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Q3 2015 Earnings Call – SM Energy Company

SM Energy Company · Oct 28, 2015 · 32 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Q3 2015 Earnings Call – SM Energy Company – slide 1
    3Q15 Earnings Call October 28, 2015
  2. Q3 2015 Earnings Call – SM Energy Company – slide 2
    3Q15 Highlights Exceeding 2015 Expectations Key Messages: EXECUTION Faster drill times and better completions driving better wells and lower costs PERFORMANCE Production exceeding plan due to well performance and successful…
  3. Q3 2015 Earnings Call – SM Energy Company – slide 3
    Performance: 3Q15 Outstanding Quarter Well performance and cost focus PRODUCTION* UP 30% YOY 200 3Q Production 16.1 MMBOE 180 160 175 174 175 Up 30% from 2014 on retained properties 140 165 MBOE/d and beating plan 120…
  4. Q3 2015 Earnings Call – SM Energy Company – slide 4
    Hedging Provides Cash Flow Stability 45% of guided midpoint 4Q15 production volumes hedged 44% of 2016 production volumes hedged assuming forecasted 4Q15 production held flat into 2016 9 Hedged Volumes as of October 21, 2015 8…
  5. Q3 2015 Earnings Call – SM Energy Company – slide 5
    2015 Activity Reducing Rigs and Building DUC* Inventory Capital budget of 1.28 billion, down 37% from 2014** 18 150 15 125 Drilled but Uncompleted Wells 12 100 Operated Rigs 9 75 6 50 3 25 0 0 Jan Feb Mar Apr May…
  6. Q3 2015 Earnings Call – SM Energy Company – slide 6
    Top Tier Financial Position Well positioned for 2016 Current Debt:TTM Adjusted EBITDAX 1.9 times Financial Position Ample liquidity with 0.2 B drawn on 1.5 B Commitments amount and 2.0 B Borrowing Base No maturities until 2021…
  7. Q3 2015 Earnings Call – SM Energy Company – slide 7
    Operations Update Key Themes Exceeding expectations 2015 Gaining efficiency Technology application Driving lower costs through improved execution Inventory upside 8
  8. Q3 2015 Earnings Call – SM Energy Company – slide 8
    Optimization: Eagle Ford Efficiency Gains Average Drilling Cost Average Completion Cost per Lateral Foot per Lateral Foot 400 1,000 350 800 /Lateral Foot /Lateral Foot 300 250 600 200 150 400 100 200 50 0 0 2014 2015…
  9. Q3 2015 Earnings Call – SM Energy Company – slide 9
    Optimization: Bakken Drilling Efficiency Gains Drilling days down 11% YOY and 34% from 2012 Recent Divide County Bakken well drilled 17,750 in 10 days Drilling cost per foot down 22% YOY Average Days Spud to Rig Release 40 35…
  10. Q3 2015 Earnings Call – SM Energy Company – slide 10
    Optimization: Bakken Completion Efficiency Gains Expect to maintain improved efficiency regardless of market conditions Pad Development Zipper fracs Continuous execution improvement Significant completions savings due to market and…
  11. Q3 2015 Earnings Call – SM Energy Company – slide 11
    Optimization: Plug-and-Perf Completions Improving Economics Plug-and-perf completions have been employed by SM in both Divide County and Raven/Bear Den programs in the Williston Basin Plug-and-perf results show uplift in IRR Divide…
  12. Q3 2015 Earnings Call – SM Energy Company – slide 12
    Optimization: Midland Basin Shales Landing zone and completion optimization drive well performance Focus on Landing Zone Improves ROP WOLFCAMP B COMPLETION Wolfcamp B Landing Zone Optimization OPTIMIZATION IMPROVES PRODUCTION…
  13. Q3 2015 Earnings Call – SM Energy Company – slide 13
    Optimization: SM Energy a Leader in Well Performance Top Midland Basin IP Performance Wolfcamp B Midland Basin 1,800 19 15 1 1,600 1 1,400 Normalized to 7500 lateral length 24 Hr IP (BOEPD) 2 1,200 22 15 180 6 21 50…
  14. Q3 2015 Earnings Call – SM Energy Company – slide 14
    Inventory Upside Eagle Ford Pilot Test Progress Testing underway to evaluate substantial potential upside from existing assets Pilot Tests: 1) East Area Down-spacing 14-well 625 & 450 spacing 2) East Area Infill LEF W 2-well…
  15. Q3 2015 Earnings Call – SM Energy Company – slide 15
    Pilot Test 1: East Area 14-Well Spacing Test Testing 450 spacing has potential to increase EF inventory by 25% Pilot test area 16
  16. Q3 2015 Earnings Call – SM Energy Company – slide 16
    Inventory Upside: PT1 - 450 Spacing in East Production results to date for 450 spaced wells are in-line with 625 spaced wells 160 Cum Gross Wet Gas Production (MMcf per 1000' Lateral Length) 140 120 100 80 60 40 20…
  17. Q3 2015 Earnings Call – SM Energy Company – slide 17
