DENVER, Feb. 22,
2023 /PRNewswire/ -- SM Energy Company (the
"Company") (NYSE: SM) today announced certain fourth quarter and
full year 2022 operating and financial results, year-end 2022
estimated proved reserves and its 2023 operating plan. Highlights
include:
- Substantial growth in profitability. Net income for the
full year 2022 and fourth quarter 2022 was $1.11 billion and $258.5
million, or $8.96 and
$2.09 per diluted common share,
respectively. Adjusted net income(1) for the full year
2022 and fourth quarter 2022 was $7.29 and $1.29 per
diluted common share, respectively.
- Increased return of capital to stockholders through share
buybacks and fixed dividend. The Company repurchased 1,365,255
shares from announcement of its return of capital program on
September 7, 2022 through year-end
and initiated payment of the $0.15
quarterly dividend on November 7,
2022.
- Proved reserves growth. Estimated proved reserves at
year-end 2022 totaled 537 MMBoe, a 9% increase from year-end 2021,
replacing 2022 production by 205%. The ratio of estimated proved
reserves at year-end 2022 to 2022 production is 10.1 years. The
standardized measure of discounted future net cash flows from
estimated proved reserves was $9.96
billion, up 43% from year-end 2021.
- Significant cash flow generation. For the full year
2022, net cash provided by operating activities of $1.69 billion before net change in working
capital of $72.1 million totaled
$1.76 billion.(1) Fourth
quarter net cash provided by operating activities of $288.4 million before net change in working
capital of $58.8 million was
$347.2 million.(1) For the
full year 2022, the Company generated Adjusted free cash
flow(1) of $848.7 million,
more than double the Adjusted free cash flow generated in 2021.
- Production at high end of guidance. Production for the
full year 2022 was 53.0 MMBoe or 145.1 MBoe/d, up 3% from 2021.
Fourth quarter production was 13.1 MMBoe or 142.9 MBoe/d.
- Strengthened balance sheet. Cash and cash equivalents at
year-end 2022 were $445.0 million.
Utilizing cash generated in 2022, and in support of the Company's
objective to reduce absolute debt, the Company redeemed
$551.4 million of long-term debt and
ended 2022 with a net debt-to-Adjusted EBITDAX(1) ratio
of 0.59 times.
- Stewardship targets on track. The Company made
substantial progress in 2022 and is committed to achieving its
short-to-medium-term targets for flaring, Scope 1 and 2 greenhouse
gas emissions reductions, and methane intensity. For full year
2022, the Company had de minimis routine flaring and non-routine
flaring was less than 1% at all SM Energy operations. Scope 1 and 2
greenhouse gas emissions intensity was down an estimated 40% from
base year 2019 and methane intensity was estimated at less than
0.04 mT CH4/MBoe.
2023 Strategic Objectives:
- Deliver increased return of capital to stockholders.
Continue the Company's sustainable capital return program through
the increased fixed annual dividend of $0.60 per share, to be paid in quarterly
increments, and share repurchases of up to $500.0 million in total through 2024, while
maintaining a strong balance sheet.
- Focus on operational execution. Optimize capital
efficiency, demonstrate innovation and maintain focus on ESG
stewardship.
- Continue to replace/build top-tier inventory. Repeat the
Company's track record of inventory replacement and growth,
applying the Company's differential strength in geosciences and
development optimization.
Chief Executive Officer Herb
Vogel comments: "We are very pleased to report our results
and achievements for 2022, which exceeded our strategic objectives.
We generated Adjusted free cash flow(1) of $848.7 million, a 20% yield to market
capitalization(1) at year-end. We outperformed our
leverage objective and initiated a capital return program via an
increased dividend and share repurchases. Proved reserves increased
to 537 million Boe, which resulted in a Pre-tax PV-10(1)
value of $12.15 billion and
demonstrated our high-quality asset base. Our strategy is to be a
premier operator of top tier assets and our 2023 objectives are
intended to drive value creation, differential performance and
increased stockholder returns."
ESTIMATED PROVED RESERVES AT
YEAR-END 2022
|
|
MMBoe
|
Estimated proved
reserves year-end 2021
|
|
492.0
|
Revisions - infill and
performance
|
|
92.1
|
Production
|
|
(53.0)
|
Revisions – 5-year
rule
|
|
(19.9)
|
Reserve
additions
|
|
16.7
|
Revisions –
price
|
|
9.5
|
Estimated proved
reserves year-end 2022
|
|
537.4
|
Estimated proved reserves at year-end 2022 were 537 MMBoe.
Estimated proved reserves were 52% in South Texas and 48% in the Midland Basin, and
were comprised of 38% oil, 44% natural gas and 18% NGLs. Reserves
were 59% proved developed and 41% proved undeveloped.
- The ratio of estimated proved reserves at year-end 2022 to 2022
production is 10.1 years.
- Proved reserve additions and revisions related to infill and
performance were 108.8 MMBoe, replacing 2022 production by
205%.
- 2022 SEC pricing was $93.67 per
Bbl oil, $6.36 per Mcf natural gas
and $42.52 per Bbl NGLs, up 41%, 77%
and 16%, respectively, compared to 2021 SEC pricing.
- The nominal increase in proved reserves due to price revisions
is a testament to the high-quality and commodity price resiliency
of the Company's reserve base.
- South Texas proved reserves
increased 40 MMBoe compared with 2021 as a result of continued
Austin Chalk success.
- PDP reserves of 308 MMBoe surpassed the Company's previous peak
of 297 MMBoe, set at the end of 2021.
STANDARDIZED MEASURE
The standardized measure of discounted future net cash flows
from estimated proved reserves was $9.96 billion at year-end 2022, up from
$6.96 billion at year-end 2021.
The 43% increase in the standardized measure compared with year-end
2021 is predominantly due to the increase in reserves and SEC
pricing across commodities used in the calculation. Pre-tax
PV-10(1) was $12.15 billion, the highest value in Company
history.
