Barclays CEO Energy-Power Conference September 6, 2016
SM Energy Creating Differential Value Vision Premier Operator, Top Tier Assets High quality acreage in Tier 1 areas Apply our demonstrated expertise Midland Basin scale to transform portfolio 3
Top Tier Performance Exceeding Expectations Across the Board Better wells, lower costs Across the board beat Production Outstanding execution and well performance Costs Capital spend guidance reduced, production guidance…
Top Tier Performance Premier Operator of Permian Assets Track record delivering better wells and lower costs at operated Sweetie Peck asset Best in class initial production rates in the Midland Basin Cost benchmarking indicates…
Top Tier Performance Proven Track Record Improving Performance J.P. Morgan 90-day oil cumulative production SM ranks 1 in Midland Basin SM wells outperformed the average peer by SM wells outperformed the average peer by 97% and…
Top Tier Performance Sweetie Peck Success Ability to Leverage Sweetie Peck Experience and Expertise in Howard County Spud to total depth time reduced 43% since 2015 Drilling and completion efficiency gains continuing 53% cost…
Permian Acquisition Why Howard County On a lateral adjusted basis, Howard County is the most productive(1) Howard County Ranks Best Based on Howard County Ranks Among Highest Cumulative Production per Well(2) Based on Oil Percentage…
Permian Acquisition Why Howard County Significant stacked pay area Excellent source rock Original-oil-in-place of up to 130 MMBbls per section 1,000 feet shallower targets than west side of the basin while maintaining thermal…
Permian Acquisition Summary Acreage: 24,783 net acres in Howard County, Texas(1) Production: 4,900 net Boe/d(2) plus two new wells August 2016; 140 wells producing Proved developed producing reserves: 6 MMBoe Producing and…
Permian Acquisition Substantial Multi-Bench Inventory Potential development model Up to 40 wells / section 24,783 net acres across 4 benches yields nearly 100,000 net equivalent acres Exploration potential in the Wolfcamp C and…
Permian Acquisition Strong Well Results Well Count Wells Type Curve Average 10,000 180 Oil Rate Normalized to 7,500' Equivalent Oil Rate (BOE/D) 1,000 120 Well Count 100 60 10 0 0 12 24 Months Seven operated…
Permian Acquisition Lower Spraberry and Wolfcamp A IRR Sensitivity Acquisition expected to deliver competitive Midland Basin Tier 1 economics Howard County, Texas Lower Spraberry and Wolfcamp A IRR Range(1) 80% 70% 60% 50%…
Permian Acquisition SM Expands to 46,750 net acres Following closing, Tier 1 Permian scale comparable to FANG and RSPP Permian Players Core Acreage(1) FANG: 54,100 net acres SM: 41,200 net acres(2) RSPP: 39,250 net acres (1)…
Eagle Ford Tier 1 Gas/NGL Asset, Top Tier Execution Better than expected performance New Galvan wells exceeding expectations Staggered UEF/LEF 625 within zone spacing / 312 spacing in plan view Choke managed to target rate…
Eagle Ford Tier 1 Gas/NGL Asset, Top Tier Execution Driving capital costs down (1) Total Capital Cost per Lateral Foot 1,400 1,200 1,000 800 600 400 200 - Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15…
Eagle Ford Tier 1 Gas/NGL Asset, Top Tier Execution 2016 activity is focused in Eagle Ford East including Lower and Upper Eagle Ford Lower Eagle Ford East IRR Sensitivity(1) 45% 40% 35% 2Q16 Average 30% Mt. Belvieu /Gal 25%…
Permian Acquisition Funding Largely funded through equity and convertible offerings plus announced acquisition 531 MM common shares offering(1) 166 MM convertible notes offering(1) 195 MM of announced, pending non-core asset sales…
Permian Acquisition Funding Substantial liquidity to bridge transaction timing Pro forma(1) liquidity: 750 MM estimated Pro forma(1) debt metrics post transaction close: Senior Secured Debt:TTM Adjusted EBITDAX < 1 times; max ratio…
Financial Discipline 2016 Driving Capital Efficiency Permian focus through year end(1) 8 160 7 140 Drilled But Uncompleted Gross Operated Wells 6 120 5 100 Operated Rigs 4 80 3 60 2 40 1 20 0 0 Dec Jan Feb…
Permian Program Value Creation(1) Projected rig count increase over the next two years expected to drive high margin oil growth 8 7 6 5 Operated Rigs 4 3 2 1 0 4Q16 2017 2018 Sweetie Peck Howard County…
Permian Acquisition Value Creation High margin oil growth drives cash flow growth Permian Oil Growth 2Q'16 4Q'17 (1) 2Q16 actual production relates to Sweetie Peck; Estimated 4Q17 production relates to Sweetie Peck and Howard…
