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Q4 2016 and Full Year 2016 – SM Energy Company

SM Energy Company · Feb 23, 2017 · 41 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 2016 and Full Year 2016 – SM Energy Company – slide 1
    Q4 & Full Year 2016 FEBRUARY 23, 2017 PREMIER OPERATOR OF TOP TIER ASSETS 1
  2. Q4 2016 and Full Year 2016 – SM Energy Company – slide 2
    SM Energy Transforming the Portfolio Ten transactions exceeding 6 billion in six months Built sizeable Midland Basin position, now at approximately 86,700 net acres Divested approximately 1.8B of non-core assets(1) 8/8/16…
  3. Q4 2016 and Full Year 2016 – SM Energy Company – slide 3
    SM Energy A Premier Operator of Top Tier Assets 3 Year Plan Expected Outcomes: Big growth in Big growth in Debt:EBITDAX Top Tier high-margin cash flow 2x in 2019 portfolio production 2017 Priorities: Midland Basin Focus…
  4. Q4 2016 and Full Year 2016 – SM Energy Company – slide 4
    2017 Planned Rig Activity and Completions By Month 2017 80 completions Midland, 35 completions Eagle Ford 14 120 Drilled But Uncompleted Gross Operated Wells 12 100 10 80 Operated Rigs 8 (1) Facilities 60 6% 6…
  5. Q4 2016 and Full Year 2016 – SM Energy Company – slide 5
    Big Expected Production Growth Retained Assets 100% CAGR Midland Basin More than 15% CAGR total retained assets 70,000 50% 60,000 40% 50,000 Production 30% 40,000 Oil % (MBoe) 30,000 20% 20,000 10%…
  6. Q4 2016 and Full Year 2016 – SM Energy Company – slide 6
    2017 Guidance(1) Capital & Production FY 2017 2017 Production by Quarter Total Capital Spend (MM)(2) (before acquisitions) 875 125 Total Production (MMBoe) 40 - 43 100 Costs Production (Boe/d) 75 LOE, including Ad Valorem…
  7. Q4 2016 and Full Year 2016 – SM Energy Company – slide 7
    Big Cash Flow Growth Driven by Expected Margin Expansion Operating margin expected to increase 80% 4Q16 2019 Production growth expected within cash flow in 2019 25 1,400 22 Operating Margin Cash Flow 19 /Boe /MM…
  8. Q4 2016 and Full Year 2016 – SM Energy Company – slide 8
    3-Year Plan Funded by Cash Flow and Divestitures Reinvesting expected sale proceeds to higher expected margin development and debt reduction 1,200 1,000 Divide County Debt sale Reduction 800 Facilities 6% MM (2) (1)…
  9. Q4 2016 and Full Year 2016 – SM Energy Company – slide 9
    Financial Discipline Year-End 2016 Significant liquidity provides flexibility in 2017 Borrowing Base 1.17 billion at year-end 2016 No bond maturities until 2021; 2021 notes callable; 2023 notes callable July 2017 Coverage metrics offer…
  10. Q4 2016 and Full Year 2016 – SM Energy Company – slide 10
    3-Year Plan Objective Net Debt : EBITDAX 2x Managing the balance sheet to the long-term 3,500 4 3,000 Net Debt : EBITDAX 3 Net Debt (MM) 2,500 Operated Eagle 2,000 Ford 20% Facilities 2 6% 1,500 Drilling and (2)…
  11. Q4 2016 and Full Year 2016 – SM Energy Company – slide 11
    2017 Capital Program Aggressive growth expected in the Midland Basin Total Capital Budget 875MM Operated Eagle Ford 20% Facilities 6% Drilling and (2) Completion (1) Other Midland 8% 86% Other Basin 86% 8% 80% Average…
  12. Q4 2016 and Full Year 2016 – SM Energy Company – slide 12
    Eagle Ford 2017 Plan Objectives Value creation through better wells, longer laterals, and optimum number of wells per section Meet leasehold obligations and marketing commitments Operated Eagle Ford Recent Well Results Focus on…
  13. Q4 2016 and Full Year 2016 – SM Energy Company – slide 13
    Eagle Ford East Increasing Value With More Wells Per Section 625 spacing exceeds 900 spacing type curve with staggered upper/lower drilling pattern 2015-2016 East Area 4Q16 Completions 50 40 Gross Cumulative Production…