FOURTH QUARTER AND FULL
YEAR 2022 RESULTS
PRODUCTION BY OPERATING
AREA
|
|
|
|
Fourth Quarter
2022
|
|
Midland
Basin
|
South
Texas
|
Total
|
Oil (MBbl /
MBbl/d)
|
4,416
/ 48.0
|
1,289
/ 14.0
|
5,705
/ 62.0
|
Natural Gas (MMcf /
MMcf/d)
|
15,928
/ 173.1
|
16,174
/ 175.8
|
32,102
/ 348.9
|
NGLs (MBbl /
MBbl/d)
|
12 / -
|
2,076
/ 22.6
|
2,088
/ 22.7
|
Total (MBoe /
MBoe/d)
|
7,083
/ 77.0
|
6,060
/ 65.9
|
13,143
/ 142.9
|
Note: Totals may not
calculate due to rounding.
|
|
|
- Fourth quarter production volumes of 13.1 MMBoe (142.9 MBoe/d)
were up 4% sequentially, near the high end of guidance, and were
43% oil.
- Fourth quarter volumes in South
Texas reflect approximately 0.08 MMBoe shut-in due to
inclement weather in December. South
Texas infrastructure was designed as a dry gas system
supporting Eagle Ford production and the Company experiences
intermittent curtailments at certain wells due to high line
pressures associated with the high liquids content of Austin Chalk
wells. During the fourth quarter 2022, the effect of high line
pressures curtailed an estimated 0.2 MMBoe of production, which was
largely considered in guidance. The Company continues to work with
its midstream partners to upgrade facilities in the region to
accommodate the higher liquids production.
|
Full Year
2022
|
|
Midland
Basin
|
South
Texas
|
Total
|
Oil (MBbl /
MBbl/d)
|
19,105
/ 52.3
|
4,874
/ 13.4
|
23,979
/ 65.7
|
Natural Gas (MMcf /
MMcf/d)
|
63,459
/ 173.9
|
62,471
/ 171.2
|
125,930
/ 345.0
|
NGLs (MBbl /
MBbl/d)
|
31 / -
|
7,961
/ 21.8
|
7,992
/ 21.9
|
Total (MBoe /
MBoe/d)
|
29,712
/ 81.4
|
23,247
/ 63.7
|
52,959
/ 145.1
|
Note: Totals may not
calculate due to rounding.
|
|
|
- Full year production volumes of 53.0 MMBoe (145.1 MBoe/d) were
up 3% from 2021.
- Production volumes were 56% from the Midland Basin and 44% from
South Texas. Volumes were 45% oil,
15% NGLs and 40% natural gas.
- Oil volumes from South Texas
reflect a 78% increase over the prior year period as the Company
continued delineation drilling and initiated development drilling
of the Austin Chalk on its 155,000-acre South Texas position.
REALIZED PRICES BY
OPERATING AREA
|
|
|
Fourth Quarter
2022
|
|
Midland
Basin
|
South
Texas
|
Total
(Pre/Post-hedge)(1)
|
Oil ($/Bbl)
|
$83.09
|
$79.82
|
$82.35
/ $67.30
|
Natural Gas
($/Mcf)
|
$4.34
|
$4.69
|
$4.52
/ $3.60
|
NGLs ($/Bbl)
|
nm
|
$26.06
|
$26.10
/ $25.83
|
Per Boe
|
$61.62
|
$38.42
|
$50.92
/ $42.12
|
Note: Totals may not
calculate due to rounding.
|
|
Full Year
2022
|
|
Midland
Basin
|
South
Texas
|
Total
(Pre/Post-hedge)(1)
|
Oil ($/Bbl)
|
$95.08
|
$93.04
|
$94.67
/ $73.21
|
Natural Gas
($/Mcf)
|
$6.82
|
$5.73
|
$6.28
/ $4.92
|
NGLs ($/Bbl)
|
nm
|
$35.67
|
$35.66
/ $32.60
|
Per Boe
|
$75.74
|
$47.12
|
$63.18
/ $49.76
|
Note: Totals may not
calculate due to rounding.
|
- In the fourth quarter, the average realized price before the
effect of hedges was $50.92 per Boe
and the average realized price after the effect of hedges was
$42.12 per Boe.(1) For the
full year, the average realized price before the effect of hedges
was $63.18 per Boe and the average
realized price after the effect of hedges was $49.76 per Boe.(1)
- In the fourth quarter, benchmark pricing included NYMEX WTI at
$82.64/Bbl, NYMEX Henry Hub natural
gas at $6.26/MMBtu and Hart Composite
NGLs at $33.03/Bbl. For the full
year, benchmark pricing included NYMEX WTI at $94.23/Bbl, NYMEX Henry Hub natural gas at
$6.64/MMBtu and Hart Composite NGLs
at $43.48/Bbl.
- The effect of commodity derivative settlements for the fourth
quarter and full year was a loss of $8.80 per Boe, or $115.6
million, and a loss of $13.42
per Boe, or $710.7 million,
respectively.
For additional operating metrics and regional detail, please see
the Financial Highlights section below and the accompanying slide
deck.
NET INCOME, NET INCOME PER SHARE AND NET CASH PROVIDED BY
OPERATING ACTIVITIES
Fourth quarter 2022 net income was $258.5 million, or $2.09 per diluted common share, compared with net
income of $424.9 million, or
$3.43 per diluted common share, for
the same period in 2021. The current year period included a 21%
decrease in operating revenues and other income, compared with the
same period in 2021, due to lower production partially offset by
higher realized prices for oil and NGLs after the effect of
derivative settlements, as well as increased production costs. For
the full year 2022, net income was $1.11 billion, or $8.96 per diluted common share, compared with net
income of $36.2 million, or
$0.29 per diluted common share, for
the full year 2021. Full year net income reflects a 28% increase in
operating revenues and other income, a 22% decrease in DD&A
expense, and lower net derivative loss, which was partially offset
by higher production expenses per Boe and higher income tax
expense.
