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4Q 2013 EARNINGS CALL – SM Energy Company

SM Energy Company · Feb 19, 2014 · 70 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. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 1
    4th Quarter 2013 Earnings Call and Operational Update February 19, 2014
  2. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 2
    Key Messages SM Energy had record production for the year. Annual avg. daily production growth of 33%. 4Q12 to 4Q13 production growth of 31%. 2013 was a strong year for proved reserves. Proved reserves grew 46% year over year.…
  3. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 3
    4th Quarter 2013 Performance Production 4Q13 Actual Performance 4Q13 Guidance Net Income GAAP net income of Average daily production (MBOE/d) 143.8 139 - 146 7.0 million, or 0.10 Total production (MMBOE) 13.23 12.8 - 13.5 per diluted…
  4. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 4
    2013 Proved Reserves and Production 5
  5. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 5
    2013 Proved Reserve Roll-Forward MMBOE 54% 600 Liquids/ 46% Gas 53% 195.5 1.3 5.0 18.2 500 Liquids/ 47% Gas 48.3 428.7 400 293.4 300 219.9 126.9 200 Proved Developed Proved Undeveloped 100 166.5 208.9 0 Beginning…
  6. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 6
    Reserve Metrics Drilling F&D decreased by approximately 26% in 2013 to 7.77 per BOE. Reserve replacement in excess of 400% for the second consecutive year. Reserve Metrics Reserve Replacement % 25.00 450% 405% 400% 20.00…
  7. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 7
    Annual Production 150 132.4 125 26.0 99.7 100 MBOE/d 77.5 16.7 38.2 NGL 75 9.6 28.3 Oil 49.8 50.2 22.1 50 Gas 17.3 17.4 68.2 25 45.8 54.7 32.5 32.8 0 2009 2010 2011 2012 2013 2013 average daily annual production…
  8. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 8
    Debt Adjusted Metrics 6.0 0.7 Proved reserves per debt 0.6 5.0 adjusted share 0.6 Production per debt 0.5 BOE/D.A. Share BOE/D.A. Share adjusted share 0.5 4.0 0.4 0.4 3.0 0.3 0.3 5.5 0.3 2.0 3.8 0.2 2.8 3.1 1.0 2.1…
  9. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 9
    Operational Update: Development Programs 10
  10. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 10
    Quarterly Production 160 138.8 143.8 140 131.8 115.0 27.5 31.5 120 110.0 24.6 100 20.8 20.5 35.5 41.6 40.8 NGL MBOE/d 80 34.8 31.3 Oil 60 Gas 40 71.7 71.5 59.7 69.7 57.9 20 0 4Q12 1Q13 2Q13 3Q13 4Q13 4Q13 production…
  11. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 11
    Operated Eagle Ford Operational Highlights Net Production 80 10% sequential production 68.1 74.8 70 66.1 growth quarter over quarter; 24.2 MBOE/d 60 21.1 51.8 18.9 65% quarterly production 50 45.2 7.8 15.1 5.5 8.2 growth…
  12. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 12
    Operated Eagle Ford Type Curve Regions Area 6 Area 1 Area 4 Area 3A Area 2 Area 5 Area 3B Area 5 13
  13. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 13
    Operated Eagle Ford 2013 Activity Area 6 Area 1 Area 4 Area 3A Area 2 Area 3B Type Curve 2013 Well Net Reserve Area Count Add (MMBOE) 1 15 2.1 2 4 2.3 Area 5 3 61 47.7 4 4 1.4 2013 Wells 5 1 0.5 Prior Year Wells 6 10…
  14. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 14
    Op. Eagle Ford CWC Efficiencies 8.0 7.0 14% Reduction 14% Reduction CWC Capital (MM) 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2012 Avg Area 1,2,4 2013 Avg Area 1,2,4 2012 Avg Area 3 Well 2013 Avg Area 3 Well Well Well 15
  15. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 15
