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IPAA 24th OGIS New York – SM Energy Company

SM Energy Company · Apr 9, 2018 · 51 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. IPAA 24th OGIS New York – SM Energy Company – slide 1
    IPAAs 24th OGIS New York APRIL 9, 2018 PREMIER OPERATOR OF TOP TIER ASSETS 1
  2. IPAA 24th OGIS New York – SM Energy Company – slide 2
    SM Energy Premier Operator of Top Tier Assets Focused on two basins in Texas Market capitalization: 2+B Production: 113 MBoe/d; 37% Midland Basin oil, 46% natural gas, 21% 88,000 net acres(1) 9 Rigs / 5 Frac Crews NGLs (4Q17)…
  3. IPAA 24th OGIS New York – SM Energy Company – slide 3
    2017-2019 Driving Differential Value Measuring returns: cash flow growth per debt adjusted share(1) Cash flow growth per debt adjusted share is the metric with the highest correlation to intra sector relative performance Credit Suisse…
  4. IPAA 24th OGIS New York – SM Energy Company – slide 4
    Rapid Improvement Key Metrics 2017 marked by outstanding execution Top operatorSM ranks 1 in the Midland Basin on a Key differentiator is revenues per lateral foot Howard County acreage basis104% above median - Deutsche Bank(2) -…
  5. IPAA 24th OGIS New York – SM Energy Company – slide 5
    SM Energy Accomplishments YTD Doing exactly what we set out to do, or better Midland Basin wells coming on stronger than expected Execution Well performance, water handling system construction, sand logistics, takeaway 30%…
  6. IPAA 24th OGIS New York – SM Energy Company – slide 6
    2017-2019 High Rate of Change Driven by projected big Permian Basin production growth and associated margin expansion Permian projected production growth up 135% 2017-2019 Company projected cash operating margin up over 45% 2017-2019…
  7. IPAA 24th OGIS New York – SM Energy Company – slide 7
    Midland Basin 2018 Plan Objectives Value creation through better wells, longer laterals, and increasing wells per section Midland Basin 88,000 net acres(1) Initiate development stage in western RockStar, continue delineation in…
  8. IPAA 24th OGIS New York – SM Energy Company – slide 8
    Midland Basin Top Well Results SM Energy Ranks 1 in revenue per well and revenue per lateral foot (1) Baird Equity Research 3/28/18 Joseph Allman 9
  9. IPAA 24th OGIS New York – SM Energy Company – slide 9
    New Well Results Howard County Great results in multiple intervals across acreage position Two Maverick Pad wells with 30- Iceman 2-10A 1LS day IP rates that each Iceman 2-10A 2LS Iceman 2-10A 3LS Sundown 4566WB approximated 200…
  10. IPAA 24th OGIS New York – SM Energy Company – slide 10
    Premier Operator Midland Basin Top tier capital efficiency Drilling Costs Completion Costs 800 12,000 1,200 3,000 Completion Cost Per Lateral Foot (/ft) Drilling Cost Per Lateral Foot (/ft) Proppant Per Lateral Foot…
  11. IPAA 24th OGIS New York – SM Energy Company – slide 11
    Midland Basin Infrastructure Regional Sand Deal Best in basin arrangement with US Silica and Sandbox Logistics New sand mines close to SM operations 55 miles(1) 48 miles(1) 400K expected capital Lamesa (3Q18) savings per…
  12. IPAA 24th OGIS New York – SM Energy Company – slide 12
    Midland Basin Infrastructure Water Management Invest 70MM in fresh and produced water infrastructure Expected cost Accelerates System development savings control (LOE + Capital) 13
  13. IPAA 24th OGIS New York – SM Energy Company – slide 13
    Eagle Ford 2018 Plan Objectives Value creation: improving capital efficiency and building inventory Eagle Ford Employ new technology and optimized 165,000 net acres spacing Average lateral length increased to 9,300 Dimmit County…
  14. IPAA 24th OGIS New York – SM Energy Company – slide 14
    Balance Sheet Rapidly Strengthening Driving down net debt 30% with expected 792MM non-core asset sales year-to-date Balance Sheet offers financial flexibility 1.2B liquidity year-end 2017 No bond maturities until 2021 Senior…
  15. IPAA 24th OGIS New York – SM Energy Company – slide 15
    Well Hedged(1) 2018 percentage of expected production hedged 85% of expected 1Q18 production volumes Production Hedged hedged(2); 65% of oil volumes, 85% of gas volumes (NGLs hedged by product) 75% of expected 2018 production…