Fourth quarter 2022 net cash provided by operating
activities of $288.4 million
before net change in working capital of $58.8 million totaled $347.2 million,(1) which was down
$17.2 million, or 5%, from
$364.4 million(1) in
the same period in 2021. For the full year 2022, net cash provided
by operating activities of $1.69 billion before net changes in working
capital of $72.1 million totaled
$1.76 billion,(1)
which was up $716.1 million, or
69%, from $1.04 billion(1) in 2021.
ADJUSTED EBITDAX,(1) ADJUSTED NET
INCOME(1) AND NET DEBT-TO-ADJUSTED
EBITDAX(1)
Fourth quarter 2022 Adjusted EBITDAX(1) was
$373.9 million, down
$33.0 million, or 8%, from
$406.9 million in the same
period in 2021. The decrease in Adjusted EBITDAX(1) was
due to lower production and higher production costs per Boe,
partially offset by a higher realized price per Boe after the
effect of derivative settlements. For the full year 2022, Adjusted
EBITDAX(1) was $1.92 billion, compared with $1.23 billion in 2021. The 57% increase in
Adjusted EBITDAX was due to a 3% increase in production, 38%
increase in the average realized price per Boe after the effect of
derivative settlements, and lower cash interest expense, which was
partially offset by higher production costs per Boe.
Fourth quarter 2022 adjusted net income(1) was
$159.2 million, or $1.29 per diluted common share, which compares
with adjusted net income(1) of $141.5 million, or $1.14 per diluted common share, for the same
period in 2021. For the full year 2022, adjusted net
income(1) was $904.0 million, or $7.29 per diluted common share, compared with
adjusted net income(1) of $228.3 million, or $1.85 per diluted common share, in 2021.
At December 31, 2022, Net debt-to-Adjusted
EBITDAX(1) was 0.59 times.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL EXPENDITURES
At year-end 2022, the outstanding principal amount of the
Company's long-term debt was $1.59 billion with zero drawn on the
Company's senior secured revolving credit facility. At year-end
2022, cash and cash equivalents were $445.0 million and net debt(1)
was $1.14 billion, down
$663.7 million from year-end 2021. As
of December 31, 2022, the Company's borrowing base and
commitments under its senior secured revolving credit facility were
$2.50 billion and $1.25 billion, respectively, providing
$1.70 billion in available
liquidity.
In the fourth quarter 2022, capital expenditures of $288.1 million adjusted for decreased
capital accruals of $20.8 million were $267.3 million.(1) During the
fourth quarter of 2022, the Company drilled 26 net wells and added
21 net flowing completions. For the full year 2022, capital
expenditures of $879.9 million
adjusted for increased capital accruals of $29.8 million totaled $909.7 million(1) and the Company
drilled 90 net wells and added 79 net flowing completions. Fourth
quarter and full year capital expenditures adjusted for capital
accruals exceeded guidance by approximately $10 million primarily due to the unplanned
pre-purchase of pipe for 2023 activity.
COMMODITY DERIVATIVES
Commodity hedge positions as of February
15, 2023:
- Oil: Slightly less than 30% of expected 2023 oil production is
hedged to contract prices in the Midland Basin at an average price
of $74.10/Bbl (weighted-average of
collar floors and swaps, excludes basis swaps).
- Oil, Midland Basin differential: Approximately 5,400 MBbls is
hedged to the local price point at a positive $0.94/Bbl basis.
- Natural gas: Slightly less than 30% of expected 2023 natural
gas production is hedged at an average price of $3.97/MMBtu (weighted-average of collar floors
and swaps, excludes basis swaps).
A detailed schedule of these and other hedge positions are
provided in the accompanying slide deck.
2023 OPERATING PLAN
AND GUIDANCE
Discussion in this release of the Company's 2023 operating plan
guidance includes the term "capital expenditures," which is defined
to include adjustments for capital accruals, and is a non-GAAP
measure. In reliance on the exception provided by Item
10(e)(1)(i)(B) of Regulation S-K, the Company is unable to provide
a reconciliation of forward-looking non-GAAP capital expenditures
because components of the calculations are inherently
unpredictable, such as changes to, and the timing of, capital
accruals, unknown future events, and estimating certain future GAAP
measures. The inability to project certain components of the
calculation could significantly affect the accuracy of a
reconciliation.
KEY ASSUMPTIONS
- Price deck approximates early February strip prices at
$80.00 per Bbl WTI; $3.00 per MMBtu natural gas; $34.00 per Bbl NGLs.
- Hedges currently in place.
- Processing ethane for the full year.
GUIDANCE FULL YEAR 2023:
- Production volumes year-over-year are expected to remain flat
to low single digit growth at 52.5-54.5 MMBoe, or 144-150 MBoe/d at
43% oil.
- Capital expenditures adjusted for capital
accruals(1): are expected to be approximately
$1.1 billion, excluding
acquisitions.
-
- The capital program increased the allocation to Midland Basin
activity due to the expectation of lower natural gas prices in
2023. The allocation of drilling and completion capital is expected
to be roughly 60% to the Midland Basin and 40% to South Texas.
- The capital program includes approximately $45 million for facilities, including extension
of the South Texas oil facilities,
as well as $22 million for
capitalized interest.
- Total net wells drilled is expected to approximate 85-90,
roughly split equally between Midland Basin and South Texas. Total net wells completed is
expected to approximate 50 in Midland Basin and 40 in South Texas.
-
- Midland Basin operations are expected to continue to co-develop
zones and is expected to include activity across the RockStar
position as well as in Sweetie Peck. The scheduling of the Guitar
consolidated development, a previously discussed project that
includes 20 wells on four adjacent pads, has been modified with all
wells completed by the end of the second quarter and turned-in-line
by early in the third quarter.
- South Texas activity is
expected to be concentrated on Austin Chalk development.
- Production costs:
-
- LOE is expected to average between $5.75-6.00/Boe, which includes workover
activity;
- Transportation is expected to approximate $2.50/Boe, which includes a reduction to
South Texas natural gas
transportation costs of approximately $0.35/Mcf starting in July
2023;
- Production and ad valorem taxes are expected to average between
$2.90-3.00/Boe.