  14. Q4 2016 and Full Year 2016 – SM Energy Company – slide 14
    Midland Basin 2017 Plan Objectives Value creation through better wells, longer laterals, and increasing wells per section Evaluate economics of drilling Midland Basin 86,700 net acres across position Lower Spraberry RockStar…
  15. Q4 2016 and Full Year 2016 – SM Energy Company – slide 15
    RockStar Top Tier Well Performance Continues SM Energy operated wells with greater than 6,900 lateral lengths 220,000 200,000 Blissard Ogre 180,000 160,000 Tackleberry WCA Cumulative Production (BOE) 140,000 (1) 120,000…
  16. Q4 2016 and Full Year 2016 – SM Energy Company – slide 16
    Howard County Recent Well Results Initial production rates on 8 new wells soundly beating acquisition assumptions Lateral IP Rate IP Well Name Interval Length (BOE/d) Days Tackleberry 43-42 A 1LS LS 7,873 1,286 30 Tackleberry…
  17. Q4 2016 and Full Year 2016 – SM Energy Company – slide 17
    Regional Well Projected Economics 2017 capital program focusing on areas with top tier returns RockStar Wolfcamp A Sweetie Peck Lower Spraberry 120% 120% 100% 100% 80% 80% IRR IRR 60% 60% 40% 40% 20% 20% 0% 0% 50…
  18. Q4 2016 and Full Year 2016 – SM Energy Company – slide 18
    Drilling Locations Inventory 20 Years at Current Activity Level Approximately 50 years including upside resources Midland Basin and Eagle Ford Operated Inventory 6,000 5,000 4,000 Locations 3,000 2,000 1,000…
  19. Q4 2016 and Full Year 2016 – SM Energy Company – slide 19
    Drilling Inventory Midland Basin Rapidly building inventory of economic locations October 2016 February 2017 5,000 5,000 4,500 4,500 4,000 4,000 3,500 3,500 Drilling Locations Drilling Locations 3,000 (gross…
  20. Q4 2016 and Full Year 2016 – SM Energy Company – slide 20
    SM Energy A Premier Operator of Top Tier Assets 3 Year Plan Expected Outcomes: Big growth in Big growth in Debt:EBITDAX Top Tier high-margin cash flow 2x in 2019 portfolio production 2017 Priorities: Midland Basin Focus…
  21. Q4 2016 and Full Year 2016 – SM Energy Company – slide 21
    Appendix 22
  22. Q4 2016 and Full Year 2016 – SM Energy Company – slide 22
    4th Quarter and Full Year 2016 Performance Production 4Q16 FY 2016 Total Production (MMBoe) 13.4 55.3 Average Daily Production (MBoe/d) 145.6 151.0 Pre-Hedge Realized Price (/Boe) 25.86 21.32 Post-Hedge Realized Price (/Boe) 27.59 27.28…
  23. Q4 2016 and Full Year 2016 – SM Energy Company – slide 23
    4Q16 Regional Realizations Pricing NYMEX WTI Oil (/Bbl) 49.29 NYMEX LLS Oil (/Bbl) 50.53 NYMEX Henry Hub Gas (/MMBTU) 2.98 Hart Composite NGL (/Bbl) 24.11 Production Volumes Eagle Ford Op(1) Rocky Mountain Permian Eagle Ford Non-Op…
  24. Q4 2016 and Full Year 2016 – SM Energy Company – slide 24
    2016 Activity Wells Drilled, Flowing Completions & DUC Count Wells Drilled Flowing Completions DUC Count 4th Quarter 2016 2016 YTD 4th Quarter 2016 2016 YTD As of 12/31/16 Region Gross Net Gross Net Gross Net Gross Net Gross Net…
  25. Q4 2016 and Full Year 2016 – SM Energy Company – slide 25
    Leasehold Summary Pro-forma for pending and planned transactions Net Acres(1) Pro-forma 12/31/16 Planned Sales Net Acres Midland Basin Sweetie Peck(2) 15,880 - 15,880 Halff East (Upton County) 5,985 - 5,985 RockStar 64,850 -…
  26. Q4 2016 and Full Year 2016 – SM Energy Company – slide 26
    Proved Reserves By Region Year-end 2016 Rocky Eagle Ford Permian Total Mountain Oil (MMbl) 35.4 37.9 31.6 104.9 Gas (Bcf) 989.3 94.6 27.2 1,111.1 NGL (MMBbl) 105.2 0.1 0.5 105.7 Total (MMBOE) 305.4 53.8 36.5 395.8 % Proved…
  27. Q4 2016 and Full Year 2016 – SM Energy Company – slide 27
