SM Energy Company (SM) Reports Excellent Financial and Operating Results for 2023

SM Energy Company (SM) has recently unveiled its impressive financial and operating results for the year 2023. With a strong focus on operational execution, the company managed to surpass production guidance by 3.5% and achieve a remarkable 5% year-over-year increase in production. Furthermore, SM Energy set a company record for proved reserves, ending the year with an impressive 605 MMBoe, a significant 13% surge compared to the previous year. In addition to its outstanding performance, the company also acquired 29,700 net acres in the Midland Basin, expanding its leasehold position by 37% in that region. Looking ahead to 2024, SM Energy aims to maintain its operational excellence while returning capital to stockholders and further enhancing the quality and diversity of its portfolio. With an expected capital program ranging between $1.16 billion and $1.2 billion, the company anticipates increased activity and the development of recently acquired properties. Furthermore, SM Energy remains confident in its production growth, with guidance predicting a 3-4% year-over-year increase on a Boe basis, alongside a projected decrease in cash taxes due to significant R&D credits earned.

Financial Results

SM Energy Company (SM) had an excellent financial performance in 2023. The company generated substantial free cash flow of $509 million, demonstrating strong financial management and efficiency. This significant amount of free cash flow enabled SM Energy to create value for its stockholders and invest in future growth opportunities.

A notable accomplishment for SM Energy was the return of $300 million to stockholders. This reflects the company’s commitment to delivering shareholder value and rewarding investors. By returning capital to stockholders, SM Energy continues to build trust and confidence in its ability to generate sustainable returns.

Operating Results

SM Energy achieved impressive operating results in 2023. One of the key highlights was the increase in proved reserves to 605 MMBoe, representing a substantial growth of almost 13% from yearend 2022. This increase in proved reserves showcases SM Energy’s ability to effectively identify and develop oil and gas assets.

The company’s production also surpassed expectations, with production levels coming in 3.5% ahead of guidance. This highlights SM Energy’s operational excellence and its ability to efficiently extract hydrocarbons from its reserves. Furthermore, on a year-over-year basis, production increased by approximately 5%, demonstrating SM Energy’s commitment to delivering consistent growth.

SM Energy’s commitment to safety is evident through its excellent safety record. The company prioritizes the well-being of its employees and stakeholders, implementing robust safety measures and protocols to prevent accidents and ensure a secure working environment. Additionally, SM Energy received a leadership level score of A- for environmental stewardship, indicating its dedication to environmentally responsible practices.

Acquisitions

In 2023, SM Energy made significant acquisitions to enhance its asset portfolio. The company acquired 29,700 net acres in the Midland Basin, expanding its leasehold position in this promising area by 37%. This strategic move allows SM Energy to capitalize on the potential of the Midland Basin, which is known for its abundant oil and gas resources.

The acquisition of additional acreage in the Midland Basin aligns with SM Energy’s long-term growth strategy. By expanding its presence in this highly prospective region, the company positions itself for future success and increased production capabilities.

Strategic Objectives for 2024

Looking ahead to 2024, SM Energy has identified several strategic objectives to guide its operations. The first objective is operational execution. The company aims to continue delivering operational excellence, focusing on efficient resource extraction, cost control, and maximizing productivity.

Another key strategic objective is the return of capital to stockholders. SM Energy remains committed to delivering value to its investors by allocating capital wisely and returning excess cash to its stockholders through dividends, share buybacks, or other means.

Additionally, maintaining and expanding the quality and depth of its portfolio is a vital strategic objective for SM Energy in 2024. The company aims to selectively acquire and develop assets that complement its existing portfolio, ensuring long-term sustainability and growth.

Capital Program for 2024

SM Energy has developed a comprehensive capital program for 2024 to support its strategic objectives. The expected range for the capital program is between $1.16 billion and $1.2 billion, reflecting increased activity and investment in the company’s asset base.

With this capital program, SM Energy aims to accelerate its growth by initiating the delineation and development of the properties acquired in 2023. By strategically investing in these newly acquired assets, the company can unlock their full value and drive long-term production growth.

Production Guidance for 2024

SM Energy has provided production guidance for 2024, highlighting its expectations for future performance. The company projects a production range of 56-59 MMBoe, representing a 3-4% year-over-year increase on a Boe basis.

This production guidance reflects SM Energy’s confidence in its asset base and its ability to efficiently convert its reserves into production. By maintaining a steady trajectory of production growth, the company strives to create long-term value for its stakeholders.

Cash Taxes for 2024

SM Energy anticipates a decrease in cash taxes for 2024 due to the significant research and development (R&D) credits earned. These credits are a result of the company’s commitment to innovation and technological advancements in its operations.

The expected decrease in cash taxes further enhances SM Energy’s financial performance and underscores its ability to optimize its tax position. By leveraging R&D credits, the company can allocate more resources towards growth initiatives and shareholder returns.

In conclusion, SM Energy had an outstanding year in 2023, with excellent financial and operating results. The company demonstrated its ability to generate significant free cash flow, return capital to stockholders, and increase proved reserves. SM Energy’s strategic objectives for 2024 and its comprehensive capital program position the company for continued success and growth. With a strong commitment to operational excellence, safety, and environmental stewardship, SM Energy is well-positioned to navigate the evolving energy landscape and deliver sustainable value to its stakeholders.