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Barclays Bus Tour – SM Energy Company

SM Energy Company · Nov 29, 2016 · 37 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. Barclays Bus Tour – SM Energy Company – slide 1
    Generating Value in the Midland Basin November 29, 2016 NYSE: SM sm-energy.com
  2. Barclays Bus Tour – SM Energy Company – slide 2
    President & CEO Jay Ottoson Creating Differential Value 3
  3. Barclays Bus Tour – SM Energy Company – slide 3
    Vision Premier Operator of Top Tier Assets Differential Shareholder Returns High Margin Growth Improved Capital Efficiency Portfolio Changes (RockStar, Divestitures) 4
  4. Barclays Bus Tour – SM Energy Company – slide 4
    Howard & Martin Counties Acquired Assets Combined Acreage: added 60,500 net acres in Howard and Martin Counties, Texas(1) Production: 7,300 net Boe/d(2) Producing and prospective intervals: Lower Spraberry, Wolfcamp A and B,…
  5. Barclays Bus Tour – SM Energy Company – slide 5
    SM Energy Competitive Scale Midland Basin Scale and contiguous positions Parsley Energy RSP Permian Diamondback (2) SM + QStar PF (1) 90,000 Net Acres 53,000 Net Acres 86,000 Net Acres 83,750 Net 82,450 Net Acres Acres…
  6. Barclays Bus Tour – SM Energy Company – slide 6
    Midland Basin Acquisitions Creating Differential Value What we expect to achieve with QStar and Rock transactions: Midland Basin scale 83,750 net acres in the Midland Basin(1) 4,500 4,000 Massive Permian inventory increase…
  7. Barclays Bus Tour – SM Energy Company – slide 7
    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…
  8. Barclays Bus Tour – SM Energy Company – slide 8
    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…
  9. Barclays Bus Tour – SM Energy Company – slide 9
    Senior V.P. & Regional Manager Midland Basin Newt Newton Execution in the Midland Basin 10
  10. Barclays Bus Tour – SM Energy Company – slide 10
    Premier Operator Midland Basin Sweetie Peck Success Best in class Midland Basin well performance Track record of delivering better wells and lower costs at operated Sweetie Peck Net Production (BOEPD) Sweetie Peck asset 8,000 5%…
  11. Barclays Bus Tour – SM Energy Company – slide 11
    Premier Operator Midland Basin Sweetie Peck Success Best in class Midland Basin cost performance Spud to total depth time reduced approximately 40% since 2015 Drilling and completion efficiency gains continuing 53% cost…
  12. Barclays Bus Tour – SM Energy Company – slide 12
    Midland Basin Integrating Acquisitions Ability to leverage Sweetie Peck experience and expertise on RockStar Successfully transfer technical knowledge Accelerate learning curve Maximize drillable inventory Successfully transfer…
  13. Barclays Bus Tour – SM Energy Company – slide 13
    Midland Basin Team Expertise and competence to successfully execute plan More than 100 individuals focused on the region Integrated functional teamwork Land, Geosciences, Asset Management, Drilling, Completions, Production P&L…
  14. Barclays Bus Tour – SM Energy Company – slide 14
    Midland Basin You Get What You Measure Focused on metrics that drive results Focus on faster drilling times Increase completion efficiency Optimize completions to maximize productivity Generate strong cash margins Deliver…
  15. Barclays Bus Tour – SM Energy Company – slide 15
    Executive Vice President - Operations Herb Vogel Delivering Growth in the Midland Basin 16
  16. Barclays Bus Tour – SM Energy Company – slide 16
    Midland Basin Acquisitions Outstanding Well Results New well results exceeding expectations Blissard 20-29 1H WA 30-day IP: 1,775 Boe/d (91% oil) Tackleberry 3-well pad showing very strong results first few days on…
  17. Barclays Bus Tour – SM Energy Company – slide 17
    Midland Basin Acquisitions Outstanding Well Results RockStar well results exceeding expectations 140,000 120,000 Cumulative Oil Barrels (normalized to 7,500) 100,000 80,000 60,000 40,000 20,000 0 0 50 100 150…
  18. Barclays Bus Tour – SM Energy Company – slide 18
    Midland Basin Longer Laterals Drive Higher Returns Consolidation of drilling spacing units result in potential for longer laterals Sweetie Peck - Wolfcamp B Example YE15: 40% of laterals potentially greater than 5,000 YE16: 90% of…