- G&A: is expected to approximate $120
million.
- Exploration/Capitalized overhead: is expected to approximate
$45 million.
- DD&A: is expected to average between $12-13/Boe.
GUIDANCE FIRST QUARTER 2023:
- Capital expenditures: are expected to range between
$320-330 million, which includes
drilling approximately 22 net wells, completing approximately 25
net wells and facilities costs. Capital expenditures are weighted
to the first half of the year, which includes approximately 60% of
2023 well completions and facilities costs.
- Production: is expected to range between 12.9-13.1 MMBoe, or
143-146 MBoe/d, at 42-43% oil. Production volumes consider the
expected effects of offset activity and curtailments.
UPCOMING EVENTS
EARNINGS Q&A WEBCAST AND CONFERENCE CALL
February 23, 2023 – Please join SM
Energy management at 8:00 a.m. Mountain
time/10:00 a.m. Eastern time
for the 2022 financial and operating results/2023 operating plan
Q&A session. This discussion will be accessible via webcast
(available live and for replay) on the Company's website at
ir.sm-energy.com or by telephone. In order to join the live
conference call, please register at the link below for dial-in
information.
- Live Conference Call Registration:
https://conferencingportals.com/event/pAjDSntN
- Replay (conference ID 11299) - Domestic toll
free/International: 888-330-2434/240-789-2725
The call replay will be available approximately one hour after
the call and until March 9, 2023.
CONFERENCE PARTICIPATION
- February 27, 2023 - Credit Suisse
28th Annual Vail Summit. Executive Vice President and
Chief Financial Officer Wade Pursell
will present at 9:15 a.m. Mountain
time and will participate in investor meetings at the event.
The presentation will be webcast, accessible from the Company's
website and available for replay for a limited time.
- March 6, 2023 - J.P. Morgan 2023
Global High Yield & Leveraged Finance Conference. Executive
Vice President and Chief Financial Officer Wade Pursell will participate in investor
meetings at the event.
DISCLOSURES
FORWARD LOOKING STATEMENTS
This release contains forward-looking statements within the
meaning of securities laws. The words "deliver," "demonstrate,"
"establish," "estimate," "expects," "goal," "generate," "maintain,"
"objectives," "optimize," "target," and similar expressions are
intended to identify forward-looking statements. Forward-looking
statements in this release include, among other
things, commodity prices, projections for the first quarter
and full year 2023 regarding guidance for capital, production,
operating costs, general and administrative expenses, exploration
expenses and DD&A and the number of net wells to be drilled and
completed; the allocation of activity between our operating areas
and, the Company's 2023 strategic objectives, including generating
and applying free cash flow to capital returns, maintaining low
leverage, optimizing capital efficiency, replacing inventory and
meeting the Company's ESG stewardship goals. These statements
involve known and unknown risks, which may cause SM Energy's actual
results to differ materially from results expressed or implied by
the forward-looking statements. Future results may be impacted by
the risks discussed in the Risk Factors section of SM Energy's most
recent Annual Report on Form 10-K, as such risk factors may be
updated from time to time in the Company's other periodic reports
filed with the Securities and Exchange Commission, specifically the
2022 Form 10-K. The forward-looking statements contained herein
speak as of the date of this release. Although SM Energy may from
time to time voluntarily update its prior forward-looking
statements, it disclaims any commitment to do so, except as
required by securities laws.
RESERVE DISCLOSURE
The SEC requires oil and natural gas companies, in their filings
with the SEC, to disclose estimated proved reserves, which are
those quantities of oil, natural gas and NGLs, that, by analysis of
geoscience and engineering data, can be estimated with reasonable
certainty to be economically producible-from a given date forward,
from known reservoirs and under existing economic conditions (using
the trailing 12-month average first-day-of-the-month prices),
operating methods and government regulations-prior to the time at
which contracts providing the right to operate expire, unless
evidence indicates that renewal is reasonably certain, regardless
of whether deterministic or probabilistic methods are used for the
estimation. The SEC also permits the disclosure of separate
estimates of probable or possible reserves that meet SEC
definitions for such reserves; however, the Company currently does
not disclose probable or possible reserves in its SEC filings.
Estimated proved reserves attributable to the Company at
December 31, 2022, are estimated utilizing SEC reserve
recognition standards and pricing assumptions based on the trailing
12-month average first-day-of-the-month prices of $93.67 per Bbl of oil, $6.36 per MMBtu of natural gas, and $42.52 per Bbl of NGLs. At least 80% of the PV-10
of the Company's estimate of its total estimated proved reserves as
of December 31, 2022, was audited by Ryder Scott Company,
L.P.
FOOTNOTE 1: Indicates a non-GAAP measure or metric.
Please refer to the "Definitions of non-GAAP Measures and Metrics
as Calculated by the Company" section in Financial Highlights for
additional information.
ABOUT THE COMPANY
SM Energy Company is an independent energy company engaged in
the acquisition, exploration, development, and production of oil,
gas, and NGLs in the state of Texas. SM Energy routinely posts important
information about the Company on its website. For more information
about SM Energy, please visit its website at www.sm-energy.com.
