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Q4 2015 Results – SM Energy Company

SM Energy Company · Feb 24, 2016 · 38 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. Q4 2015 Results – SM Energy Company – slide 1
    4Q15 Earnings Call February 24, 2016 Preserve, Persevere and Progress
  2. Q4 2015 Results – SM Energy Company – slide 2
    SM Energy Introduction Preserve Liquidity Persevere Debt Adjusted Per Share Focus Progress Well Results and Portfolio 4
  3. Q4 2015 Results – SM Energy Company – slide 3
    Balance Sheet and Liquidity Steadfast in our plan to keep debt metrics and liquidity in good standing 1. Ample liquidity with 0.2 B drawn on 1.5 B Commitments and 2.0 B Borrowing Base 2. No maturities until 2021 (excluding revolver)…
  4. Q4 2015 Results – SM Energy Company – slide 4
    2016 Capital Program Capex cut 46% from 2015; spending less than projected EBITDAX 705 MM TOTAL CAPITAL BUDGET: 2016 CAPITAL PROGRAM: Operating strategy to drive cash flow Permian and improved margins by increasing oil 30% mix…
  5. Q4 2015 Results – SM Energy Company – slide 5
    2016 Activity Reducing Rigs and Increasing Completions Driving capital efficiency in 2016 with more completions 8 160 7 140 Drilled but Uncompleted Gross Operated Wells 6 120 5 100 Operated Rigs 4 80 3 60 2 40…
  6. Q4 2015 Results – SM Energy Company – slide 6
    Hedging Provides Cash Flow Stability 50% of 2016 production volumes hedged (at the midpoint of guidance) Approximately 30% of oil, 55% of natural gas and 60% of NGLs 76,135 BBTU of 2017 natural gas hedged at average price of…
  7. Q4 2015 Results – SM Energy Company – slide 7
    2015 Performance: Excellent Operational Execution Well performance and cost focus PRODUCTION UP 17% YOY 200 2015 Production - 64.2 MMBOE 180 160 176 Beat original guidance and on high end of 140 151 MBOE/d most recently…
  8. Q4 2015 Results – SM Energy Company – slide 8
    Eagle Ford World Class Asset 2015 Production up 19% Costs declined more than 40%* Improved completions; established NORTH AREA Upper Eagle Ford; testing down- spacing and in-fill drilling EAST AREA Mexico MEXICO MEXICO 2016…
  9. Q4 2015 Results – SM Energy Company – slide 9
    Inventory Upside Eagle Ford Pilot Tests Extensive Eagle Ford tests drive significant growth in economic inventory Pilot Tests: 1) East Area Down-spacing 14-well 625 & 450 spacing 2) East Area Infill LEF W 2-well down-spaced infill…
  10. Q4 2015 Results – SM Energy Company – slide 10
    Operated Eagle Ford Driving Capital Costs Down Total D&C Cost per Lateral Foot 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 1/1/2014 4/11/2014 7/20/2014 10/28/2014 2/5/2015 5/16/2015 8/24/2015 12/2/2015…
  11. Q4 2015 Results – SM Energy Company – slide 11
    Bakken/Three Forks World Class Asset DIVIDE 2015 NORTH DAKOTA Production up 25% GOOSENECK Costs down to 4.5MM for a 10,000 ft 120,000 net acres lateral in Divide County, North Dakota RAVEN / BEAR DEN 44,000 net acres WILLIAMS…
  12. Q4 2015 Results – SM Energy Company – slide 12
    Optimization: Continued Success with Plug-and-Perf Completions Plug-and-perf completions have been employed by SM in both Divide County and Raven/Bear Den programs in the Williston Basin Divide TFS Results Raven/BD Bakken Results…
