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October 2016 Investor Presentation – SM Energy Company

SM Energy Company · Oct 18, 2016 · 28 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. October 2016 Investor Presentation – SM Energy Company – slide 1
    Coring Up in the Midland Basin October 2016 NYSE: SM sm-energy.com
  2. October 2016 Investor Presentation – SM Energy Company – slide 2
    President & CEO Jay Ottoson Creating Differential Value 3
  3. October 2016 Investor Presentation – SM Energy Company – slide 3
    SM Energy Creating Differential Value Vision Premier Operator, Top Tier Assets This transaction: High quality acreage in Tier 1 area Opportunity to apply our demonstrated expertise Midland Basin scale to transform…
  4. October 2016 Investor Presentation – SM Energy Company – slide 4
    SM Energy Creating Differential Value What we are achieving with QStar and Rock transactions: Midland Basin Scale 82,450 net acres in the Midland Basin 4,500 4,000 Massive Permian inventory increase 3,500 Inventory Locations…
  5. October 2016 Investor Presentation – SM Energy Company – slide 5
    Permian Program Value Creation SM Permian production growth outlook exceeds pure play peers 180% Permian Production Growth Rate(1) 160% 140% 2016e EV/EBITDAX(2) 120% 100% 80% 60% 40% 20% 0% SM Company A…
  6. October 2016 Investor Presentation – SM Energy Company – slide 6
    Permian Acquisition QStar Summary Acreage: 43,500 gross/35,700 net acres in Howard and Martin Counties, Texas(1) Production: 2,400 net Boe/d(2) Producing and prospective intervals: Lower Spraberry, Wolfcamp A and B, Middle…
  7. October 2016 Investor Presentation – SM Energy Company – slide 7
    Executive Vice President - Operations Herb Vogel Delivering Growth in the Midland Basin 8
  8. October 2016 Investor Presentation – SM Energy Company – slide 8
    SM Energy Outstanding Permian Performance Premier operator of Permian assets Track record of delivering better wells and lower costs at operated Sweetie Peck asset Best in class initial production rates in the Midland Basin Cost…
  9. October 2016 Investor Presentation – SM Energy Company – slide 9
    SM Energy Outstanding Permian Performance J.P. Morgan: SM ranks 1 in Midland Basin SM wells outperformed the average peer by SM wells outperformed the average peer by 97% and the nearest peer by 26% in 2015 98% and the nearest…
  10. October 2016 Investor Presentation – SM Energy Company – slide 10
    Howard County Outstanding Permian Performance BMO: 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…
  11. October 2016 Investor Presentation – SM Energy Company – slide 11
    Rock Oil Acquisition Outstanding Performance Actual well results exceeding expectations 140,000 120,000 Cumulative Oil Barrels 100,000 80,000 60,000 40,000 20,000 0 0 50 100 150 200 250 300 350 Producing Days…
  12. October 2016 Investor Presentation – SM Energy Company – slide 12
    QStar Acquisition Impact of Transaction Contiguous blocks of acreage = longer laterals(1) Combination with Rock Oil acquisition enables: - Economies of scale - Lower service and transportation costs Three intervals largely…
  13. October 2016 Investor Presentation – SM Energy Company – slide 13
    Top Tier Regional Well Performance: Howard County Silver City A 1HWA Eastland 15 2WH Callon Apache IP30: 2,123 BOED IP30*: 587 BOED *Short Lateral Adams 4231WA Oxy IP30: 1,636 BOED Wright 41-32 1SH Element Ponderosa L 1H IP30: 880…
  14. October 2016 Investor Presentation – SM Energy Company – slide 14
    Substantial Inventory Upside Beyond Acquisition Assumptions ACQUISITION BASIS UPSIDE 15
  15. October 2016 Investor Presentation – SM Energy Company – slide 15