SM ENERGY INVESTOR
CONTACTS
Jennifer Martin Samuels,
jsamuels@sm-energy.com, 303-864-2507
SM ENERGY
COMPANY
|
FINANCIAL
HIGHLIGHTS
|
December 31,
2022
|
|
Consolidated Balance
Sheets
|
|
|
|
(in thousands, except
share data)
|
December
31,
|
ASSETS
|
2022
|
|
2021
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
444,998
|
|
$
332,716
|
Accounts
receivable
|
233,297
|
|
247,201
|
Derivative
assets
|
48,677
|
|
24,095
|
Prepaid expenses and
other
|
10,231
|
|
9,175
|
Total current
assets
|
737,203
|
|
613,187
|
Property and equipment
(successful efforts method):
|
|
|
|
Proved oil and gas
properties
|
10,258,368
|
|
9,397,407
|
Accumulated depletion,
depreciation, and amortization
|
(6,188,147)
|
|
(5,634,961)
|
Unproved oil and gas
properties, net of valuation allowance of $38,008 and $34,934,
respectively
|
487,192
|
|
629,098
|
Wells in
progress
|
287,267
|
|
148,394
|
Other property and
equipment, net of accumulated depreciation of $56,512 and
$62,359,
respectively
|
38,099
|
|
36,060
|
Total property and
equipment, net
|
4,882,779
|
|
4,575,998
|
Noncurrent
assets:
|
|
|
|
Derivative
assets
|
24,465
|
|
239
|
Other noncurrent
assets
|
71,592
|
|
44,553
|
Total noncurrent
assets
|
96,057
|
|
44,792
|
Total
assets
|
$
5,716,039
|
|
$
5,233,977
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued expenses
|
$
532,289
|
|
$
563,306
|
Derivative
liabilities
|
56,181
|
|
319,506
|
Other current
liabilities
|
10,114
|
|
6,515
|
Total current
liabilities
|
598,584
|
|
889,327
|
Noncurrent
liabilities:
|
|
|
|
Revolving credit
facility
|
—
|
|
—
|
Senior Notes,
net
|
1,572,210
|
|
2,081,164
|
Asset retirement
obligations
|
108,233
|
|
97,324
|
Deferred income
taxes
|
280,811
|
|
9,769
|
Derivative
liabilities
|
1,142
|
|
25,696
|
Other noncurrent
liabilities
|
69,601
|
|
67,566
|
Total noncurrent
liabilities
|
2,031,997
|
|
2,281,519
|
Stockholders'
equity:
|
|
|
|
Common stock, $0.01
par value - authorized: 200,000,000 shares; issued and
outstanding:
121,931,676 and 121,862,248 shares, respectively
|
1,219
|
|
1,219
|
Additional paid-in
capital
|
1,779,703
|
|
1,840,228
|
Retained
earnings
|
1,308,558
|
|
234,533
|
Accumulated other
comprehensive loss
|
(4,022)
|
|
(12,849)
|
Total stockholders'
equity
|
3,085,458
|
|
2,063,131
|
Total liabilities
and stockholders' equity
|
$
5,716,039
|
|
$
5,233,977
|
SM ENERGY
COMPANY
|
FINANCIAL
HIGHLIGHTS
|
December 31,
2022
|
|
Consolidated
Statements of Operations
|
(in thousands, except
per share data)
|
For the Three Months
Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Operating revenues
and other income:
|
|
|
|
|
|
|
|
Oil, gas, and NGL
production revenue
|
$
669,250
|
|
$
852,368
|
|
$ 3,345,906
|
|
$ 2,597,915
|
Other operating
income
|
2,068
|
|
2,592
|
|
12,741
|
|
24,979
|
Total operating
revenues and other income
|
671,318
|
|
854,960
|
|
3,358,647
|
|
2,622,894
|
Operating
expenses:
|
|
|
|
|
|
|
|
Oil, gas, and NGL
production expense
|
150,667
|
|
143,285
|
|
620,912
|
|
505,416
|
Depletion,
depreciation, amortization, and asset retirement
obligation liability accretion
|
143,611
|
|
200,011
|
|
603,780
|
|
774,386
|
Exploration
(1)
|
10,826
|
|
12,550
|
|
54,943
|
|
39,296
|
Impairment
|
1,002
|
|
8,750
|
|
7,468
|
|
35,000
|
General and
administrative (1)
|
32,843
|
|
37,062
|
|
114,558
|
|
111,945
|
Net derivative (gain)
loss (2)
|
(11,168)
|
|
(22,524)
|
|
374,012
|
|
901,659
|
Other operating
expense, net
|
879
|
|
1,415
|
|
3,493
|
|
46,069
|
Total operating
expenses
|
328,660
|
|
380,549
|
|
1,779,166
|
|
2,413,771
|
Income from
operations
|
342,658
|
|
474,411
|
|
1,579,481
|
|
209,123
|
Interest
expense
|
(22,638)
|
|
(40,085)
|
|
(120,346)
|
|
(160,353)
|
Net loss on
extinguishment of debt
|
—
|
|
—
|
|
(67,605)
|
|
(2,139)
|
Other non-operating
income (expense), net
|
3,310
|
|
607
|
|
4,240
|
|
(464)
|
Income before income
taxes
|
323,330
|
|
434,933
|
|
1,395,770
|
|
46,167
|
Income tax
expense
|
(64,867)
|
|
(10,033)
|
|
(283,818)
|
|
(9,938)
|
Net
income
|
$
258,463
|
|
$
424,900
|
|
$
1,111,952
|
|
$
36,229
|
|
|
|
|
|
|
|
|
Basic weighted-average
common shares outstanding
|
122,485
|
|
121,535
|
|
122,351
|
|
119,043
|
Diluted
weighted-average common shares outstanding
|
123,399
|
|
124,019
|
|
124,084
|
|
123,690
|
Basic net income per
common share
|
$
2.11
|
|
$
3.50
|
|
$
9.09
|
|
$
0.30
|
Diluted net income per
common share
|
$
2.09
|
|
$
3.43
|
|
$
8.96
|
|
$
0.29
|
Dividends per common
share
|
$
0.15
|
|
$
—
|
|
$
0.31
|
|
$
0.02
|
|
|
|
|
|
|
|
|
(1)
Non-cash stock-based compensation included in:
|
|
|
|
|
|
|
|
Exploration
expense
|
$
1,000
|
|
$
946
|
|
$
3,965
|
|
$
3,950
|
General and
administrative expense
|
3,914
|
|
3,682
|
|
14,807
|
|
14,869
|
Total non-cash
stock-based compensation
|
$
4,914
|
|
$
4,628
|
|
$
18,772
|
|
$
18,819
|
|
|
|
|
|
|
|
|
(2)
The net derivative (gain) loss line item consists of the
following:
|
|
|
|
|
|
|
Derivative settlement
loss
|
$
115,620
|
|
$
268,696
|
|
$
710,700
|
|
$
748,958
|
(Gain) loss on fair
value changes
|
(126,788)
|
|
(291,220)
|
|
(336,688)
|
|
152,701
|
Total net derivative
(gain) loss
|
$
(11,168)