    Inventory Enhancements / Tests Increasing lateral length For the 2014 program, extending laterals on most wells out to an average length of 6,500 from 5,000. Extended lateral lengths in Areas 1, 2, and 4 were modeled in the type…
  16. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 16
    2014 Activity Map Area 6 Area 1 Area 4 Area 3A Area 2 Area 3B Type Curve Well Area Count 1 12 Area 5 2 21 3 60 4 8 5 0 6 0 2014 Planned Activity Total 101 17
  17. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 17
    5 Year Development Plan Area 6 Area 1 Area 4 Area 3A Area 2 Area 3B Area 5 2014 2015 2016 2017 2018 18
  18. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 18
    Non-operated Eagle Ford Net Production Operational Highlights 25 1% sequential production growth quarter over MBOE/d 20 quarter. 15 10 The operator ran 19.8 20.0 15.5 16.0 17.4 approximately 10 drilling 5 rigs during…
  19. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 19
    Bakken/Three Forks Net Production Operational Highlights 18 8% sequential growth quarter over 16 14 quarter; 35% quarterly production MBOE/d 12 growth 4Q12 to 4Q13. 10 8 14.9 16.1 The Company operated 3 rigs during 6 12.2…
  20. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 20
    Raven/Bear Den Bakken / TFS Operated 2013 Activity Well Count Net Reserve Add Type Curve Area Gross/Net (MMBOE) Raven/Bear Den Bakken 17/ 10 3.9 Raven/Bear Den TFS 13 / 8 2.6 North Dakota Total 30 / 18 6.5 Raven/Bear Den =…
  21. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 21
    Gooseneck TFS Operated 2013 Activity Well Count Net Reserve Add Type Curve Area Gross/Net (MMBOE) Gooseneck TFS 15 / 11 3.5 North Dakota Gooseneck 22
  22. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 22
    Operated Bakken/Three Forks CWC Efficiencies 10.0 4% Reduction 9.0 CWC Capital (MM) 8.0 7.0 4% Reduction 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2012 Avg Raven/Bear 2013 Avg Raven/Bear 2012 Avg Gooseneck 2013 Avg Gooseneck Den…
  23. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 23
    Inventory Enhancements / Tests Raven / Bear Den Completion Tests Current design: OH packers & sleeves, 26 stages, 3.5MM proppant, 80K Bbls of fluid (slickwater and XL gel). Testing: Increase proppant and fluid volume (4.2MM & 90K…
  24. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 24
    East Raven Current Spacing Strategy Current inventory (in Appendix) is based on: Upper Bakken Shale Up to 5 Middle Bakken wells per spacing unit. Middle Bakken 4 1st Bench Three Forks wells per spacing unit. 1060 This spacing…
  25. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 25
    Gooseneck Bakken Play Potential Recent competitor results show economic potential of Bakken in Gooseneck. Gooseneck 2014 Bakken Wells Participated in 1 non-operated well to date. High water saturation concerns have been mitigated…
  26. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 26
    Stateline Play Extends Into Montana Recent competitor results show economic potential of Bakken/Three Forks in MT. SM Energy has 15,975 net acres in MT Stateline (89% HBP). 24 spacing units with potential SM Energy operatorship.…
  27. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 27
    Raven/Bear Den 2014 Activity Well Type Curve Area Count Raven/Bear Den Bakken 14 / 10 Raven/Bear Den TFS 18 / 13 Total 32 / 23 2014 planned activity = 2014 BAKKEN WELL = 2014 THREE FORKS WELL 28
  28. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 28
    Gooseneck TFS 2014 Activity Well Type Curve Area Count Goosneck TFS 13 / 8 Gooseneck 2014 planned activity = 2014 THREE FORKS WELL 29
  29. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 29
    Operational Update: New Ventures 30
