June 19, 2017 Investor Presentation PREMIER OPERATOR OF TOP TIER ASSETS 1
SM Energy Focused 3-Year Plan Top tier oil in Midland + top tier NGLs and gas in Eagle Ford Midland Basin Sweetie Peck/RockStar 88,000 net acres Maverick Basin Eagle Ford 167,000 net acres 3 3
Three-Year Plan 4
3-Year Plan Big Expected Production Growth 60% CAGR Midland Basin Rapid growth in oil production as a percent of commodity mix 70,000 45% 60,000 50,000 Production 40,000 (MBoe) Oil % 35% 30,000 20,000…
3-Year Plan Big Expected Cash Flow Growth Operating margin expected to increase 40% 2017 2019 Production growth expected within cash flow in 2019 Operating Margin(1) Cash Flow 25 1,200 20 800 15 10 40% INCREASE 400 100%…
3-Year Plan Hedging Expected to Provide Cash Flow Stability Oil price volatility protection: 1 change in oil prices equals 4 million change in 2H17 cash flow and 15MM change in 2018 cash flow Hedging Program Hedged Volumes as of April…
3-Year Plan Financial Discipline On Track Liquidity of 1.6 billion, including more than 650MM cash on hand(1) Balance Sheet Offers Financial Flexibility Senior Secured Debt : TTM Adjusted EBITDAX TTM Adjusted EBITDAX : Interest 0.0…
Premier Operator of Top-Tier Assets 9
Premier Operator Adding Value with Outstanding Execution Better wells, lower costs drive higher cash flow Experience Achieved rapid ramp-up in Midland Basin to bring value forward Relationships that enable growth Longer laterals;…
Premier Operator Midland Basin Applying technology to optimize development 140,000 Example: Venkman Wells in RockStar Area Midland Basin Development 120,000 Cumulative Production (BOE) Improved 100,000 Completion Acquiring…
Premier Operator Midland Basin Applying seismic, core, and geo-chem data to optimize development Planned 3-D Seismic Acquisition Modern 3-D Seismic Grid 12
Top-Tier Assets 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%…
Outstanding Well Results Based on our in-depth analysis of historic well data we see Howard County as one of the most valuable parts of the Midland Basin given higher oil cuts that decline slower than other areas -Credit…
Outstanding Results Midland Basin Midland Basin Midland Basin Program 88,000 net acres Currently 6 horizontal rigs and 1 data gathering rig 3 completions crews active Production up 55% sequentially; RockStar RockStar wells…
Outstanding Results Howard County Great results in multiple intervals and across acreage position Tackleberry 43-42 A 1LS Tackleberry 43-42 A 1WA Tackleberry 43-42 A 2WB IP30: 1,286 BOE/d (89% oil) IP30: 2,262 BOE/d (90% oil) IP30:…
Outstanding Results Top Tier Well Performance Continues Initial production rates on SM completed wells soundly beating Companys acquisition assumptions 280,000 260,000 240,000 Gross Cumulative Production (BOE) 220,000 200,000…
Howard County Positive Peer Well Results Peer wells extend confirmed geologic assessment to east and south Howard County Peer Results Thumper 14-23 Viper 14-9 1WA Wolfcamp A Thumper 14-23 10,000 lateral 24-hour rate: 1,357…
Outstanding Results Eagle Ford Increasing value with more wells per section All three areas support UEF/LEF co-development Operated Eagle Ford Recent Well Results East 4Q16 Completions 50 Continued Outperformance at 312 plan view…
Powder River Basin Third Party Carry(1) Thick oil section with stacked pay in well known oil province Sussex 10,100 TVD Powder River Basin Campbell Shannon Utilizing partner capital and Converse 10,750 TVD services on current…
SM Energy Why Invest in SM Value proposition Value Doubling proposition cash flow over two years Liquidity Drilling cash on catalysts hand, zero bank debt Drilling Premier Operator catalysts Top Tier Assets Rapid,…
Appendix 22
1st Quarter 2017 Performance Production 1Q17 Total Production (MMBoe) 12.1 Average Daily Production (MBoe/d) 134.4 Pre-Hedge Realized Price (/Boe) 27.55 Post-Hedge Realized Price (/Boe) 27.55 Costs LOE (/Boe) 3.82 Ad Valorem…
