- **5-Year Growth Milestone**: 60%+ increase in reserves, production, and oil margins with no shareholder dilution.
- **Tax Efficiency**: 2025 cash taxes ~$100M, sustained by R&D benefits and stable spending.
- **Uinta Outperformance**: 41/50 wells completed YTD, with stellar well performance and cost reductions.
- **Capital Discipline**: 2026 rig count maintained at 6, prioritizing free cash flow over production growth.
- **Gas Cautiousness**: Supply elasticity and demand uncertainty keep gas allocation conservative.

**【Management Opening Remarks】**
- Over 5 years (2020-2025), SM Energy achieved **60%+ growth** in net proved reserves and production, with oil percentage increasing and production margins expanding.
- Reduced leverage by over 1x since 2020, maintaining flat share count to avoid dilution.
- Emphasis on technical expertise in unconventional resource development, enabling repeatable performance and shareholder value creation.

**【Q&A Highlights】**
- **Cash Tax Guidance**: 2025 cash taxes ~$100M, with similar outlook for 2026 assuming stable commodity prices. Benefits from R&D capitalization and tax deductions expected to persist.
- **Uinta Performance**: Q2 2025 production exceeded expectations due to strong well performance and cost efficiency. 41/50 net completions achieved YTD, with Q3 expected to be slightly higher than Q2.
- **Capital Allocation**: 2025 CapEx ~$1.3B, with ~15% allocated to Q4. 2026 rig count expected to remain at 6, balanced across assets. Focus on free cash flow generation over 2-3 years.
- **Gas Strategy**: Cautious on natural gas due to supply elasticity, but open to hedging in out years. Monitoring LNG and data center demand for structural shifts.
- **Logistics Optimization**: Record rail volumes at Price River Terminal, with marketing team maximizing refinery sales and minimizing transportation costs.

SM Energy Company (SM) Q2 2025 Earnings Call Transcript

- **Production Growth**: 30% oil production increase in 2025, driven by Uinta Basin assets.
- **Financial Resilience**: Generates $55/bbl free cash flow, targeting 1x leverage by year-end with disciplined capital allocation.
- **Uinta Success**: Integration exceeds expectations, with 90% of program focused on high-margin lower cube zones.
- **Cost Control**: LOE increases driven by operational inefficiencies, but capital efficiency improvements offset costs.
- **Scenario-Driven Planning**: 2026 rig count and capital allocation contingent on commodity prices, with scenarios modeled for price volatility.

**【CEO Opening Remarks】**
- SM Energy achieved a 30% increase in oil production and 20% growth in total production in 2025, driven by top-tier assets in the Uinta Basin, South Texas, and the DJ Basin.
- The company prioritizes disciplined capital allocation, with 90% of the Uinta program focused on the lower cube (Uteland Butte and Wasatch zones) and 10% on the upper cube for testing.
- Despite lower oil prices (~$55/bbl), the company maintains its program due to strong free cash flow generation and leverage reduction goals.

**【CFO Financial Highlights】**
- GAAP net income for Q1 2025 was $420 million, with Non-GAAP EPS exceeding expectations at $1.08.
- Free cash flow generation remains robust, enabling debt reduction to target 1x leverage by year-end.
- Hedging strategy includes $55/bbl costless collars to protect against price volatility.

**【Key Q&A Insights】**
- **Production Mix & Timing**: Q1 oil mix was 53%, with a modest increase in Q2 and a significant jump in Q3. Full-year guidance remains unchanged due to variability in well completions.
- **Cost Management**: LOE increase driven by fuel gas costs and water handling, with ~1/3 of the impact recurring. Capital efficiency improvements in Uinta continue to exceed expectations.
- **Capital Allocation**: No immediate rig count changes; 2026 plans depend on commodity price scenarios. At $55/bbl, the company generates sufficient cash flow for dividend, debt repayment, and 1x leverage.
- **Uinta Integration**: Exceeds expectations with XCL's infrastructure investments, driving faster turn-in-line (TIL) benefits and cost synergies.
- **Share Buybacks**: Disciplined approach prioritizes debt reduction but retains flexibility to support equity if needed.


SM Energy (SM)-1 May 25-2025 Q1 Earnings call transcript

- **2025 Growth Ambition**: 40% free cash flow increase, 30% oil production growth, and <1.0x leverage by H2 2025.
- **Uinta Basin Impact**: $40/BOE margin parity with Midland, 40% inventory boost, and 10+ years of drilling runway.
- **2026 Strategy**: Flat to low-single-digit production growth with capital returns prioritized post-balance sheet reset.
- **Gas Discipline**: Avoiding dry gas risk, focusing on high-margin oil-rich intervals and Permian infills.
- **Shareholder Returns**: 2023-style buybacks (~$200M/year) expected to resume in 2026.