|
|
$
(22,524)
|
|
$
374,012
|
|
$
901,659
|
SM ENERGY
COMPANY
|
FINANCIAL HIGHLIGHTS
(UNAUDITED)
|
December 31,
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Stockholders' Equity
|
(in thousands, except
share data and dividends per share)
|
|
|
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
Stockholders'
Equity
|
|
Common
Stock
|
|
|
|
|
|
Shares
|
|
Amount
|
|
|
|
|
Balances,
December 31, 2020
|
114,742,304
|
|
$
1,147
|
|
$
1,827,914
|
|
$
200,697
|
|
$
(13,598)
|
|
$
2,016,160
|
Net income
|
—
|
|
—
|
|
—
|
|
36,229
|
|
—
|
|
36,229
|
Other comprehensive
income
|
—
|
|
—
|
|
—
|
|
—
|
|
749
|
|
749
|
Cash dividends
declared, $0.02 per share
|
—
|
|
—
|
|
—
|
|
(2,393)
|
|
—
|
|
(2,393)
|
Issuance of common
stock under
Employee Stock Purchase Plan
|
313,773
|
|
3
|
|
2,636
|
|
—
|
|
—
|
|
2,639
|
Issuance of common
stock upon vesting
of RSUs and settlement of PSUs, net of
shares used for tax withholdings
|
827,572
|
|
9
|
|
(9,081)
|
|
—
|
|
—
|
|
(9,072)
|
Stock-based
compensation expense
|
60,510
|
|
1
|
|
18,818
|
|
—
|
|
—
|
|
18,819
|
Issuance of common
stock through
cashless exercise of Warrants
|
5,918,089
|
|
59
|
|
(59)
|
|
—
|
|
—
|
|
—
|
Balances,
December 31, 2021
|
121,862,248
|
|
$
1,219
|
|
$
1,840,228
|
|
$
234,533
|
|
$
(12,849)
|
|
$
2,063,131
|
Net income
|
—
|
|
—
|
|
—
|
|
1,111,952
|
|
—
|
|
1,111,952
|
Other comprehensive
income
|
—
|
|
—
|
|
—
|
|
—
|
|
8,827
|
|
8,827
|
Cash dividends
declared, $0.31 per share
|
—
|
|
—
|
|
—
|
|
(37,927)
|
|
—
|
|
(37,927)
|
Issuance of common
stock under
Employee Stock Purchase Plan
|
113,785
|
|
1
|
|
3,038
|
|
—
|
|
—
|
|
3,039
|
Issuance of common
stock upon vesting
of RSUs and settlement of PSUs, net of
shares used for tax withholdings
|
1,291,427
|
|
13
|
|
(25,142)
|
|
—
|
|
—
|
|
(25,129)
|
Stock-based
compensation expense
|
29,471
|
|
—
|
|
18,772
|
|
—
|
|
—
|
|
18,772
|
Purchase of shares
under Stock
Repurchase Program
|
(1,365,255)
|
|
(14)
|
|
(57,193)
|
|
—
|
|
—
|
|
(57,207)
|
Balances, December
31, 2022
|
121,931,676
|
|
$
1,219
|
|
$
1,779,703
|
|
$
1,308,558
|
|
$
(4,022)
|
|
$
3,085,458
|
SM ENERGY
COMPANY
|
FINANCIAL
HIGHLIGHTS
|
December 31,
2022
|
|
Consolidated
Statements of Cash Flows
|
|
|
|
|
|
|
(in
thousands)
|
For the Three Months
Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
|
$
258,463
|
|
$
424,900
|
|
$ 1,111,952
|
|
$
36,229
|
Adjustments to
reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
Depletion,
depreciation, amortization, and asset retirement
obligation liability accretion
|
143,611
|
|
200,011
|
|
603,780
|
|
774,386
|
Impairment
|
1,002
|
|
8,750
|
|
7,468
|
|
35,000
|
Stock-based
compensation expense
|
4,914
|
|
4,628
|
|
18,772
|
|
18,819
|
Net derivative (gain)
loss
|
(11,168)
|
|
(22,524)
|
|
374,012
|
|
901,659
|
Derivative settlement
loss
|
(115,620)
|
|
(268,696)
|
|
(710,700)
|
|
(748,958)
|
Amortization of debt
discount and deferred financing costs
|
1,371
|
|
3,925
|
|
10,281
|
|
17,275
|
Net loss on
extinguishment of debt
|
—
|
|
—
|
|
67,605
|
|
2,139
|
Deferred income
taxes
|
66,061
|
|
9,847
|
|
269,057
|
|
9,565
|
Other, net
|
(1,426)
|
|
3,548
|
|
6,242
|
|
(3,753)
|
Changes in working
capital:
|
|
|
|
|
|
|
|
Accounts
receivable
|
37,235
|
|
8,776
|
|
38,554
|
|
(101,047)
|
Prepaid expenses and
other
|
9,408
|
|
729
|
|
(1,055)
|
|
220
|
Accounts payable and
accrued expenses
|
(105,476)
|
|
55,736
|
|
(109,562)
|
|
218,238
|
Net cash provided by
operating activities
|
288,375
|
|
429,630
|
|
1,686,406
|
|
1,159,772
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Capital
expenditures
|
(288,088)
|
|
(124,576)
|
|
(879,934)
|
|
(674,841)
|
Other, net
|
267
|
|
2,092
|
|
(329)
|
|
7,606
|
Net cash used in
investing activities
|
(287,821)
|
|
(122,484)
|
|
(880,263)
|
|
(667,235)
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Proceeds from
revolving credit facility
|
—
|
|
183,000
|
|
—
|
|
1,832,500
|
Repayment of revolving
credit facility
|
—
|
|
(183,000)
|
|
—
|
|
(1,925,500)
|
Net proceeds from
Senior Notes
|
—
|
|
—
|
|
—
|
|
392,771
|
Cash paid to
repurchase Senior Notes
|
—
|
|
—
|
|
(584,946)
|
|
(450,776)
|
Repurchase of common
stock
|
(36,966)
|
|
—
|
|
(57,207)
|
|
—
|
Net proceeds from sale
of common stock
|
1,394
|
|
1,324
|
|
3,039
|
|
2,639
|
Dividends
paid
|
(18,419)
|
|
(1,215)
|
|
(19,637)
|
|
(2,393)
|
Net share settlement
from issuance of stock awards
|
—
|
|
(4,339)
|
|
(25,129)
|
|
(9,072)
|
Other, net
|
—
|
|
—
|
|
(9,981)
|
|
—
|
Net cash used in
financing activities
|
(53,991)
|
|
(4,230)
|
|
(693,861)
|
|
(159,831)
|
|
|
|
|
|
|
|
|
Net change in cash,
cash equivalents, and restricted cash
|
(53,437)
|
|
302,916
|
|
112,282
|
|
332,706
|
Cash, cash equivalents,
and restricted cash at beginning of period
|
498,435
|
|
29,800
|
|
332,716
|
|
10
|
Cash, cash
equivalents, and restricted cash at end of period
|
$
444,998
|
|
$
332,716
|
|
$
444,998
|
|
$
332,716
|
SM ENERGY
COMPANY
|
FINANCIAL
HIGHLIGHTS
|
December 31,
2022
|
|
Consolidated
Statements of Cash Flows (Continued)
|
|
|
|
|
|
|
(in
thousands)
|
For the Three Months
Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Supplemental