  30. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 30
    Powder River Basin WY SM Energy currently has 140,000 net acres in the Powder River Basin (100,000 net acres in the Frontier). Currently running 1 drilling rig developing Frontier. 2nd rig anticipated early 2Q14. Loco (Frontier)…
  31. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 31
    Permian Region Net Production Operational Highlights 8 7 7% sequential production growth MBOE/d 6 5 4 7.3 quarter over quarter; 6.6 6.8 3 2 5.5 5.3 33% quarterly 1 production growth from 0 4Q12 1Q13 2Q13 3Q13 4Q13…
  32. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 32
    Midland Basin Focus Map Midland Basin Buffalo 47,500 Net acres Sweetie Peck 13,500 Net acres 33
  33. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 33
    Sweetie Peck Horiz Well Performance Target Lateral Peak 30-Day Lift Well Name Interval Length Stages IP (BOE/d) % Oil Proppant Mechanism Dorcus 3035 H Wolfcamp B 4,960 25 1,226 82 White Sand ESP Britain 3133H Wolfcamp B 4,960 25 981 81…
  34. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 34
    Sweetie Peck Potential Wolfcamp B Development Location Wolfcamp B Count Producing 3 2014 planned completions 14 Addl Locations 79 Total Potential Locations 96* Additional Potential Wolfcamp D / Cline: 50 wells (Test in 4Q14)…
  35. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 35
    Geology Sweetie Peck to Buffalo Buffalo Sweetie Peck 36
  36. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 36
    Buffalo Program Target Lateral Peak 30-Day IP Lift Well Name Interval Length Stages (BOE/d) % Oil Proppant Mechanism Tatonka 1H Wolfcamp B 5,560 28 376 89 LWC ESP 2014 Program Continue production test on Tatonka 1H. SM-Energy…
  37. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 37
    Midland Basin Wolfcamp B Wells 1,800 1,600 1,400 Dorcus 3035H 30 Day IP (BOE) 1,200 Britain 3133H 1,000 CVX 4134H 800 600 Tatonka 1H 400 200 - 3000 4000 5000 6000 7000 8000 9000 10000 11000 12000 Lateral…
  38. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 38
    SM Energy East Texas Prospect Areas Total Net Acreage: 215,000 Deep Pines Central Three Geologic Concepts 91,000 Net acres Eagle Ford Resource Play (East Deep Pines West Texas) Extension of the South 90,000 Net acres Texas Lower…
  39. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 39
    Woodbine Trap Model Over-Pressured Normally Pressured Hydrocarbon-Saturated Conventional Woodbine Shaley Sandstones Hydrocarbon Traps (Woodbine Rim Play) Unconventional Trap Conventional Trap Austin Chalk Woodbine Porous,…
  40. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 40
    SM Energy East Texas Prospect Areas Target Effective Fluid Volume 7-Day IP BTU Well Name Interval Lateral Length Stages (Bbl/Stage) (BOE/d) %Oil Gas FCP (PSI) Horizon 2H Woodbine 2,500 11 7,775 873 41 1,278 1,540 Brollier 1H Eagle Ford…
  41. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 41
    2014 East Texas Program Drill additional test wells in each of the four prospect areas to delineate and high-grade acreage position. SM Energy plans to drill eight additional test wells, primarily in the first half of 2014. Well…
  42. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 42
    Financial Update 43
  43. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 43
    Financial Position TOTAL BOOK At December 31, 2013, CAPITALIZATION the Companys net debt (in millions) 3,500 to trailing EBITDAX was 3,000 0.9 and net debt to book 2,500 capitalization was 45%. 1,607 2,000 Current revolver 1,500…
  44. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 44
