SM Energy Company (SM) Stephens 26th Annual Investment Conference | NASH2024 summary

Strategic Positioning and Asset Overview

• Focus on sustainable, repeatable operations leveraging top-tier assets in Texas and a transformative Uinta Basin acquisition, which added over 63,000 net acres and extended inventory life by more than three years.

• Midland Basin and Austin Chalk assets deliver high-return, consistent well results, outperforming peers since 2021, with new Woodford Barnett and Klondike wells exceeding acquisition models.

• Uinta Basin offers up to 17 stacked pay targets, 87% oil content, and competitive returns, with early Upper Cube and Douglas Creek wells showing strong initial production rates.

• Technical team credited for identifying and developing undervalued basins, driving organic and inorganic growth, and enabling full-stack co-development.

• Integration of the Uinta asset is progressing well, with most key personnel retained and operational transition on track.

Financial Strategy and Capital Allocation

• Strengthened balance sheet with debt layered through 2032, a new revolver maturing in 2029, and a borrowing base increased to $3 billion.

• 3Q24 adjusted EBITDAX reached $481.5 million, with adjusted free cash flow of $129.8 million and net debt of $1.0–1.8 billion post-acquisitions.

• Cumulative capital returned to stockholders totaled $521.3 million, including $369.1 million in share repurchases and $152.2 million in dividends; fixed quarterly dividend increased to $0.20/share and buyback program extended through 2027.

• Near-term free cash flow prioritized for debt reduction, with opportunistic share repurchases considered and a target to return leverage to 1x by mid-2025.

• Well costs have declined to the mid-$700s per lateral foot across all basins, aided by deflation and operational efficiencies.

Operational Highlights and Development Plans

• Achieved 170.0 MBoe/d production in 3Q24, exceeding guidance midpoint, with 46% oil content.

• Austin Chalk: Over 100 wells drilled, consistently high returns, downspacing success increased location count by 53, and inventory updates expected in early 2025.

• Uinta Basin: Early Upper Cube and Douglas Creek wells average 870 BOE/d (94% oil), with sand mine and rail facility supporting cost and ESG advantages.

• 2025 plans include a mix of delineation and development in Uinta, with inventory and reserves updates forthcoming.

• 2024 plan includes processing ethane all year, supporting NGL realizations and high liquids content.