    2016 Proved Reserves 2016 Additions and Revisions 53% Proved Developed 26% Oil, 47% Natural Gas, 27% NGLs 700 600 500 -48 16 +108 -55 -96 MMBOE 400 300 471 200 396 100 0 2015 YE Proved 2016 Reserve Divestitures…
  28. Q4 2016 and Full Year 2016 – SM Energy Company – slide 28
    Adjusted EBITDAX Reconciliation Reconciliation of net loss (GAAP) to Adjusted EBITDAX (non-GAAP) Three Months Ended Twelve Months Ended to net cash provided by operating activities (GAAP): (in thousands) December 31, 2016 December 31,…
  29. Q4 2016 and Full Year 2016 – SM Energy Company – slide 29
    Adjusted Net Loss Reconciliation Reconciliation of net loss (GAAP) to adjusted net loss Three Months Ended Twelve Months Ended (Non-GAAP): (in thousands, except per share data) December 31, 2016 December 31, 2016 Net loss (GAAP)…
  30. Q4 2016 and Full Year 2016 – SM Energy Company – slide 30
    Total Capital Spend Reconciliation Three Months Twelve Months Reconciliation of Costs Incurred in Oil and Gas Activities (GAAP) Ended Ended to Total Capital Spend (Non-GAAP)(1) (in thousands) December 31, 2016 December 31, 2016…
  31. Q4 2016 and Full Year 2016 – SM Energy Company – slide 31
    Financial Discipline Hedging Provides Cash Flow Stability 80% of expected 2017 production volumes hedged (at the midpoint of guidance) 65% of oil, 85% of natural gas and 75% of NGLs 80% of expected 1Q17 production volumes hedged (at…
  32. Q4 2016 and Full Year 2016 – SM Energy Company – slide 32
    Derivative Positions Summary By Quarter Through 2018 As of February 15, 2017 Fixed Swaps Oil Gas NGL(3) Volume Volume Volume (2) Period (MBbls) /Bbl(1) (BBTU) /MMBTU(1) (MBbls) /Bbl 1Q17 1,574 46.41 29,420 3.76 1,911 19.12 2Q17…
  33. Q4 2016 and Full Year 2016 – SM Energy Company – slide 33
    NGL Derivative Position Detail(1) NGL Swaps OPIS Eth Purity Mt Belv NGL Swaps OPIS Propane Mt Belv Non-TET NGL Swaps OPIS IsoButane Mt Belv Non TET Volume Volume Volume (2) (2) (2) Period (MBbls) /Bbl Period (MBbls) /Bbl Period…
  34. Q4 2016 and Full Year 2016 – SM Energy Company – slide 34
    NGL Realizations 70% increase in realized price (before hedges) from 1Q16 to 4Q16 SM NGL price realizations are predominately tied to Mont Belvieu, fee based contracts Differential reflects NGL barrel product mix and transportation…
  35. Q4 2016 and Full Year 2016 – SM Energy Company – slide 35
    Midland Basin Infrastructure Excellent proximity to gathering/processing and takeaway with significant capacity Oil Gas NGLs 100% sold at wellhead 100% sold at wellhead 100% sold at wellhead 65% on pipeline (35% trucked) 100% third…
  36. Q4 2016 and Full Year 2016 – SM Energy Company – slide 36
    RockStar Premier Operator and Top Tier Well Performance 10 of the top 40 wells in the area are operated by SM Energy 350 East Martin and West Howard Counties Top 40 Wells in the Area 300 IP-30/ 1,000 lateral ft. 250 200…
  37. Q4 2016 and Full Year 2016 – SM Energy Company – slide 37
    Howard County Operators SM Energy Callon Encana Surge/Yantai Xinchao Diamondback Oxy Energen BreitBurn Sabalo 38
  38. Q4 2016 and Full Year 2016 – SM Energy Company – slide 38
    Sweetie Peck Operators SM Energy Apache Chevron Concho Devon Diamondback Discovery Endeavor Exxon Legacy Oxy Pioneer Summit Miscellaneous 39
  39. Q4 2016 and Full Year 2016 – SM Energy Company – slide 39
    Eagle Ford Operators APC APC APC CHK Dimmit APC SN Lewis APC SM EF North CHK NBL (ROSE) SM EF East SM EF South SFY 40
  40. Q4 2016 and Full Year 2016 – SM Energy Company – slide 40
    Divide County Operators Divide Williams 41
  41. Q4 2016 and Full Year 2016 – SM Energy Company – slide 41
    Contact Information Jennifer Martin Samuels Senior Director, Investor Relations 303-864-2507 jsamuelssm-energy.com 43

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