    Financial Position Debt Maturities (in millions) 2,500 2,000 1,500 1,000 500 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Revolving Credit Facility Senior Notes due 2019 Senior Notes due 2021 Senior Notes due…
  45. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 45
    Debt to TTM EBITDAX 5.0x 4.5x 4.0x 3.5x 3.0x Average: 2.4x 2.5x 2.0x 1.5x 1.0x 0.5x 1.1 1.2 0.0x SM SM 12/31/13 9/30/13 SM Energys debt to trailing twelve-month EBITDAX is below its peer average of 2.4x. Note: 12/31/13…
  46. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 46
    EBITDAX Per Debt Adjusted Share EBITDAX per debt adjusted share increased by 44% year over year, and compound annual growth of 22% over a 3-year period ending December 31, 2013. EBITDAX Per Debt Adjusted Share 20.00 15.00 / D.A.…
  47. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 47
    Key Takeaways Solid execution on development programs and advancement of new venture plays in 2013. Strong year over year growth on debt-adjusted per share metrics. Proved Reserves increased 47%. Production increased 33%.…
  48. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 48
    Appendix 49
  49. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 49
    2014 Capital Budget ( in millions) Development 65 New Ventures 200 Non Drilling 2014 capital budget of 1.9 billion 1,660 Other 60 East Texas 55 Focused EFS and PRB 140 Bakken programs account for 75% of Operated Permian…
  50. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 50
    Condensate Update South Texas & Gulf Coast % Oil Realization to LLS 100% 50 Substantially all of SM 90% 45 Energys Eagle Ford 80% 85% 88% 86% 86% 40 condensate trades off of an SM Oil Realization % of LLS 81% 70% 35 LLS…
  51. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 51
    4Q13 Regional Realizations Benchmark NYMEX WTI OIL (Bbl) 97.41 Hart Composite NGL (Bbl) 43.13 NYMEX Henry Hub Gas (MMBTU) 3.82 Production Volumes STGC Rockies Mid-Con Permian SM Total Oil (MBbls) 1,449 1,699 113 493 3,756 Gas (MMcf)…
  52. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 52
    BAKKEN/THREE FORKS OPERATED RAVEN/BEAR DEN Type Curve (1st 24 Months) Oil Type 30 Day IP b factor Di Dt (%) 1,400 Curve (Bopd) (%) PRODUCTION (BOEPD) Bakken 671 1.4 80 8 1,200 DAILY EQUIVALENT Three Forks 542 1.5 80 8…
  53. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 53
    THREE FORKS OPERATED GOOSENECK Type Curve (1st 24 Months) 900 PRODUCTION (BOEPD) Oil Type 30 Day Max b Di Dt 800 DAILY EQUIVALENT Curve IP (Bopd) factor (%) (%) 700 Three Forks 324 1.4 63 8 600 500 400 300 200 100 0…
  54. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 54
    Operated Bakken/Three Forks Resource Potential Gooseneck Raven/Bear Den Raven/Bear Den Three Forks Bakken Three Forks Acreage (ac) 36,207 43,185* 43,185* EUR/well (MBOE) ** 397 529 444 Spacing (ac/well) 320 320 320 DCC/well (MM) 6.5…
  55. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 55
    Non-Operated Bakken/Three Forks Resource Potential Gooseneck Raven/Bear Den Raven/Bear Den Three Forks Bakken Three Forks Acreage (ac) 36,207 43,185* 43,185* EUR/well (MBOE) ** 367 529 444 Spacing (ac/well) 320 320 320 DCC/well (MM)…
  56. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 56
    Operated Eagle Ford Type Curve Regions Area 6 Area 1 Area 4 Area 3A Area 2 Area 5 Area 3B Area 5 57
  57. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 57
    OPERATED EAGLE FORD AREA 1 Type Curve (1st 24 Months) 800 Gas Type 30 Day IP b factor Di Dt PRODUCTION (BOEPD) 700 Curve (Mcfpd) (%) (%) DAILY EQUIVALENT 600 AREA 1 1,423 1.5 69 10 500 6,500' Lateral 400 300 5,000'…
  58. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 58
