 2019 – After market close,
the Company plans to issue its first quarter 2019 earnings release,
a pre-recorded webcast discussion of the first quarter 2019
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 2, 2019 – Please join SM
Energy management at 8:00 a.m. Mountain
time/10:00 a.m. Eastern time
for the first quarter 2019 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 3654049) - Domestic toll
free/International: 844-343-4183/647-689-5129
- Replay (conference ID 3654049) - Domestic toll
free/International: 800-585-8367/416-621-4642
The call replay will be available approximately one hour after
the call until May 9, 2019.
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,"
"objectives," "target," "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: projections for price
volatility in the Permian Basin based on related pipeline capacity,
and the status of a third-party gas processing facility force
majeure event and the impacts on production volumes. General risk
factors include the availability, proximity and capacity of
gathering, processing and transportation facilities; the volatility
and level of oil, natural gas, and natural gas liquids prices and
related differentials, including any impact on the Company's asset
carrying values or reserves arising from price declines;
uncertainties inherent in projecting future timing and 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 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; and other such matters 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 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