SM Energy Co Q4 FY2024 earnings call

• SM Energy's 2025 plan expects a 40% increase in free cash flow, supported by 30% oil production growth and a strong balance sheet aiming for 1 times leverage by the second half of 2025. The Uinta Basin acquisition added about $40 per BOE cash production margin and increased gross inventory by ~40%. - In South Texas, a frac crew was dropped in Q4 2024, causing Q1 2025 production drop, but the crew restarted in January 2025. - Drilling 105 net wells in 2025 but completing 150 net wells, with the DUC count ending 2024 at 104 and expected to reduce by ~45 in 2025. - The Utah acquisition had limited control in Q4 2024 due to integration, but Midland margin per barrel was close to the anticipated level for Uinta.

No detailed financial performance for product segments with absolute revenue and contribution % provided in the transcript.

• 2025 plan expects a 40% increase in free cash flow, supported by 30% oil production growth and aiming for 1 times leverage by H2 2025. - 2026 expected to be about return of capital to stockholders with flat to single-digit production growth, depending on commodity prices. - 2025 BOE range with 51%-52% oil percentage, production to grow through Q3 2025 then level off in Q4.

• Takeaway constraints in Q4 2024 due to refinery downtime in Salt Lake City and rail delays, affecting sales timing. - Uncertainty around non-op spending later in 2025, dependent on commodity prices and economics. - Volatility in commodity prices impacting non-op spending and activity levels.

Q: Speak to first quarter guidance, production drop, and rail delay resolution A: Production drop in Q1 due to dropping a South Texas frac crew in Q4 2024, crew restarted in Jan 2025, production to grow through Q3.

Q: 40% increase in drilling inventory, breakdown by area A: Uinta acquisition contributed to inventory growth, inventory is conservative and detailed in database.

Q: Full-year guidance range for 2025, production trajectory A: BOE range with 51%-52% oil percentage, production grows through Q3 then levels off in Q4, timing related.

Q: Transport delays in Q4, one-off or ongoing A: Takeaway constraints in Q4 due to refinery downtime and rail delays, building flexibility in railcar and storage.

Q: Non-op spending in 2025 A: Non-op spending not coded in budget, back-end weighted, dependent on commodity prices and economics.

Q: Drilling vs completion activity mismatch in 2025 A: DUC count outcome of activity, 2025 net drilling completes expected to reduce DUC count by ~45, not managing to DUC count.

Q: Well productivity in Uinta A: Upper cube has lower rate but shallower decline, lower cube creating value, tests ongoing in upper cube.

Q: Capital allocation and DUC drawdown A: Capital allocation flexible between regions based on commodity prices, DUCs outcome of activity, not managed to.

Q: Reserves and Midland activity A: Midland reserves decrease due to slowing activity, Utah reserves managed like other assets with additions and infills.

Q: Repurchases and leverage A: Prioritizing free cash flow to get balance sheet strong, then return of capital, similar cadence to 2023.

Q: Uinta oil differentials A: Working on improving oil differentials, opportunities exist, will see in realizations over time.

Q: Permian opportunities (Klondike, Woodford Barnett) A: Strong returns in Permian assets, Klondike and Woodford Barnett performing well, competitive for capital.