    Inventory Upside: PT 1 - Early Pressure Data Encouraging Flowing pressures of 450 well spacing tests are greater than 625 well spacing; no indication of interference 6,000 5,000 Avg Casing Pressure (psi) 4,000 3,000…
  18. Q3 2015 Earnings Call – SM Energy Company – slide 18
    Inventory Upside: PT 3 Facies 3 & 6 Testing Upper Eagle Ford Facies 7 GR C203H GR C205H Ag - 2015 Aug - 2015 Facies 6 312 312 312 312 Facies 5 Facies 4 GR C202H GR C204H GR C206H Facies 3 Aug - 2015 Aug - 2015 Aug - 2015…
  19. Q3 2015 Earnings Call – SM Energy Company – slide 19
    Inventory Upside: Proving Up Bakken in Divide County Bakken interval has the potential to double Divide County inventory NORTH DAKOTA Bakken wells drill faster, therefore cheaper than Three Forks wells The Company completed 2 Divide…
  20. Q3 2015 Earnings Call – SM Energy Company – slide 20
    Looking Forward - Late 2015/2016 Focus on returns in low price environment Expect to allocate increased portion of capital to oily programs Permian Divide County Bakken/Three Forks Expect to start completing oily DUC wells in late…
  21. Q3 2015 Earnings Call – SM Energy Company – slide 21
    Summary Another strong quarter Projected Debt:Adjusted EBITDAX* 2.2x est. YE2015 Ample current liquidity: 1.3 B Sustainable business plan at low product prices Potential to double economic drilling inventory from existing asset…
  22. Q3 2015 Earnings Call – SM Energy Company – slide 22
    2015 Guidance Production FY 2015 Total Production (MMBOE) 63.6 64.4 Average daily production (MBOE/d) 174 176 Costs LOE (/BOE) 3.70 - 3.90 Ad Valorem (/BOE) 0.45 - 0.50 Transportation (/BOE) 6.10 - 6.25 Production taxes (% of…
  23. Q3 2015 Earnings Call – SM Energy Company – slide 23
    3rd Quarter 2015 Performance Production 3Q15 Total Production (MMBOE) 16.1 Average Daily Production (MBOE/d) 174.5 Pre-Hedge Realized Price (/BOE) 22.84 Post-Hedge Realized Price (/BOE) 29.92 Costs LOE (/BOE) 3.86 Ad Valorem…
  24. Q3 2015 Earnings Call – SM Energy Company – slide 24
    3Q15 Regional Realizations Pricing NYMEX WTI Oil (Bbl) 46.48 NYMEX LLS Oil (Bbl) 50.24 NYMEX Henry Hub Gas (MMBTU) 2.75 Hart Composite NGL (Bbl) 18.22 Production Volumes STGC Rockies Permian SM Total Oil (MBbls) 1,763 2,334 417…
  25. Q3 2015 Earnings Call – SM Energy Company – slide 25
    2015 Activity Wells Drilled, Flowing Completions & DUC Count Wells Drilled Flowing Completions Drilled and Uncompleted 3rd Quarter 2015 Year-to-Date 2015 3rd Quarter 2015 Year-to-Date 2015 Year-to-Date 2015 Region Gross Net Gross Net…
  26. Q3 2015 Earnings Call – SM Energy Company – slide 26
    Adjusted Net Income Reconciliation Reconciliation of net income (loss) (GAAP) to adjusted net loss (Non-GAAP): For the Three Months (in thousands, except per share data) Ended September 30, 2015 Reported Net income (GAAP) 3,114…
  27. Q3 2015 Earnings Call – SM Energy Company – slide 27
    Adjusted EBITDAX Reconciliation Reconciliation of net income (GAAP) to Adjusted EBITDAX (non-GAAP) to net cash provided For the Three Months by operating activities (GAAP): (in thousands) Ended September 30, 2015 Net income (GAAP)…
  28. Q3 2015 Earnings Call – SM Energy Company – slide 28
    Oil Derivative Position* Oil Swaps NYMEX Equivalent Oil Collars NYMEX Equivalent Period Volume (MBbls) /Bbl Period Volume (MBbls) Ceiling /Bbl Floor /Bbl 4Q15 1,137 90.15 4Q15 869 92.19 85.00 2015 Total 1,137 2015 Total 869 1Q16 1,868…
  29. Q3 2015 Earnings Call – SM Energy Company – slide 29
    Gas Derivative Position* Natural Gas Swaps NYMEX Equivalent Natural Gas Collars NYMEX Equivalent Period Volume /MMBTU Period Volume Ceiling Floor (MMBTU) (MMBTU) /MMBTU /MMBTU 4Q15 12,499,000 4.08 4Q15 5,157,000 4.36 4.05 2015 Total…
  30. Q3 2015 Earnings Call – SM Energy Company – slide 30
    NGL Derivative Position** NGL Swaps OPIS Eth Purity Mt Belv NYMEX Equivalent NGL Swaps OPIS IsoButane Mt Belv Non TET NYMEX Equivalent Period Volume (MBbls) /Bbl* Period Volume (MBbls) /Bbl* 1Q16 926 8.29 4Q15 276 25.30 2Q16 828 8.28…
  31. Q3 2015 Earnings Call – SM Energy Company – slide 31
    NGL Realizations 3Q15 benefitted 0.94/Bbl from propane and butane hedges SM NGL price realizations are predominantly tied to Mont Belvieu, fee-based contracts Differential reflects NGL barrel product mix and transportation and…
  32. Q3 2015 Earnings Call – SM Energy Company – slide 32
    Permian Sweetie Peck More Economic Inventory Prime location, significant value potential through proving up additional intervals TEXAS MIDLAND UPTON Net Acreage: 15,000 Predominantly 100% working interest contiguous…

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