SM Energy Company Q2 FY2025 earnings call

• Herb Vogel noted a standout second quarter with record production volumes, paid off the credit facility, and built a cash balance over $100 million. The Uinta Basin was a key driver, and the company entered the optimization phase of Uinta Basin asset integration.
• Beth McDonald highlighted 5-year growth with estimated net proved reserves and production up over 60% since 2020, technology initiatives like machine learning models for well designs, field tours with officials, and early integration and efficiency wins in the Uinta Basin.
• Wade Pursell discussed strong financial performance with beats in adjusted net income, EBITDAX, and free cash flow, prioritization of debt reduction towards 1x leverage target, hedging activities for future production, and updated guidance on production, capital expenditures, DD&A, and cash taxes.

Record production volumes totaled 209,000 barrels of oil equivalent per day, exceeding the midpoint of guidance by 5%. Oil production was 115,700 barrels per day, making up over 55% of total production. The Uinta Basin was a major driver of production, with its volumes outpacing expectations. The South Texas Austin Chalk continued to generate exceptional returns, and the Midland Basin also performed strongly. Revenue contribution from oil was over 55% of total production.

• Production: Reiterated total net production of 200,000 to 215,000 BOE per day, with oil contribution at 53%-54% (approximately 106,000 to 116,000 barrels per day at midpoint).
• Capital expenditures: Updated full year total capital expenditures to approximately $1.375 billion, with net drilled wells expected to be 115.
• DD&A: Increased to approximately $16 per BOE due to higher expected full year oil production.
• Cash taxes: Reduced to approximately $10 million for 2025 due to the One Big Beautiful Bill Act, down from a prior range of $75 million to $95 million.

• Industry still faces challenges for the remainder of 2025 and into 2026, including potential impact of OPEC+ supply decisions, sanctions, tariffs, or other geopolitical tensions.
• Commodity price volatility, which the company manages through its hedging program, but still poses a risk.

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