    Lower Spraberry and Wolfcamp A IRR Sensitivity Acquisition will deliver Tier 1 economics QStar and Rock Oil Lower Spraberry and Wolfcamp A IRR Range(1) 80% 70% 60% 50% IRR 40% 30% 20% 10% 0% 45 50 55 NYMEX WTI…
  16. October 2016 Investor Presentation – SM Energy Company – slide 16
    Driving Value Creation Longer lateral lengths and higher sand loading improve returns 10 NPV10 Recent Strip Pricing(1) (MM) Wolfcamp A Central 8 Single Well Economics 6 4 2 0 1,370 lbs/ft 2,000 lbs/ft 1,370 lbs/ft…
  17. October 2016 Investor Presentation – SM Energy Company – slide 17
    Expanding Rig Program Impact of Transactions(1) Projected rig count: accelerated program adds value 12 11 11 10 9 Operated Rig Count 8 7 6 6 5 4 4 3 2 1 0 4Q16 2017 2018 Sweetie Peck Rock QStar (1) Based…
  18. October 2016 Investor Presentation – SM Energy Company – slide 18
    SM Company-wide Rig Program Historical and Projected Plenty of organizational capacity to ramp up in the Midland Basin 18 17 16 15 15 14 14 12 11 Rig Count 10 8 7 6 4 4 2 0 2012 2013 2014 2015 2016E 2017E…
  19. October 2016 Investor Presentation – SM Energy Company – slide 19
    Sizable Inventory Upside Gross location summary Sweetie Peck Rock Oil QStar (16,440 net acres) (25,000 net acres) (36,000 net acres) Total Previously Disclosed / Risked Lower and Middle Spraberry 199 145 208 552 Wolfcamp A and B…
  20. October 2016 Investor Presentation – SM Energy Company – slide 20
    Production: Significant High-Margin Growth(1) Projected SM Midland Basin net production 45,000 40,000 35,000 Production Boe/d 30,000 25,000 20,000 15,000 10,000 5,000 - 2016 2017 2018 Sweetie Peck Rock…
  21. October 2016 Investor Presentation – SM Energy Company – slide 21
    Chief Financial Officer Wade Pursell Prioritizing Debt Metrics and Liquidity While Delivering Competitive Scale 22
  22. October 2016 Investor Presentation – SM Energy Company – slide 22
    Financial Discipline Stability Balance sheet strength and flexibility, with ample liquidity Current Balance Sheet Liquidity 1.3 billion No bond maturities until 2021 Coverage metrics(1) offer flexibility: Senior Secured Debt:TTM…
  23. October 2016 Investor Presentation – SM Energy Company – slide 23
    QStar Acquisition Funding Expected funding through divestiture, equity issued to seller, credit facility Credit Facility 315 MM Raven/Bear-Den Divestiture Common Stock 785 MM(1) Issued to Seller(2) 500 MM (1) Gross…
  24. October 2016 Investor Presentation – SM Energy Company – slide 24
    Financial Discipline Stability Balance sheet strength and flexibility, with ample liquidity Pro-forma Balance Sheet Liquidity 925 million No bond maturities until 2021; 2021 notes callable in November 2016 Coverage metrics(1) offer…
  25. October 2016 Investor Presentation – SM Energy Company – slide 25
    Funding Estimated Cash Flow(1) v. Capex(2) Accelerated program drives rapid growth in cash flow; projected outspend expected to be funded through further portfolio management including sale of Eagle Ford non-op assets Estimated Outspend…
  26. October 2016 Investor Presentation – SM Energy Company – slide 26
    SM Energy Coring Up in the Midland Basin Parsley Energy RSP Permian Diamondback SM + QStar PF (1) 90,000 Net Acres 53,000 Net Acres 86,000 Net Acres 82,450 Net Acres Source: PLS, ITG and Company investor presentations. Note: Net…
  27. October 2016 Investor Presentation – SM Energy Company – slide 27
    SM Energy Creating Differential Value Vision Premier Operator, Top Tier Assets This transaction: High quality acreage in Tier 1 area Opportunity to apply our demonstrated expertise Midland Basin scale to transform…
  28. October 2016 Investor Presentation – SM Energy Company – slide 28
    Contact Information Jennifer Martin Samuels Senior Director, Investor Relations 303-864-2507 jsamuelssm-energy.com 29

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