  13. Q4 2015 Results – SM Energy Company – slide 13
    Divide County Rate of Return Sensitivity to Flat Oil Price 100% 90% 2016 Divide County Three Forks Well Cost: 4.5 MM Lateral Length: 10,000 80% 70% 60% 50% IRR % 40% 30% 20% 10% 0% 40 50 60 70 80 NYMEX WTI DIVIDE…
  14. Q4 2015 Results – SM Energy Company – slide 14
    Permian Sweetie Peck More Economic Inventory Prime location; significant value potential through proving up additional intervals 2015 Acreage held by production TEXAS Capex redeployed to other areas Top Midland Basin IP…
  15. Q4 2015 Results – SM Energy Company – slide 15
    Permian Sweetie Peck: Leader in Midland Basin 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…
  16. Q4 2015 Results – SM Energy Company – slide 16
    Sweetie Peck Wolfcamp B Performance vs Peers 300 Wolfcamp B Normalized Production SP: 5,000' 1,540 SP: 5,000' 1,897 SP: 5,000' 1,869-ZIP 250 SP: 7,500' 1,617 SP: 7,500' 1,884-SW SP: 7,500' 2,500 Operator A Operator B 200…
  17. Q4 2015 Results – SM Energy Company – slide 17
    Permian Lower Spraberry Rate of Return Sensitivity to Flat Oil Price Meeting hurdle rate returns at 40 oil 110% Lateral Length: 7,600 100% 90% 80% 70% 60% 2016 Cost: 5.8 MM IRR % 50% 40% 30% 2015 Cost: 6.5 MM 20% 10%…
  18. Q4 2015 Results – SM Energy Company – slide 18
    2015 Proved Reserves* 2015 Additions and Revisions +208 MMBOE reserve additions and performance revisions 52% Proved Developed 31% Oil, 45% Natural Gas, 24% NGLs 700 +47 600 -117 +161 500 -79 -63 MMBOE 400 300 522 471…
  19. Q4 2015 Results – SM Energy Company – slide 19
    Reserves Better Wells, Lower Costs Successful 2015 testing and enhanced completions grow reserves +47 MMBOE Positive Performance Revision Largest in Company History Plug-N-Perf completions and lower operating costs in Bakken/Three…
  20. Q4 2015 Results – SM Energy Company – slide 20
    Proved Reserve - History Production Replacement Ratio averages 347% Reserve growth CAGR 23% since 2010 Reserve History 600 548 500 471 400 429 (MMBOE) 300 293 200 210 164 100 0 2010 2011 2012 2013 2014 2015…
  21. Q4 2015 Results – SM Energy Company – slide 21
    Drilling Inventory Substantial Growth in 2015 Continuing to drive value from current asset base More upside potential to realize 1,775 1,800 150 1,600 235 1,400 1,200 1,000 MMBOE 1,000 Permian 95 Bakken/Three Forks…
  22. Q4 2015 Results – SM Energy Company – slide 22
    2016 Guidance* Capital FY 2016 Total Capital, before acquisitions (MM) 705 Production FY 2016 Total Production (MMBOE) 51 55 Costs LOE, including Ad Valorem (/BOE) 4.10 - 4.50 Transportation (/BOE) 6.10 - 6.30 Production taxes…
  23. Q4 2015 Results – SM Energy Company – slide 23
    4th Quarter and Full Year 2015 Performance Production 4Q15 FY 2015 Total Production (MMBOE) 14.9 64.2 Average Daily Production (MBOE/d) 162.1 175.9 Pre-Hedge Realized Price (/BOE) 20.03 23.36 Post-Hedge Realized Price (/BOE) 28.40…
  24. Q4 2015 Results – SM Energy Company – slide 24
    4Q15 Regional Realizations Pricing NYMEX WTI Oil (/Bbl) 42.02 NYMEX LLS Oil (/Bbl) 43.51 NYMEX Henry Hub Gas (/MMBTU) 2.11 Hart Composite NGL (/Bbl) 18.48 Production Volumes Eagle Ford* Rockies Permian SM Total Oil (MBbls) 1,715…