SM Energy Creating Differential Value Vision Premier Operator, Top Tier Assets High quality acreage in Tier 1 areas Apply our demonstrated expertise Midland Basin scale to transform portfolio 23
Appendix 24
Wolfcamp B and Lower Spraberry IRR Sensitivity 2016 Permian activity focused in Wolfcamp B and Lower Spraberry; upside potential in additional intervals Wolfcamp B and Lower Spraberry IRR Range(1) 80% 70% 60% 50% IRR…
Bakken, Divide County IRR Sensitivity 2016 Activity focused in Divide County Bakken, Divide County IRR Sensitivity(1) 40% 35% 30% 25% IRR 20% 15% 10% 5% 0% 45 50 55 NYMEX WTI Well Cost: 4.1 MM Lateral Length:…
2016 Guidance(1) Raised production guidance; lowered capital and operating cost guidance Capital Spend FY 2016 Total Capital Spend, before acquisitions (MM)(2) 685 690 (3) Production FY 2016 Total Production (MMBOE) 53 57 Costs(3)…
2Q16 Regional Realizations Pricing NYMEX WTI Oil (/Bbl) 45.59 NYMEX LLS Oil (/Bbl) 47.40 NYMEX Henry Hub Gas (/MMBTU) 1.95 Hart Composite NGL (/Bbl) 20.04 Production Volumes Eagle Ford Rocky Mountain Permian SM Total Oil (MBbls)…
2016 Activity Wells Drilled, Flowing Completions and DUC Count Wells Drilled Flowing Completions DUC Count 2nd Quarter 2016 2016 YTD 2nd Quarter 2016 2016 YTD As of June 30, 2016 Region Gross Net Gross Net Gross Net Gross Net Gross…
Leasehold Summary(1) As of 6/30/16 Gross Acres Net Acres Eagle Ford Operated 166,952 161,475 Non-Operated 237,362 35,957 Rocky Mountain Divide 186,201 126,603 Raven/Bear Den 84,009 43,954 Powder River Basin 262,994 171,378…
Financial Discipline Hedging Provides Cash Flow Stability 70% of expected 3Q and 4Q 2016 production volumes hedged (at the midpoint of revised guidance) Approximately 65% of oil, 75% of natural gas and 60% of NGLs 55% of 2017…
Summary Derivative Positions By Quarter Through 2017 As of August 11, 2016(1) Fixed Swaps Oil Gas NGL(4) Volume Volume Volume Period (MBbls) /Bbl(2) (BBTU) /MMBTU(2) (MBbls) /Bbl(3) 3Q16 2,172 67.66 25,724 3.13 2,062 16.14 4Q16…
NGL Derivative Position Detail(1) NGL Swaps OPIS Eth Purity Mt Belv NGL Swaps OPIS IsoButane Mt Belv Non TET (2) (2) Period Volume (MBbls) /Bbl Period Volume (MBbls) /Bbl 3Q16 751 8.70 3Q16 200 23.24 4Q16 688 8.71 4Q16 182 23.25 2016…
Adjusted Net Loss Reconciliation Reconciliation of net loss (GAAP) to adjusted net loss (Non-GAAP): Three Months Ended (in thousands, except per share data) June 30, 2016 Reported net loss (GAAP) (168,681) Adjustments to net loss:…
Adjusted EBITDAX(1) Reconciliation Reconciliation of net loss(GAAP) to Adjusted EBITDAX (non- Three Months Ended Six Months Ended GAAP) to net cash provided by operating activities (GAAP): June 30, 2016 June 30, 2016 (in thousands)…
Total Capital Spend Reconciliation Reconciliation of Costs Incurred in Oil and Gas Activities Three Months Six Months (GAAP) to Total Capital Spend (Non-GAAP)(1) (in thousands) Ended Ended June 30, 2016 June 30, 2016 Costs incurred in…
Great Assets Eagle Ford 2Q16: Production of 10.9 MMBoe 9 gross/net wells completed NORTH AREA Top tier well performance with recent EAST AREA wells in gas/NGL areas Mexico MEXICO MEXICO SOUTH AREA TEXAS Operated Eagle…
Eagle Ford Tier 1 Gas/NGL Asset, Top Tier Execution Highest IP rates dont necessarily lead to best 2 year cumulative production Average 24 month Cumulative Production / Average Peak Month Production by Operator(1) 14 9,000 8,000…
NGL Uplift(1) by Region at 30 oil / 60 oil Eagle Ford top-tier geographic position to benefit from NGLs SM largest NGL producer in Eagle Ford Bakken -0.15/0.82 Niobrara Marcellus/ 0.03/0.46 Utica -0.01/0.42 Piceance…
NGL Realizations 37% increase in realized price (before hedges) from 1Q16 to 2Q16 SM NGL price realizations are predominantly tied to Mont Belvieu, fee-based contracts Differential reflects NGL barrel product mix and transportation…
Great Assets Bakken/Three Forks DIVIDE 2Q16: NORTH DAKOTA GOOSENECK Production of 2.6 MMBoe 120,000 net acres RAVEN / BEAR DEN 17 gross/14 net wells completed 44,000 net acres WILLIAMS Successfully employing diverter…
Permian Area Operators Howard County Rock Oil Element Callon (Big Star) Encana Surge Diamondback Qstar Oxy Energen Breitburn Other in area without shapefiles: Crownquest 43
Permian Area Operators Sweetie Peck 44
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…
Eagle Ford Area 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…
Divide Area 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 47
Raven/Bear Den Area 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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