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Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company

SM Energy Company · Mar 27, 2017 · 40 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 45th Annual Energy Conference – SM Energy Company – slide 1
    Scotia Howard Weil 2017 Energy Conference MARCH 27, 2017 PREMIER OPERATOR OF TOP TIER ASSETS 1
  2. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 2
    SM Energy Focused on Two Core Assets Top tier oil in Midland + top tier NGLs and gas in Eagle Ford Midland Basin Sweetie Peck/RockStar Maverick Basin Eagle Ford Successful transformation to core up portfolio 3 3
  3. Scotia Howard Weil 45th Annual Energy Conference – 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. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 4
    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%…
  5. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 5
    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…
  6. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 6
    3-Year Plan Funded by Cash Flow and Divestitures Planning to reinvest expected sale proceeds to higher expected margin development and debt reduction 1,200 1,000 Divide County Debt sale Reduction 800 Facilities MM 6%…
  7. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 7
    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…
  8. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 8
    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 Approximately 1/3 of expected 2018 volumes hedged…
  9. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 9
    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)…
  10. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 10
    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…
  11. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 11
    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 Wolfcamp A…
  12. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 12
    Midland Basin Setting Up for 11 Rig Program in 2018 Excellent vendor relationships and continued improvements in operating efficiencies set the stage for expansion in 2018 Significant experience Sufficient takeaway in the basin -…
  13. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 13
    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…
  14. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 14
    Howard County Recent Well Results Initial production rates on 8 recent 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…
  15. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 15
    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…
  16. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 16
    Eagle Ford East Increasing Value With More Wells Per Section 312 plan view/625 spacing per interval exceeds 900 spacing type curve with staggered upper/lower drilling pattern 2015-2016 East Area 4Q16 Completions 50 40 Gross…
  17. Scotia Howard Weil 45th Annual Energy Conference – 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 60% 60% IRR 40% 40% 20% At 45, returns…
  18. Scotia Howard Weil 45th Annual Energy Conference – 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. Scotia Howard Weil 45th Annual Energy Conference – 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. Scotia Howard Weil 45th Annual Energy Conference – 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. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 21
    Howard County Outstanding Peer Well Results in Southeast Tubb A 1HA produced 141,000 Boe over 132 days Well Statistics 9,366 lateral, 66 stages 2,000 lbs/ft proppant Installed ESP after flowing for 43 days Tubb well…
  22. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 22
    SM Valuation High Growth Reward Not Recognized Best stock performance corresponds with debt-adjusted growth Cash Flow Growth per Debt Adjusted Share 35% 30% CFPS CAGR 18E 21E 25% 20% 15% 10% 5% 0% SM Best…
  23. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 23
    Midland Basin Setting Up for 11 Rig Program in 2018 Excellent vendor relationships and continued improvements in operating efficiencies set the stage for expansion in 2018 Significant Use multiple contractors experience in Eagle…
  24. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 24
    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 8/8/16 10/18/16…
  25. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 25
    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…
  26. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 26
    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…
  27. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 27
    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…
  28. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 28
    Leasehold Summary Pro-forma for closed and planned transactions Net Acres(1) Closed and 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…
  29. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 29
    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,…
  30. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 30
    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)…
  31. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 31
    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…
  32. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 32
    Derivative Positions Summary By Quarter Through 2018 As of March 24, 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 1,444…
  33. Scotia Howard Weil 45th Annual Energy Conference – 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. Scotia Howard Weil 45th Annual Energy Conference – 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. Scotia Howard Weil 45th Annual Energy Conference – 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. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 36
    Howard County Operators SM Energy Callon Encana Surge/Yantai Xinchao Diamondback Oxy Energen BreitBurn Sabalo 38
  37. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 37
    Sweetie Peck Operators SM Energy Apache Chevron Concho Devon Diamondback Discovery Endeavor Exxon Legacy Oxy Pioneer Summit Miscellaneous 39
  38. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 38
    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
  39. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 39
    Divide County Operators Divide Williams 41
  40. Scotia Howard Weil 45th Annual Energy Conference – SM Energy Company – slide 40
    Contact Information Jennifer Martin Samuels Senior Director, Investor Relations 303-864-2507 jsamuelssm-energy.com 44

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