  25. Q4 2015 Results – SM Energy Company – slide 25
    Proved Reserves By Region Year-end 2015 Proved Reserves South Texas & Rocky Permian Total Gulf Coast Mountain Oil (MMbl) 43.6 88.2 13.4 145.3 Gas (Bcf) 1,116.9 102.9 44.2 1,264.0 NGL (MMBbl) 112.6 2.8 - 115.4 Total (MMBOE) 342.4 108.1…
  26. Q4 2015 Results – SM Energy Company – slide 26
    2015 Activity Wells Drilled, Flowing Completions & DUC Count 30
  27. Q4 2015 Results – SM Energy Company – slide 27
    Regional Leasehold Summary* Gross Acres Net Acres Eagle Ford Operated 166,951 161,474 Non-Operated 237,363 35,958 Rockies Divide 185,992 117,286 Raven/Bear Den 80,529 44,417 Powder River Basin 268,850 204,381 Rockies Other…
  28. Q4 2015 Results – SM Energy Company – slide 28
    Adjusted Net Income Reconciliation Reconciliation of net income (loss) (GAAP) to adjusted net loss (Non-GAAP): Three Months Ended Twelve Months Ended (in thousands, except per share data) December 31, 2015 December 31, 2015 Reported Net…
  29. Q4 2015 Results – SM Energy Company – slide 29
    Adjusted EBITDAX(1) Reconciliation Reconciliation of net income (GAAP) to Adjusted EBITDAX (non-GAAP) Three Months Ended Twelve Months Ended to net cash provided by operating activities (GAAP): (in thousands) December 31, 2015 December…
  30. Q4 2015 Results – SM Energy Company – slide 30
    Total Capital Spend Reconciliation Reconciliation of Cost Incurred in Oil and gas Activities (GAAP) to Total Twelve Months Ended Capital Spend (Non-GAAP)(1) December 31, 2015 Development costs (2) 1,234,114 Exploration costs 132,465…
  31. Q4 2015 Results – SM Energy Company – slide 31
    Summary Derivative Positions By Quarter Through 2017 as of February 23, 2016* Oil Gas NGL**** Volume Volume Volume Period (MBbls) /Bbl** (BBTU) /MMBTU** (MBbls) /Bbl*** 1Q16 1,868 86.93 23,341 3.82 2,274 15.74 2Q16 1,752 86.73…
  32. Q4 2015 Results – SM Energy Company – slide 32
    Oil and Natural Gas Derivative Positions* Oil Swaps Natural Gas Swaps Period Volume (MBbls) /Bbl Period Volume /MMBTU (BBTU) 1Q16 1,868 86.93 1Q16 23,341 3.82 2Q16 1,752 86.73 2Q16 20,780 3.40 3Q16 1,170 90.29 3Q16 18,829 3.38 4Q16…
  33. Q4 2015 Results – SM Energy Company – slide 33
    NGL Derivative Position** NGL Swaps OPIS Eth Purity Mt Belv NGL Swaps OPIS IsoButane Mt Belv Non TET Period Volume (MBbls) /Bbl* Period Volume (MBbls) /Bbl* 1Q16 926 8.29 1Q16 146 25.33 2Q16 828 8.28 2Q16 174 24.68 3Q16 751 8.70 2016…
  34. Q4 2015 Results – SM Energy Company – slide 34
    NGL Realizations 4Q15 benefited 0.61/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…
  35. Q4 2015 Results – SM Energy Company – slide 35
    Permian Peer Operators 39
  36. Q4 2015 Results – SM Energy Company – slide 36
    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…
  37. Q4 2015 Results – SM Energy Company – slide 37
    Divide Peer Operators Canada AE CPEG BH HES CPEG SRC MV MV CLR MRX HNT NP Divide Williams CLR CLR CPEG HES Source: IHS Inc. November 2015 41
  38. Q4 2015 Results – SM Energy Company – slide 38
    Raven/Bear Den Peer Operators STO HES XTO EOG SLN Raven Bear Den HES CLR WLL OAS OAS Williams NFX COP STO McKenzie XTO WLL OAS EOG OAS CLR HES STO SLN XTO XTO OAS NFX CLR COP QEP WLL HES XTO…

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