schedule of additional cash flow information:
|
|
|
|
|
|
|
|
Operating
activities:
|
|
|
|
|
|
|
|
Cash paid for
interest, net of capitalized interest
|
$
(8,572)
|
|
$
(10,378)
|
|
$
(134,240)
|
|
$
(136,606)
|
Net cash paid for
incomes taxes
|
$
(70)
|
|
$
(62)
|
|
$
(10,576)
|
|
$
(864)
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
Increase (decrease) in
capital expenditure accruals and other
|
$
(20,801)
|
|
$
(19,711)
|
|
$
29,789
|
|
$
(10,826)
|
DEFINITIONS OF NON-GAAP MEASURES
AND METRICS AS CALCULATED BY THE COMPANY
To supplement the presentation of its financial results prepared
in accordance with U.S. generally accepted accounting principles
(GAAP), the Company provides certain non-GAAP measures and metrics,
which are used by management and the investment community to assess
the Company's financial condition, results of operations, and cash
flows, as well as compare performance from period to period and
across the Company's peer group. The Company believes these
measures and metrics are widely used by the investment community,
including investors, research analysts and others, to evaluate and
compare recurring financial results among upstream oil and gas
companies in making investment decisions or recommendations. These
measures and metrics, as presented, may have differing calculations
among companies and investment professionals and may not be
directly comparable to the same measures and metrics provided by
others. A non-GAAP measure should not be considered in isolation or
as a substitute for the most directly comparable GAAP measure or
any other measure of a company's financial or operating performance
presented in accordance with GAAP. A reconciliation of the
Company's non-GAAP measures to the most directly comparable GAAP
measure is presented below. These measures may not be comparable to
similarly titled measures of other companies.
Adjusted EBITDAX: Adjusted EBITDAX is calculated
as net income (loss) before interest expense, interest income,
income taxes, depletion, depreciation, amortization and asset
retirement obligation liability accretion expense, exploration
expense, property abandonment and impairment expense, non-cash
stock-based compensation expense, derivative gains and losses net
of settlements, gains and losses on divestitures, gains and losses
on extinguishment of debt, and certain other items. Adjusted
EBITDAX excludes certain items that the Company believes affect the
comparability of operating results and can exclude items that are
generally non-recurring in nature or whose timing and/or amount
cannot be reasonably estimated. The Company believes that Adjusted
EBITDAX is a non-GAAP measure that we believe provides useful
additional information to investors and analysts, as a performance
measure, for analysis of our ability to internally generate funds
for exploration, development, acquisitions, and to service debt.
The Company is also subject to financial covenants under the
Company's Credit Agreement, a material source of liquidity for the
Company, based on Adjusted EBITDAX ratios. Please reference the
Company's 2022 Form 10-K for discussion of the Credit Agreement and
its covenants.
Adjusted net income (loss) and adjusted net income (loss) per
diluted common share: Adjusted net income (loss)
and adjusted net income (loss) per diluted common share excludes
certain items that the Company believes affect the comparability of
operating results, including items that are generally non-recurring
in nature or whose timing and/or amount cannot be reasonably
estimated. These items include non-cash and other adjustments, such
as derivative gains and losses net of settlements, impairments, net
(gain) loss on divestiture activity, gains and losses on
extinguishment of debt, and accruals for non-recurring matters. The
Company uses these measures to evaluate the comparability of the
Company's ongoing operational results and trends and believes these
measures provide useful information to investors for analysis of
the Company's fundamental business on a recurring basis.
Adjusted free cash flow: Adjusted free cash flow
is calculated as net cash provided by operating activities before
net change in working capital less capital expenditures before
increase (decrease) in capital expenditure accruals and other. The
Company uses this measure as representative of the cash from
operations, in excess of capital expenditures that provides
liquidity to fund discretionary obligations such as debt reduction,
returning cash to stockholders or expanding the business.
Adjusted free cash flow yield to market
capitalization: Adjusted free cash flow yield to
market capitalization is calculated as Adjusted free cash flow
(defined above) divided by market capitalization (share close price
multiplied by outstanding common stock). The Company believes this
metric provides useful information to management and investors as a
measure of the Company's ability to internally fund its capital
expenditures, to service or incur additional debt, and to measure
management's success in creating stockholder value.
