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Scotia Howard Weil 2016 Energy Conference – SM Energy Company

SM Energy Company · Mar 21, 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. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 1
    Scotia Howard Weil 2016 Energy Conference March 21, 2016
  2. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 2
    SM Portfolio Core Basins, Substantial Resource Inventory Williston Basin - Bakken/Three Forks 90 MMBoe (net) 430 gross, operated locations Midland Basin - Wolfcamp/Spraberry 110 MMBoe (net) 350 gross, operated locations…
  3. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 3
    SM Energy Managing a Cyclical Business Preserve balance sheet strength Improve the portfolio Core up Build a strong hedge position Mid-cycle Preserve liquidity Improve well results and capture cost savings Build on quality…
  4. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 4
    Managing to the Long-term Driving Shareholder Value 9 of 23 peers are expected to exceed 4 times debt:EBITDAX year-end 2016 20 of 23 peers have issued equity, diluting their long-term shareholders SM only company expected to be below…
  5. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 5
    Balance Sheet and Liquidity Ample liquidity with 0.2 B drawn on 1.5 B Commitments and 2.0 B Borrowing Base No bond maturities until 2021 Coverage - Debt:TTM Adjusted EBITDAX 2.3 times*; 2016/17 Plan expected to stay below 4.0…
  6. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 6
    Hedging Provides Cash Flow Stability 55% of 2016 production volumes hedged (at the midpoint of guidance) Approximately 40% of oil, 60% of natural gas and 65% of NGLs 35% of 2017 production hedged (assuming similar production level to…
  7. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 7
    SM Portfolio 2016 Development Plan Williston Basin - Bakken/Three Forks 90 MMBoe (net) 430 gross locations Midland Basin - Wolfcamp/Spraberry 110 MMBoe (net) 350 gross locations Maverick Basin - Eagle Ford 900 MMBoe 780…
  8. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 8
    2016 Capital Program Capex cut 46% from 2015; spending less than projected EBITDAX 705 MM TOTAL CAPITAL BUDGET: 2016 PLAN: Financial strategy to preserve liquidity and maintain debt:EBITDAX < 4.0 times Permian 30% Operating…
  9. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 9
    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…
  10. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 10
    Permian Midland Basin Prime location; significant value potential through proving up additional intervals 2015 Top Midland Basin well performance TEXAS Net Acreage: 16,000 Improved completions, leading to better wells at lower…
  11. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 11
    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 15 180 6 21 50 28 1,000…
  12. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 12
    Wolfcamp B Performance v. 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 Operator C…
  13. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 13
    Lower Spraberry Rate of Return Sensitivity to Flat Oil Price Continuing to lower well costs 70% Lateral Length: 7,600 60% 50% 2016 Cost: 5.3 MM 40% IRR % 30% 2015 Cost: 6.5 MM 20% 10% 0% 40 50 60 NYMEX WTI 2015…
  14. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 14
    Bakken/Three Forks DIVIDE 2015 NORTH DAKOTA Production up 25% GOOSENECK Added Bakken inventory 120,000 net acres RAVEN / BEAR DEN Costs down to 4.5MM for a 10,000 ft WILLIAMS 44,000 net acres lateral in Divide County, North…
  15. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 15
    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…
  16. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 16
    Divide County Rate of Return Sensitivity to Flat Oil Price 45% 40% 2016 Divide County Three Forks Well Cost: 4.5 MM Lateral Length: 10,000 35% 30% 25% IRR % 20% 15% 10% 5% 0% 40 50 60 NYMEX WTI DIVIDE COUNTY -…
  17. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 17
    Operated Eagle Ford 2015 Production up 19% D& C 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…
  18. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 18
    Eagle Ford Driving Inventory Growth Thickness allows for joint development of Upper and Lower Eagle Ford 8 - 10 Wells / Section Pre 2015 Assumptions Austin Chalk Zone F7 Improved completion designs Zone F6 allow for reduced LEF 500…
  19. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 19
    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…
  20. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 20
    Proved Reserves History Production Replacement Ratio averages 347% Reserve 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 Production…
  21. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 21
    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…
  22. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 22
    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…
  23. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 23
    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 1,100 1,000 110 MMBOE 1,000 Permian 95 90…
  24. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 24
    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…
  25. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 25
    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…
  26. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 26
    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…
  27. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 27
    2015 Activity Wells Drilled, Flowing Completions & DUC Count 31
  28. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 28
    Regional Leasehold Summary* As of 12/31/15 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…
  29. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 29
    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…
  30. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 30
    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…
  31. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 31
    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…
  32. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 32
    Summary Derivative Positions By Quarter Through 2017 as of March 15, 2016* Oil Gas NGL**** Volume Volume Volume Period (MBbls) /Bbl** (BBTU) /MMBTU** (MBbls) /Bbl*** 1Q16 1,868 86.93 23,341 3.82 2,303 15.81 2Q16 1,752 86.73 20,780…
  33. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 33
    NGL Derivative Position Detail** 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…
  34. Scotia Howard Weil 2016 Energy Conference – 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. Scotia Howard Weil 2016 Energy Conference – SM Energy Company – slide 35
    Permian Peer Operators 39
  36. Scotia Howard Weil 2016 Energy Conference – 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. Scotia Howard Weil 2016 Energy Conference – 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. Scotia Howard Weil 2016 Energy Conference – 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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