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Jefferies 2015 Energy Conference – SM Energy Company

SM Energy Company · Nov 11, 2015 · 44 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. Jefferies 2015 Energy Conference – SM Energy Company – slide 1
    November 2015 Clear and Credible Path
  2. Jefferies 2015 Energy Conference – SM Energy Company – slide 2
    Why SM Energy Top-tier performer in debt-adjusted per share growth Strong balance sheet Decades of current economic inventory, with significant inventory growth potential without acquisitions or dilution OPERATING AREAS…
  3. Jefferies 2015 Energy Conference – SM Energy Company – slide 3
    Industry leader in Debt-Adjusted Per Share Growth Consistently a top-quartile performer: only 2 companies are top-tier in all categories 40% 60% 3 YR CAGR EBITDA(X)/DA share 3 YR CAGR Production/DA share 30% 50% 40% 20% 30% 10%…
  4. Jefferies 2015 Energy Conference – SM Energy Company – slide 4
    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…
  5. Jefferies 2015 Energy Conference – SM Energy Company – slide 5
    Economic Inventory Greater than 1 Billion BOE Current Economic Inventory* in Operated Development Programs Williston Basin 90 MMBOE (net) 500 gross locations Midland Basin 75 MMBOE (net) 250 gross locations Eagle Ford 900…
  6. Jefferies 2015 Energy Conference – SM Energy Company – slide 6
    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…
  7. Jefferies 2015 Energy Conference – SM Energy Company – slide 7
    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…
  8. Jefferies 2015 Energy Conference – SM Energy Company – slide 8
    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…
  9. Jefferies 2015 Energy Conference – SM Energy Company – slide 9
    High Quality Portfolio 2016 program is expected to offer growth with solid returns IRR Sensitivities to Oil Price* Eagle Ford East Bakken, Divide County Lower Spraberry 60% 60% 60% 50% 50% 50% 40% 40% 40% ** 30% 30% 30% 20%…
  10. Jefferies 2015 Energy Conference – SM Energy Company – slide 10
    Potential to Double Inventory on Existing Assets Eagle Ford thick pay upside Potential to double Eagle Ford inventory through optimizing spacing and landing zones Bakken interval in Divide County Geologic sweet spot with potential…
  11. Jefferies 2015 Energy Conference – SM Energy Company – slide 11
    Eagle Ford World Class Asset NORTH AREA Net Production (MBOE/d) 150 EAST AREA Mexico 100 MEXICO 50 MEXICO SOUTH AREA TEXAS 0 2009 2010 2011 2012 2013 2014 3Q15* Operated Non-operated *YTD through 3Q15 Operated Eagle…
  12. Jefferies 2015 Energy Conference – SM Energy Company – slide 12
    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…
  13. Jefferies 2015 Energy Conference – SM Energy Company – slide 13
    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…
  14. Jefferies 2015 Energy Conference – SM Energy Company – slide 14
    Inventory Upside Pilot Test 1 East Area 14-Wells Testing 450 spacing has potential to increase EF inventory by 25% Pilot test area 15
  15. Jefferies 2015 Energy Conference – SM Energy Company – slide 15
    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…
  16. Jefferies 2015 Energy Conference – SM Energy Company – slide 16
    Inventory Upside PT 1 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 2,000…
  17. Jefferies 2015 Energy Conference – SM Energy Company – slide 17
    Inventory Upside PT 3 Facies 3 & 6 Testing Upper Eagle Ford Facies 7 GR C203H GR C205H Facies 6 145 Facies 5 312 312 312 312 Facies 4 Facies 3 Facies 2 GR C202H GR C204H GR C206H 145 Lower Eagle Ford Facies 1 Early…
  18. Jefferies 2015 Energy Conference – SM Energy Company – slide 18
    Bakken/Three Forks World Class Asset DIVIDE NORTH DAKOTA GOOSENECK 120,000 net acres Net Production RAVEN / BEAR DEN 25 WILLIAMS 40,000 net acres 20 15 ROOSEVELT 10 5 0 MCKENZIE 2009 2010 2011 2012 2013 2014…
  19. Jefferies 2015 Energy Conference – SM Energy Company – slide 19