**【CEO Opening Remarks】**
- 2025 Free Cash Flow Target: 40% YoY increase, driven by 30% oil production growth while maintaining <1.0x leverage by H2 2025.
- Uinta Basin Acquisition: Achieved $40/BOE cash margin parity with Midland, adding 40% to gross inventory.
- Capital Allocation: 35-40% weighted to Midland, 25% to South Texas, with flexibility to shift based on commodity prices.

**【Operational Updates】**
- Q1 Production Delay: South Texas frac crew downtime caused 3-month TIL gap, resolved in January with sequential growth.
- Drilling Inventory: 10+ years of inventory at 120-130 net wells/year, with 10,000ft laterals in Utah and 11,000ft+ in Texas.
- Non-Op Activity: Potential 2025 Permian non-op spending (~$19M+), back-end weighted with 2026 contribution.

**【Financial & Balance Sheet】**
- 2025 Guidance: Oil production 107-112K bbl/day (52% oil mix), free cash flow >$1.5B.
- 2026 Outlook: Flat to low-single-digit production growth, prioritizing capital returns post-1.0x leverage.
- Share Repurchases: 2023 cadence (~$200M/year) expected to resume post-balance sheet reset.

**【Uinta Basin Integration】**
- Q4 2024 Utah Production: 36K BOE/day (vs 43K target), impacted by XEL workover expenses and integration timing.
- Cash Margin: $40/BOE parity with Midland, with long-term decline rates offsetting slower cleanup in Upper Cube.
- Differential Management: Actively pursuing rail and storage solutions to mitigate takeaway constraints.

**【Gas & Permian Strategy】**
- Gas Focus: Avoiding dry gas Eagle Ford development, prioritizing oil-rich intervals with less price volatility.
- Klondike & Woodford-Barnett: Early results exceed expectations (150+ MBOE/6 months), competitive with legacy assets.
- Midland Reserves: PUD reductions due to 5-year window timing, not asset quality, with 2025 activity focused on Utah.

SM Energy Company (SM) Q4 2024 Earnings Call Transcript

SM Energy (SM)-31 Oct 24-2024 Q3 Earnings call transcript

SM Energy (SM)-7 Aug 24-2024 Q2 Earnings call transcript

SM Energy (SM)-3 May 24-2024 Q1 Earnings call transcript

SM Energy (SM)-21 Feb 24-2023 Q4 Earnings call transcript

SM Energy (SM)-2 Nov 23-2023 Q3 Earnings call transcript

SM Energy (SM)-3 Aug 23-2023 Q2 Earnings call transcript

SM Energy (SM)-28 Apr 23-2023 Q1 Earnings call transcript

SM Energy (SM)-23 Feb 23-2022 Q4 Earnings call transcript

SM Energy (SM)-4 Nov 22-2022 Q3 Earnings call transcript

SM Energy (SM)-4 Aug 22-2022 Q2 Earnings call transcript

SM Energy (SM)-29 Apr 22-2022 Q1 Earnings call transcript

SM Energy (SM)-25 Feb 22-2021 Q4 Earnings call transcript

SM Energy (SM)-29 Oct 21-2021 Q3 Earnings call transcript

SM Energy (SM)-30 Jul 21-2021 Q2 Earnings call transcript

SM Energy (SM)-29 Apr 21-2021 Q1 Earnings call transcript

SM Energy (SM)-18 Feb 21-2020 Q4 Earnings call transcript

SM Energy (SM)-30 Oct 20-2020 Q3 Earnings call transcript

SM Energy (SM)-31 Jul 20-2020 Q2 Earnings call transcript

SM Energy (SM)-7 May 20-2020 Q1 Earnings call transcript

SM Energy (SM)-20 Feb 20-2019 Q4 Earnings call transcript

SM Energy (SM)-1 Nov 19-2019 Q3 Earnings call transcript

SM Energy (SM)-2 Aug 19-2019 Q2 Earnings call transcript

SM Energy (SM)-2 May 19-2019 Q1 Earnings call transcript

SM Energy (SM)-21 Feb 19-2018 Q4 Earnings call transcript

SM Energy (SM)-2 Nov 18-2018 Q3 Earnings call transcript

SM Energy (SM)-2 Aug 18-2018 Q2 Earnings call transcript

SM Energy (SM)-4 May 18-2018 Q1 Earnings call transcript

SM Energy (SM)-22 Feb 18-2017 Q4 Earnings call transcript

SM Energy (SM)-3 Nov 17-2017 Q3 Earnings call transcript

SM

SM fundamentals

Earnings Call

You can ask Aime