SM Energy Company (SM) Q1 2025 Prepared Remarks earnings summary

Executive summary

• First quarter 2025 production reached 17.8 MMBoe (197.3 MBoe/d), with oil comprising 53%, driven by strong Uinta Basin integration and outperforming expectations.

• Net income for Q1 2025 was $182.3 million, or $1.59 per diluted share, up 41% year-over-year, with adjusted net income at $202.0 million ($1.76 per share).

• Adjusted EBITDAX rose 44% year-over-year to $588.9 million, and adjusted free cash flow was $73.8 million.

• Returned capital to stockholders with a $0.20 per share cash dividend and reduced debt by $31 million, progressing toward 1x leverage.

• Recognized as a leader in sustainability, ranking among the top three U.S. oil-focused operators for ESG in 2023.

Financial highlights

• Operating revenues for Q1 2025 were $844.5 million, up from $559.9 million in Q1 2024.

• Net cash from operating activities was $483.0 million, supporting capital expenditures, dividends, and debt repayments.

• Realized oil price averaged $70.56/Bbl pre-hedge and $70.87/Bbl post-hedge; total realized price per Boe was $47.29 pre-hedge and $47.73 post-hedge.

• Lease operating expense per Boe increased 15% year-over-year to $6.13.

• Dividends paid totaled $22.9 million, and $31.0 million was used to reduce the revolving credit facility.

Outlook and guidance

• Full-year 2025 guidance maintained, except LOE increased to ~$5.90/Boe due to higher workover, water disposal, and fuel gas costs.

• Q2 2025 production expected at 197–203 MBoe/d (54–55% oil); capital expenditures projected at $375–$385 million.

• FY25 capital expenditures guidance: $1.3 billion, with over 60% spent in the first half.

• 34% of expected 2Q–4Q 2025 oil and 38% of natural gas production hedged at favorable prices.

• Activity levels have slowed (nine to seven rigs), with flexibility to further reduce if prices fall.