Exploration & Production | Production | Reserves

SM Energy's 2014 Growth Fueled by Eagle Ford Ops

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   |    Tuesday,February 03,2015

SM Energy announces its 2014 proved year-end reserves and production for the fourth quarter and full year of 2014.

Jay Ottoson, President and CEO, commented, "SM Energy finished 2014 on a high note driven by continuing improvement in the performance of our core development assets. Our strong production growth was primarily driven by new completions in our Eagle Ford program and we continued our track record of adding reserves through the drill bit at low costs. Our proved undeveloped reserves and large inventory of unproved drilling projects are economic at year-end 2014 forward strip pricing and expected costs. Additionally, we enter 2015 with a strong balance sheet and substantial liquidity."

Proved Reserves

The table below provides a reconciliation of changes in the Company’s proved reserves from year-end 2013 to year-end 2014.

Benchmark prices used at year end to calculate the Company’s estimate of year-end 2014 proved reserves were $94.99 per barrel of oil, $4.35 per MMBTU of natural gas, and $39.91 per barrel of NGLs, using the 12-month arithmetic average of the first month price in accordance with SEC requirements. These prices are 2% less for oil, 19% greater for natural gas, and 1% less for NGLs than the respective prices used at the end of 2013. Benchmark prices used to calculate proved reserves at year-end 2014 are adjusted for energy content, basis, and quality differentials. The proved reserves presented above, including proved undeveloped reserves (PUDs), are also economic at 2014 year-end strip pricing and expected costs.

Proved reserves at the end of 2014 consisted of 31% oil/condensate, 45% natural gas, and 24% NGL’s.

In 2014, the Company’s proved undeveloped reserves as a percentage of total proved reserves decreased to 48%, from 51% in 2013, as the Company converted a larger amount of PUDs in 2014 compared to the prior year. During 2014, the Company converted 88.2 MMBOE of PUDs compared to 56.0 MMBOE of PUD conversions in 2013.

The table below provides detail for the Company’s expected costs incurred in oil and gas producing activities for the year ended December 31, 2014. These costs are preliminary and subject to adjustment. Final results are expected in connection with the Company's earnings release on February 24, 2015.

The table below provides finding and development costs and reserve replacement ratios for the year ended December 31, 2014:

For 2014, SM Energy had all-in reserve replacement of 320%, and drilling reserve replacement of 261%. 2014 is the fifth consecutive year in which the Company posted all-in reserve replacement in excess of 300% and drilling reserve replacement in excess of 250%.

Production

SM Energy reported record average daily production for the fourth quarter of 2014 of 175.8 MBOE/d, 13% above the midpoint of previously provided quarterly guidance of 152 - 159 MBOE/d. The outperformance in production for the fourth quarter was largely driven by the Company’s South Texas & Gulf Coast region.

For 2014, the Company reported annual average daily production of 151.1 MBOE/d, which represents 14% reported production growth from 2013. On a retained property basis, production grew 22% year over year.