1Q17 Regional Realizations Pricing NYMEX WTI Oil (/Bbl) 51.91 NYMEX LLS Oil (/Bbl) 53.39 NYMEX Henry Hub Gas (/MMBTU) 3.32 Hart Composite NGL (/Bbl) 26.74 Eagle Ford Production Volumes Eagle Ford Op(1) Rocky Mountain Permian…
2017 Activity Wells Drilled, Flowing Completions & DUC Count Wells Drilled Flowing Completions DUC Count 1st Quarter 2017 1st Quarter 2017 1st Quarter 2017 Region Gross Net Gross Net Gross Net Permian Sweetie Peck 7 7 11 11 7 7…
Leasehold Summary As of March 31, 2017 Net Acres(1) 3/31/17 Midland Basin Sweetie Peck(2) 15,880 Halff East (Upton County) 5,985 RockStar 66,195 Eagle Ford Operated 166,760 Rocky Mountain Divide 123,570 Powder River Basin…
Adjusted EBITDAX Reconciliation Reconciliation of net income (GAAP) to Adjusted EBITDAX (non-GAAP) to Three Months Ended net cash provided by operating activities (GAAP): (in thousands) March 31, 2017 Net income (GAAP) 74,434…
Adjusted Net Loss Reconciliation Reconciliation of net income (GAAP) to adjusted net loss (non-GAAP): Three Months Ended (in thousands, except per share data) March 31, 2017 Net income (GAAP) 74,434 Net derivative gain (114,774)…
Total Capital Spend Reconciliation Three Months Reconciliation of Costs Incurred in Oil and Gas Activities (GAAP) Ended to Total Capital Spend (Non-GAAP)(1) (in millions) March 31, 2017 Costs incurred in oil and gas activities…
Derivative Positions Summary By Quarter Through 2018 As of April 26, 2017 Fixed Swaps Oil Gas NGL(3) Volume Volume Volume (2) Period (MBbls) /Bbl(1) (BBTU) /MMBTU(1) (MBbls) /Bbl 2Q17 1,444 46.44 26,205 3.98 2,114 21.40 3Q17 1,340…
NGL Derivative Position Detail(1) NGL Swaps OPIS Eth Purity Mt Belv NGL Swaps OPIS Propane Mt Belv Non-TET NGL Swaps Natural Gasoline Mt Belv Non TET Volume Volume Volume (2) (2) (2) Period (MBbls) /Bbl Period (MBbls) /Bbl Period…
NGL Realizations Nearly 90% increase in realized price (before hedges) from 1Q16 to 1Q17 SM NGL price realizations are predominately tied to Mont Belvieu, fee based contracts Differential reflects NGL barrel product mix and…
Howard County New Well Results Additional Details Peak IP 24 Hour Clusters Lateral IP per Proppant Oil Well Name Interval Rate IP Days Peak IP Stages per Length 1,000 (lbs./ft) % (BOE/d) Rate Stage Tackleberry 43-42 A 1LS LS 7,873…
2017 Capital Program Investing only in top tier assets 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 7 rigs 750MM…
Setting Up for Expanded 2018 Program Excellent vendor relationships and continued improvements in operating efficiencies set the stage for expansion in 2018 Significant Use multiple contractors experience in Eagle Ford: Rigs and frac…
Midland Basin Infrastructure Excellent proximity to gathering/processing and takeaway with significant capacity expected Oil Gas NGLs 100% sold at wellhead 100% sold at wellhead 100% sold at wellhead 80% on pipeline (20% trucked)…
Howard County Operators SM Energy Callon Encana Surge/Yantai Xinchao Diamondback Oxy Energen Breitburn Sabalo 37
Sweetie Peck Operators SM Energy Apache Chevron Concho Devon Diamondback Discovery Endeavor Exxon Legacy Oxy Pioneer Summit Miscellaneous 38
Eagle Ford Operators Dimmit Maverick Dimmit Webb Area North Fasken Area East Area South 39
Divide County Operators Canada CPEG RE RE HES CPEG RE MV MV CLR MRX HNT NP Divide Williams KKN CLR HES CPEG 40
Powder River Basin Operators Johnson Campbell SM ENERGY (SME) Natrona Converse ANSCHUTZ (ANS) CHESAPEAKE (SHK) DENBURY (DEN) DEVON (DEV) EOG FLEUR DE LIS (FDL) HELIS (HEL) LIBERTY RESOURCES (LIB) SAMSON (SSN) WOLD (WLD)…
Contact Information Jennifer Martin Samuels Senior Director, Investor Relations 303-864-2507 jsamuelssm-energy.com 42
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