  19. Barclays Bus Tour – SM Energy Company – slide 19
    Midland Basin Sweetie Peck IRR Sensitivity IRR at different lateral lengths Lower Spraberry 100% 90% 80% 70% 60% IRR 50% 40% 30% 20% 10% 0% 45 50 55 NYMEX WTI (/bbl) SP LSP 5,000'LL (660') SP LSP 7,600'LL (660') SP…
  20. Barclays Bus Tour – SM Energy Company – slide 20
    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…
  21. Barclays Bus Tour – SM Energy Company – slide 21
    Substantial Inventory Upside Potential Beyond Acquisition Assumptions ACQUISITION BASIS UPSIDE 22
  22. Barclays Bus Tour – SM Energy Company – slide 22
    Driving Value Creation Per Well Longer lateral lengths and higher sand loading improve returns 10 NPV10 Recent Strip Pricing(1) (MM) Wolfcamp A 8 Single Well Economics 6 4 2 0 1,370 lbs/ft 2,000 lbs/ft 1,370 lbs/ft…
  23. Barclays Bus Tour – SM Energy Company – slide 23
    Driving Value Creation Per Section Longer lateral lengths, higher sand loading and tighter spacing add value Wolfcamp A 100 90 Drilling Unit NPV10 Strip Pricing(1) (MM) 80 70 60 50 40 30 20 10 0 8 wells 12…
  24. Barclays Bus Tour – SM Energy Company – slide 24
    Midland Basin Acquisitions Impact of Transactions(1) Rig activity by area Mid Continent 2014 2017e East Texas Eagle Ford Credit Facility Powder River Permian Eagle Ford (including non-op) Permian Bakken Driving…
  25. Barclays Bus Tour – SM Energy Company – slide 25
    Midland Basin Acquisitions Impact of Transactions(1) Projected rig count: accelerated program expected to add value 12 11 11 10 9 Operated Rig Count 8 7 6 6 5 4 4 3 2 1 0 4Q16 2017E 2018E Sweetie Peck…
  26. Barclays Bus Tour – SM Energy Company – slide 26
    SM Company-wide Rig Program Historical and Projected Ample 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…
  27. Barclays Bus Tour – SM Energy Company – slide 27
    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 E 2018 E (1) Based on…
  28. Barclays Bus Tour – SM Energy Company – slide 28
    Midland Basin Acquisitions Infrastructure Excellent proximity to gathering/processing and takeaway with ample capacity Numerous gas gathering and processing options with ample capacity Oil and gas gathering lines on or near our…
  29. Barclays Bus Tour – SM Energy Company – slide 29
    Driving Value Creation Midland Basin Top Tier Margins Higher margins drive future cash flow growth Cash Margins at 50 Oil(1) 45 Realized Price per Boe 40.61 40 35 30 Realized Price per Boe 25 23.00 34 per Boe 20 Cash Margin…
  30. Barclays Bus Tour – SM Energy Company – slide 30
    Vision Premier Operator of Top Tier Assets Differential Shareholder Returns High Margin Growth Improved Capital Efficiency Portfolio Changes (RockStar, Divestitures) 31
  31. Barclays Bus Tour – SM Energy Company – slide 31
    Appendix 32
  32. Barclays Bus Tour – SM Energy Company – slide 32
    Midland Basin Wolfcamp Potential is Massive USGS November 2016: Largest continuous oil discovery ever found in U.S. All of SMs Midland Basin acreage is within the Wolfcamp A, Wolfcamp B (upper), and Wolfcamp C boundaries A large…
  33. Barclays Bus Tour – SM Energy Company – slide 33
    Midland Basin Acquisitions Sizeable 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…
  34. Barclays Bus Tour – SM Energy Company – slide 34
    Financial Discipline Pro Forma Year-end 2016 Balance sheet strength and flexibility, with expected significant liquidity Pro-forma Balance Sheet(1) Liquidity 900 million No bond maturities until 2021; 2021 notes callable starting…
  35. Barclays Bus Tour – SM Energy Company – slide 35
    Permian Area Operators Howard County SM Energy Callon Encana Surge/Yantai Xinchao Diamondback Oxy Energen BreitBurn 36
  36. Barclays Bus Tour – SM Energy Company – slide 36
    Permian Area Operators Sweetie Peck SM Energy Apache Chevron Concho Devon Diamondback Discovery Endeavor Exxon Legacy Oxy Pioneer Summit Miscellaneous
  37. Barclays Bus Tour – SM Energy Company – slide 37
    Contact Information Jennifer Martin Samuels Senior Director, Investor Relations 303-864-2507 jsamuelssm-energy.com 38

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