SM Energy Company (SM) JP Morgan Energy, Power and Renewables Conference summary

Strategic Focus, Asset Quality, and Operational Execution

• Emphasizes capital efficiency, technical expertise, and a portfolio of low break-even cost assets in the Midland Basin and South Texas Austin Chalk.

• Maintains a high-quality inventory with over 10 years of runway and a 65%+ average projected return at $70/barrel, with over 80% categorized as 3P.

• Organically added nearly 40,000 net acres in the past year, including expansions in Klondike, Sweetie Peck, and Austin Chalk, supporting ongoing inventory replacement.

• Technical team leverages extensive data analytics and unconventional resource experience for superior well performance, with wells outperforming regional peers by up to 130% in cumulative oil production.

• Strong balance sheet with 0.6x leverage, over $500 million in cash, and $1.75 billion liquidity as of Q1 2024.

Capital Allocation, Financial Performance, and Shareholder Returns

• Focuses on share repurchases and fixed dividends, with a $500 million buyback program ($320 million completed by Q1, $180 million remaining), and $429 million returned to shareholders since September 2022.

• Returned 79% of Q1 free cash flow to shareholders; plans to allocate $60 million per quarter to buybacks for the remainder of the year, with potential for increased returns pending board review.

• 1Q24 net production reached 13.2 MMBoe (145.1 MBoe/d), with 44% oil and adjusted EBITDAX of $409 million.

• Adjusted free cash flow for 1Q24 was $67.9 million, with liquidity of $1.75 billion and $1.08 billion net debt as of March 31, 2024.

• Evaluates future capital allocation between Midland and South Texas based on commodity prices and new acreage opportunities, adjusting portfolio opportunistically.

Operational Excellence and Technology

• Consistently delivers on operational guidance, with a focus on efficiency, cost control, and completion design optimization.

• Implements new technologies annually, using a green/yellow/red system to assess impact and scalability.

• Achieved significant drilling and completion efficiency gains, including a 10% improvement in the Midland Basin and 20% in South Texas.

• Simul-frac and zipper frac techniques drive faster completions and lower costs, with per-foot costs dropping to $800-$820 in 2024.

• Maintains a comprehensive well database for multivariate analysis, optimizing well design and capital allocation.