    OPERATED EAGLE FORD AREA 2 Type Curve (1st 24 Months) 1,400 Gas Type 30 Day IP b Di Dt PRODUCTION (BOEPD) Curve (Mcfpd) factor (%) (%) 1,200 DAILY EQUIVALENT AREA 2 3,829 1.2 75 10 1,000 800 6,500' Lateral 600 5,000'…
  59. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 59
    OPERATED EAGLE FORD AREA 3A Type Curve (1st 24 Months) 2,000 1,800 Gas Type 30 Day IP b Di Dt PRODUCTION (BOEPD) Curve (Mcfpd) factor (%) (%) DAILY EQUIVALENT 1,600 AREA 3 5,169 1.0 55 10 1,400 1,200 1,000 800 600…
  60. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 60
    OPERATED EAGLE FORD AREA 3B Type Curve (1st 24 Months) 2,000 PRODUCTION (BOEPD) 1,800 Gas Type 30 Day IP b Di Dt DAILY EQUIVALENT Curve (Mcfpd) factor (%) (%) 1,600 1,400 AREA 3 5,169 1.0 55 10 1,200 1,000 800 600…
  61. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 61
    OPERATED EAGLE FORD AREA 4 Type Curve (1st 24 Months) 900 PRODUCTION (BOEPD) Gas Type 30 Day IP b Di Dt 800 DAILY EQUIVALENT Curve (Mcfpd) factor (%) (%) 700 AREA 4 1,932 1.5 68 10 600 500 6,500' Lateral 400 300 5,000'…
  62. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 62
    Operated Eagle Ford Resource Potential AREA 1 AREA 2 AREA 3A AREA 3B Acreage (ac) 35,082 21,879 22,226 29,726 EUR/well (MBOE) 475 597 1,266 1,172 Spacing (ac/well) 67 - 93 134 103 103 DCC/well (MM) 7.3 7.8 6.8 6.8 Product Mix 22 /…
  63. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 63
    Operated Eagle Ford Resource Potential AREA 4 AREA 5 AREA 6 Acreage (ac) 8,268 25,124 1,560 EUR/well (MBOE) 690 931 617 Spacing (ac/well) 93 143 52 DCC/well (MM) 7.4 7.3 7.9 Product Mix 19 / 44 / 37 0 / 78 / 22 35 / 35 / 30…
  64. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 64
    EBITDAX Reconciliation EBITDAX (1) (in thousands) Reconciliation of net income (loss) (GAAP) to EBITDAX (non-GAAP) to net cash For the Three Months Ended provided by operating activities (GAAP): December 31, 2013 2012 Net income (loss)…
  65. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 65
    Adjusted Net Income Reconciliation Reconciliation of net income (loss) (GAAP) to adjusted net income (Non-GAAP): For the Three Months Ended December 31, (in thousands, except per share data) 2013 2012 Reported Net Income (loss) (GAAP)…
  66. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 66
    1Q14 Guidance 1Q14 FY 2014 Production (MMBOE) 12.0 12.6 51.0 53.5 Average daily production (MBOE/d) 133 140 140 147 LOE (/BOE) 5.25 5.50 5.25 5.50 Transportation (/BOE) 5.75 6.05 5.75 6.05 Production taxes (% of pre-derivative oil…
  67. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 67
    Oil Derivative Position* Oil Swaps - NYMEX Equivalent Oil Swaps WTI swap with LLS basis Differential Bbls /Bbl Bbls /Bbl 2014 2014 Q1 2,175,000 96.13 Q1 425,000 100.91 Q2 2,373,000 94.95 2014 Total 425,000 Q3 973,000 95.25 Q4…
  68. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 68
    Oil Derivative Position* Oil Collars - NYMEX Equivalent Ceiling Floor Bbls /Bbl /Bbl 2014 Q1 694,000 115.07 80.97 Q2 431,000 102.50 85.00 Q3 973,000 102.58 85.00 Q4 923,000 102.63 85.00 2014 Total 3,021,000 2015 Q1 882,000…
  69. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 69
    Gas Derivative Position* Natural Gas Swaps - NYMEX Equivalent Natural Gas Collars - NYMEX Equivalent Ceiling Floor MMBTU /MMBTU MMBTU /MMBTU /MMBTU 2014 2014 Q1 32,266,000 4.24 Q1 1,540,000 5.59 4.40 Q2 23,758,000 4.06 Q2…
  70. 4Q 2013 EARNINGS CALL – SM Energy Company – slide 70
    NGL Derivative Position* Natural Gas Liquid Swaps - Mont. Belvieu Bbls /Bbl 2014 Q1 1,429,000 57.96 Q2 1,096,000 58.04 Q3 960,000 58.06 Q4 861,000 58.06 2014 Total 4,346,000 Grand Total 4,346,000 *As of 2/12/14 71

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