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Sep 30, 2022
SM Energy Q3 2022 Earnings Report
Reported operating and financial results, initiated a return of capital program, and provided guidance.
Key Takeaways
SM Energy reported strong Q3 2022 results, with a net income of $481.2 million and adjusted EBITDAX of $460.2 million. The company initiated a return of capital program, including share buybacks and an increased fixed dividend. Production volumes were 12.7 MMBoe, or 137.8 MBoe/d, with 45% oil.
Net income in the third quarter was $481.2 million, or $3.87 per diluted common share.
Net-debt-to-adjusted EBITDAX was reduced to 0.6 times at third quarter end.
The Company launched a return of capital program that includes an increase in the fixed dividend to $0.60 per share annually, to be paid in quarterly increments of $0.15 per share, and authorization for share repurchases of up to $500.0 million.
Third quarter capital expenditures totaled $238.9 million.
SM Energy
SM Energy
Forward Guidance
The Company provided full year and fourth quarter 2022 guidance.
Positive Outlook
- Full year capital expenditures (net of the change in capital accruals): $870-900 million, unchanged.
- Fourth quarter capital expenditures (net of the change in capital accruals): $228-258 million.
- Full year production: 52.5-53.0 MMBoe or 144-145 MBoe/d, at ~46% oil.
- Fourth quarter production: 12.7-13.2 MMBoe, or 138-143 MBoe/d, at ~44% oil.
- DD&A: ~$11.50/Boe, unchanged: Fourth quarter ~$11.50/Boe.
Challenges Ahead
- LOE: $5.10-$5.15/Boe, reflecting higher second half inflation. Fourth quarter ~$5.60/Boe.
- Transportation: ~$3.00/Boe, unchanged. Fourth quarter ~$3.25/Boe.
- Production and ad valorem taxes: ~$3.90/Boe, increased due to higher mid-year commodity prices and higher property tax assessments, respectively. Fourth quarter ~$3.50/Boe.
- Exploration expense: ~$55 million, up slightly.
- G&A: ~$110 million, unchanged.