  16. IPAA 24th OGIS New York – SM Energy Company – slide 16
    SM Energy Why Invest in SM Objective: Deliver long-term growth in cash flow per debt adjusted share Unique opportunity to participate in competitively high rate of change in oil production, margin expansion and cash flow growth…
  17. IPAA 24th OGIS New York – SM Energy Company – slide 17
    SM Energy Premier Operator of Top Tier Assets 4 recent analyst initiation reports, 4 great recommendations SM undervalued based on CF growth per debt adjusted share - see upside to 2018 oil production given strong Howard County well…
  18. IPAA 24th OGIS New York – SM Energy Company – slide 18
    Appendix 19
  19. IPAA 24th OGIS New York – SM Energy Company – slide 19
    Inventory & Returns 20
  20. IPAA 24th OGIS New York – SM Energy Company – slide 20
    Howard County Wolfcamp A Evolution of SM Sweet Spot Mapping January 2017 February 2018 Higginbotham Unit B 30-19 1AH Cassidy 26-23 1H Tall City 6,397 Tall City 7,314 Hyden 47-38 WA 1H 24hrIP = 403 BOEPD 24hrIP = 398 BOEPD…
  21. IPAA 24th OGIS New York – SM Energy Company – slide 21
    Howard County Wolfcamp B Evolution of SM Sweet Spot Mapping January 2017 February 2018 Sundown 4566WB SM 10,336 24hrIP = 1,435 BOEPD Prichard J 10BH Legacy 7,644 24hrIP = 602 BOEPD Maverick 0361WB SM 10,412 24hrIP = 1,683…
  22. IPAA 24th OGIS New York – SM Energy Company – slide 22
    Howard County Lower Spraberry Evolution of SM Sweet Spot Mapping January 2017 February 2018 Sundown 4524 LS Moby Dick 31-30 8SH SM 10,352 Surge 7,362 24hrIP = 959 BOEPD 24hrIP = 319 BOEPD Mr. Phillips 11-2 1SH Sabalo…
  23. IPAA 24th OGIS New York – SM Energy Company – slide 23
    Drilling Inventory Midland Basin Increasing inventory and NPV per section 4,000 3,500 Average Lateral Average Working Length Interest 3,000 9,600 72% Drilling Locations (gross operated) 2,500 (up 13% from 2016) (up 10%…
  24. IPAA 24th OGIS New York – SM Energy Company – slide 24
    Drilling Inventory 15 Years at Current Activity Level Approximately 45 years including upside resources Midland Basin and Eagle Ford 6,000 5,000 Drilling Locations 4,000 (gross operated) 3,000 2,000 1,000…
  25. IPAA 24th OGIS New York – SM Energy Company – slide 25
    Top-Tier Assets Regional Well Projected Economics RockStar Sweetie Peck Wells(1) across all intervals (WCA, WCB, LS) in the 2018 drilling program Wells(1) across all intervals (WCA, WCB, LS) in the 2018 drilling program 120% 100%…
  26. IPAA 24th OGIS New York – SM Energy Company – slide 26
    2017 Reserves at Year-End 27
  27. IPAA 24th OGIS New York – SM Energy Company – slide 27
    2017 Proved Reserves Additions and Revisions Proved reserves of retained assets up 47% Net proved reserve additions of 192MM Boe equaled 4.3 times production More than doubled proved reserve PV-10 to 3.1B(1) 500 7 450 23 14…
  28. IPAA 24th OGIS New York – SM Energy Company – slide 28
    2017 Proved Reserves By Region Coring up the portfolio to top tier assets YE 2016(1) (MMBoe) 228.9 53.0 36.3 318.2 Rocky YE 2017 Eagle Ford Permian Total Mountain Oil (MMBbl) 13.3 117.5 27.4 158.2 Gas (Bcf) 998.1 252.8 29.2…
  29. IPAA 24th OGIS New York – SM Energy Company – slide 29
    2017 Financial & Operating Results 30
  30. IPAA 24th OGIS New York – SM Energy Company – slide 30
    4th Quarter and FY 2017 Performance Solid Execution Production 4Q17 FY 2017 Total Production (MMBoe) 10.4 44.5 Average Daily Production (MBoe/d) 112.6 121.8 Pre-Hedge Realized Price (/Boe) 32.95 28.20 Post-Hedge Realized Price (/Boe)…
  31. IPAA 24th OGIS New York – SM Energy Company – slide 31
    4Q17 Regional Realizations Benchmark Pricing NYMEX WTI Oil (/Bbl) 55.40 NYMEX LLS Oil (/Bbl) 60.98 NYMEX Henry Hub Gas (/MMBTU) 2.93 Hart Composite NGL (/Bbl) 32.12 Production Volumes Eagle Ford(1) Permian Rocky Mountain SM Total Oil…
  32. IPAA 24th OGIS New York – SM Energy Company – slide 32
    2017 Activity Wells Drilled, Flowing Completions & DUC Count Wells Drilled Flowing Completions DUC Count 4th Quarter 2017 2017 4th Quarter 2017 2017 As of 12/31/17 Region Gross Net Gross Net Gross Net Gross Net Gross Net Permian…
  33. IPAA 24th OGIS New York – SM Energy Company – slide 33