    Geological Sweet Spot Divide County Unique positioning among peers PhiH of Middle Bakken and Upper Three Forks Well results largely driven by: Hydrocarbon charge thermal maturity Reservoir quality PhiH (porosity & thickness)…
  20. Jefferies 2015 Energy Conference – SM Energy Company – slide 20
    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 30…
  21. Jefferies 2015 Energy Conference – SM Energy Company – slide 21
    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…
  22. Jefferies 2015 Energy Conference – SM Energy Company – slide 22
    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…
  23. Jefferies 2015 Energy Conference – SM Energy Company – slide 23
    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…
  24. Jefferies 2015 Energy Conference – SM Energy Company – slide 24
    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…
  25. Jefferies 2015 Energy Conference – SM Energy Company – slide 25
    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 Improves…
  26. Jefferies 2015 Energy Conference – SM Energy Company – slide 26
    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…
  27. Jefferies 2015 Energy Conference – SM Energy Company – slide 27
    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…
  28. Jefferies 2015 Energy Conference – SM Energy Company – slide 28
    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…
  29. Jefferies 2015 Energy Conference – SM Energy Company – slide 29
    Appendix
  30. Jefferies 2015 Energy Conference – SM Energy Company – slide 30
    SM Energy at a Glance Operations focused in Eagle Ford and Bakken/Three Forks Enterprise Value*: 5 billion 2014 Proved Reserves: 548 MMBOE 2015e** Production: 64 MMBOE / 175 MBOE/d Current Inventory: 20x 2014 Production Debt:Adjusted…
  31. Jefferies 2015 Energy Conference – SM Energy Company – slide 31
    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…
  32. Jefferies 2015 Energy Conference – SM Energy Company – slide 32
    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…
  33. Jefferies 2015 Energy Conference – SM Energy Company – slide 33
    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…
  34. Jefferies 2015 Energy Conference – SM Energy Company – slide 34
    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…
  35. Jefferies 2015 Energy Conference – SM Energy Company – slide 35
    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…
  36. Jefferies 2015 Energy Conference – SM Energy Company – slide 36
    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)…
  37. Jefferies 2015 Energy Conference – SM Energy Company – slide 37
    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…
  38. Jefferies 2015 Energy Conference – SM Energy Company – slide 38
    Summary Derivative Positions By Quarter Through 2016 as of October 21, 2015* Oil Gas NGL**** Volume Volume Volume Period (MBbls) /Bbl** (BBTU) /MMBTU** (MBbls) /Bbl*** 4Q15 2,006 87.92 17,656 4.07 1,709 21.58 1Q16 1,868 86.93…
  39. Jefferies 2015 Energy Conference – SM Energy Company – slide 39
    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…
  40. Jefferies 2015 Energy Conference – SM Energy Company – slide 40
    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…
  41. Jefferies 2015 Energy Conference – SM Energy Company – slide 41
    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…
  42. Jefferies 2015 Energy Conference – SM Energy Company – slide 42
    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…
  43. Jefferies 2015 Energy Conference – SM Energy Company – slide 43
    Eagle Ford Peer Operators APC APC APC CHK APC SN Lewis SM EF North APC CHK NBL (ROSE) SM EF East SM EF South SFY Note: SM is a working interest partner in APC acreage with working interests that range from…
  44. Jefferies 2015 Energy Conference – SM Energy Company – slide 44
    Pilot Test 5: LEF/UEF Stack Stagger Co-Development Triple the number of wells per section with multiple Eagle Ford landing zones 1 PAD 120 120 85 110 85 70 12-well North Area stack stagger test expected completion at end of…

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