SM Energy Company (SM) Q2 2024 (Q&A) earnings summary

Executive summary

• Achieved strong Q2 2024 results with net income of $210.3M ($1.82/diluted share), driven by higher oil production and prices, and operational outperformance in Midland Basin and South Texas.

• Announced Uinta Basin acquisitions for $2.1B–$2.55B, adding 63,300 net acres and 465 net drilling locations, with closing expected October 1, 2024.

• Returned $71.9M–$84M to shareholders via buybacks and dividends; board approved 11% dividend increase and reloaded $500M repurchase program through 2027.

• 2Q24 net production was 158.5 MBoe/d (46% oil), exceeding guidance midpoint by 2,500 Boe/d.

• Delivered an outstanding quarter with strong operational and financial performance, highlighted by robust well results and continued optimization across core assets.

Financial highlights

• Q2 2024 revenue was $634.6M, up from $550.8M in Q2 2023; net income rose to $210.3M from $149.9M year-over-year.

• Adjusted EBITDAX was $485.9M; adjusted free cash flow was $98.4M, up 45% sequentially.

• Net cash from operations was $476.4M; capital expenditures were $327.8M.

• Cash balance at quarter-end was $488M; net debt was $1.10B; net debt-to-adjusted EBITDAX was 0.6x.

• Lease operating expense per Boe was $4.82, down 13% sequentially and below full-year guidance.

Outlook and guidance

• Full-year 2024 production guidance is 156–164 MBoe/d (45% oil); oil mix raised to 45%.

• Full-year capital expenditures guidance is $1.14–$1.18B, excluding acquisitions.

• Q3 2024 production expected at 163–167 MBoe/d; capex $300–$310M.

• Uinta Basin assets expected to add 44 MBoe/d at 87% oil in Q4, with $100–$120M in related capex.

• 2025 preliminary oil production guide is ~100,000 barrels/day, with final plans pending HSR approval and contract clarity.