Loading...
•
Jun 30, 2022
SM Energy Q2 2022 Earnings Report
Announced operating and financial results for the second quarter 2022 and provided certain third quarter and full year 2022 guidance.
Key Takeaways
SM Energy Company reported a net income of $323.5 million, or $2.60 per diluted common share, and Adjusted net income was $2.19 per diluted common share for the second quarter 2022. Production in the second quarter 2022 was 13.3 MMBoe (146.6 MBoe/d) and was 46% oil. Second quarter 2022 Adjusted EBITDAX was $559.7 million, a one-quarter record high for the Company, and free cash flow was $276.6 million.
Leverage ratio target met, net debt target fast approaching.
Well performance remains robust and the company is increasing production guidance for 2022 to 54-55 MMBoe, or 148-151 MBoe/d, up 4% at the mid-point.
Bottom line profitability with net income in the second quarter 2022 was $323.5 million, or $2.60 per diluted common share, and Adjusted net income was $2.19 per diluted common share.
Cash flow generation at record high and free cash flow was $276.6 million.
SM Energy
SM Energy
SM Energy Revenue by Geographic Location
Revenue by Geographic Location
Midland Basin Revenue
CapyFin.comSouth Texas Revenue
CapyFin.com Forward Guidance
The Company provided certain third quarter and full year 2022 guidance.
Positive Outlook
- The Company expects to drill 98 net wells and complete 81 net wells in 2022, or with 52 net wells drilled and 54 net wells completed in the second half of the year, an increase of 6 and 3, respectively, from the February guidance.
- Production: 54-55 MMBoe or 148-151 MBoe/d. This represents a 4% increase at the mid-point and is a result of well performance exceeding original expectations in both the Midland Basin and South Texas.
- Full year production is expected to be 46%-47% oil.
- Capital expenditures (net of the change in capital accruals): $870-900 million.
- In the third quarter 2022, the Company expects to drill 24 net wells, of which 11 are planned for South Texas and 13 are planned for the Midland Basin, and turn-in-line 35 net wells, of which 21 are planned for South Texas and 14 are planned for the Midland Basin.
Challenges Ahead
- The increase in capital expenditures incorporates higher than expected inflation and the decision to retain current rig and pressure pumping crews through the end of the year to better ensure continuous and efficient operations in a supply-constrained environment.
- LOE: $4.75-$4.90/Boe. The increase reflects increasing costs for labor, fuel and power in the second half of the year.
- Transportation: Unchanged at ~$3.00/Boe. This reflects higher South Texas volumes and the increased cost of fuel gas in the second half of the year.
- Production and ad valorem taxes $3.75-$3.90/Boe, increased due to higher commodity prices.
- DD&A: ~$11.50/Boe
Revenue & Expenses
Visualization of income flow from segment revenue to net income