    Leasehold Summary Pro-forma for pending transactions Net Acres(1) Pending/Completed Pro-forma 12/31/17 Sales Net Acres Midland Basin RockStar 65,150 - 65,150 Sweetie Peck(2) 17,265 - 17,265 Halff East (Upton County) 5,420 (5,420) -…
  34. IPAA 24th OGIS New York – SM Energy Company – slide 34
    Adjusted EBITDAX Reconciliation Reconciliation of net loss (GAAP) to adjusted EBITDAX (non-GAAP) to Three Months Ended Twelve Months Ended net cash provided by operating activities (GAAP): (in thousands) December 31, 2017 December 31,…
  35. IPAA 24th OGIS New York – SM Energy Company – slide 35
    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, 2017 December 31, 2017 Net loss (GAAP)…
  36. IPAA 24th OGIS New York – SM Energy Company – slide 36
    Total Capital Spend Reconciliation Reconciliation of costs incurred in oil and gas activities (GAAP) to Total capital spend Twelve Months Ended (Non-GAAP)(1)(3) (in millions) December 31, 2017 Costs incurred in oil and gas…
  37. IPAA 24th OGIS New York – SM Energy Company – slide 37
    PV-10 Reconciliation Reconciliation of standardized measure (GAAP) to As of PV-10 (Non-GAAP)(1) (in millions) December 31, 2017 Standardized measure of discounted future net cash flows (GAAP): 3,024.1 Add: 10 percent annual…
  38. IPAA 24th OGIS New York – SM Energy Company – slide 38
    2018 Operations Plan 39
  39. IPAA 24th OGIS New York – SM Energy Company – slide 39
    2018 Capital Program Aggressive growth expected in the Midland Basin Total Capital Spend D&C Budget 1.27B 1.04B Eagle Ford 14% Facilities 10% Drilling and Other(1) Completion 8% 82% Midland Basin 86% Currently running 9…
  40. IPAA 24th OGIS New York – SM Energy Company – slide 40
    2018 Planned Rig Activity and Completions 2018: expected 100 net completions Midland Basin; expected 25 net completions Eagle Ford 14 120 12 100 Drilled But Uncompleted Wells(1) 10 80 Operated Rigs 8 60 (1) 6…
  41. IPAA 24th OGIS New York – SM Energy Company – slide 41
    Oil and Gas Derivative Positions By quarter through 2019 Fixed Swaps Oil Gas Volume Volume Period (MBbls) /Bbl(1) (BBTU) /MMBTU(1) 1Q18 1,075 50.16 20,788 3.25 2Q18 1,534 49.57 15,712 2.85 3Q18 1,769 49.77 17,147 2.88 4Q18 1,894…
  42. IPAA 24th OGIS New York – SM Energy Company – slide 42
    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…
  43. IPAA 24th OGIS New York – SM Energy Company – slide 43
    NGL Realizations 30% increase in realized price (before hedges) from 4Q16 to 4Q17 SM NGL price realizations are predominately tied to Mont Belvieu, fee based contracts Differential reflects NGL barrel product mix and transportation…
  44. IPAA 24th OGIS New York – SM Energy Company – slide 44
    New Well Results 45
  45. IPAA 24th OGIS New York – SM Energy Company – slide 45
    Howard County New Well Results 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 Maverick 0341WA(1) WCA 10,418 2,079 30-day 200 2,316…
  46. IPAA 24th OGIS New York – SM Energy Company – slide 46
    Howard County Top Tier Well Performance Continues New Wolfcamp wells continue outperformance trend 300,000 Gross Cumulative Production (BOE) 250,000 200,000 150,000 100,000 50,000 0 0 30 60 90 120 150 180 210…
  47. IPAA 24th OGIS New York – SM Energy Company – slide 47
    Howard County Average Production by Formation All intervals exceed peer 1 MMBoe type curve 300,000 Gross Cumulative Production (BOE) 250,000 200,000 150,000 100,000 50,000 0 0 50 100 150 200 250 300 Days on…
  48. IPAA 24th OGIS New York – SM Energy Company – slide 48
    Howard County Operators SM Energy Callon Encana Surge/Yantai Xinchao Diamondback Oxy Energen Breitburn Sabalo Grenadier 49
  49. IPAA 24th OGIS New York – SM Energy Company – slide 49
    Sweetie Peck Operators SM Energy Apache Chevron Concho Devon Diamondback Discovery Endeavor Exxon Legacy Oxy Pioneer Summit Miscellaneous 50
  50. IPAA 24th OGIS New York – SM Energy Company – slide 50
    Eagle Ford Operators Dimmit Maverick Dimmit Webb Area North Fasken Area East Area South 51
  51. IPAA 24th OGIS New York – SM Energy Company – slide 51
    Contact Information Jennifer Martin Samuels Vice President - Investor Relations 303-864-2507 jsamuelssm-energy.com 54

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