Net debt: Net debt is calculated as the total
principal amount of outstanding senior unsecured notes plus amounts
drawn on the revolving credit facility less cash and cash
equivalents (also referred to as total funded debt). The Company
uses net debt as a measure of financial position and believes this
measure provides useful additional information to investors to
evaluate the Company's capital structure and financial
leverage.
Net debt-to-Adjusted EBITDAX: Net debt-to-Adjusted
EBITDAX is calculated as Net Debt (defined above) divided by
Adjusted EBITDAX (defined above) for the trailing twelve-month
period (also referred to as leverage ratio). A variation of this
calculation is a financial covenant under the Company's Credit
Agreement. The Company and the investment community may use this
metric in understanding the Company's ability to service its debt
and identify trends in its leverage position. The Company
reconciles the two non-GAAP measure components of this
calculation.
Pre-Tax PV-10: Pre-Tax PV-10 is the present value
of estimated future revenue to be generated from the production of
estimated net proved reserves, net of estimated production and
future development costs, based on prices used in estimating the
proved reserves and costs in effect as of the date indicated
(unless such costs are subject to change pursuant to contractual
provisions), without giving effect to non-property related expenses
such as general and administrative expenses, debt service, future
income tax expenses, or depreciation, depletion, and amortization,
discounted using an annual discount rate of 10 percent. While this
measure does not include the effect of income taxes as it would in
the use of the standardized measure of discounted future net cash
flows calculation, it does provide an indicative representation of
the relative value of the Company on a comparative basis to other
companies and from period to period. This measure is presented
because management believes it provides useful information to
investors for analysis of the Company's fundamental business on a
recurring basis.
Reinvestment rate: Reinvestment rate is
calculated as capital expenditures before increase (decrease) in
capital expenditure accruals and other divided by net cash provided
by operating activities before net change in working capital. The
Company believes this metric is useful to management and the
investment community to understand the Company's ability to
generate sustainable profitability and may be used to compare over
periods of time across industry peers.
Post-hedge: Post-hedge is calculated as the average
realized price after the effects of commodity derivative
settlements. The Company believes this metric is useful to
management and the investment community to understand the effects
of commodity derivative settlements on average realized price.
SM ENERGY
COMPANY
|
FINANCIAL
HIGHLIGHTS
|
December 31,
2022
|
|
Production
Data
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
|
2022
|
|
2021
|
|
Percent
Change
|
|
2022
|
|
2021
|
|
Percent
Change
|
Realized sales price
(before the effect of derivative settlements):
|
|
|
|
|
|
|
Oil (per
Bbl)
|
$ 82.35
|
|
$ 76.08
|
|
8 %
|
|
$ 94.67
|
|
$ 67.72
|
|
40 %
|
Gas (per
Mcf)
|
$ 4.52
|
|
$ 6.35
|
|
(29) %
|
|
$ 6.28
|
|
$ 4.85
|
|
29 %
|
NGLs (per
Bbl)
|
$ 26.10
|
|
$ 39.63
|
|
(34) %
|
|
$ 35.66
|
|
$ 33.67
|
|
6 %
|
Equivalent (per
Boe)
|
$ 50.92
|
|
$ 58.54
|
|
(13) %
|
|
$ 63.18
|
|
$ 50.58
|
|
25 %
|
Realized sales price
(including the effect of derivative settlements):
|
|
|
|
|
|
|
Oil (per
Bbl)
|
$ 67.30
|
|
$ 53.11
|
|
27 %
|
|
$ 73.21
|
|
$ 48.99
|
|
49 %
|
Gas (per
Mcf)
|
$ 3.60
|
|
$ 4.31
|
|
(16) %
|
|
$ 4.92
|
|
$ 3.44
|
|
43 %
|
NGLs (per
Bbl)
|
$ 25.83
|
|
$ 22.99
|
|
12 %
|
|
$ 32.60
|
|
$ 20.00
|
|
63 %
|
Equivalent (per
Boe)
|
$ 42.12
|
|
$ 40.09
|
|
5 %
|
|
$ 49.76
|
|
$ 36.00
|
|
38 %
|
Net production
volumes: (1)
|
|
|
|
|
|
|
|
|
|
|
|
Oil (MMBbl)
|
5.7
|
|
7.8
|
|
(27) %
|
|
24.0
|
|
27.9
|
|
(14) %
|
Gas (Bcf)
|
32.1
|
|
31.3
|
|
3 %
|
|
125.9
|
|
108.4
|
|
16 %
|
NGLs
(MMBbl)
|
2.1
|
|
1.6
|
|
32 %
|
|
8.0
|
|
5.4
|
|
49 %
|
Equivalent
(MMBoe)
|
13.1
|
|
14.6
|
|
(10) %
|
|
53.0
|
|
51.4
|
|
3 %
|
Average net daily
production: (1)
|
|
|
|
|
|
|
|
|
|
|
|
Oil (MBbls per
day)
|
62.0
|
|
84.5
|
|
(27) %
|
|
65.7
|
|
76.5
|
|
(14) %
|
Gas (MMcf per
day)
|
348.9
|
|
339.7
|
|
3 %
|
|
345.0
|
|
296.9
|
|
16 %
|
NGLs (MBbls per
day)
|
22.7
|
|
17.2
|
|
32 %
|
|
21.9
|
|
14.7
|
|
49 %
|
Equivalent (MBoe per
day)
|
142.9
|
|
158.3
|
|
(10) %
|
|
145.1
|
|
140.7
|
|
3 %
|
Per Boe data:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating
expense
|
$ 5.20
|
|
$ 4.21
|
|
24 %
|
|
$ 5.03
|
|
$ 4.39
|
|
15 %
|
Transportation
costs
|
$ 2.86
|
|
$ 2.61
|
|
10 %
|
|
$ 2.83
|
|
$ 2.71
|
|
4 %
|
Production
taxes
|
$ 2.43
|
|
$ 2.80
|
|
(13) %
|
|
$ 3.07
|
|
$ 2.36
|
|
30 %
|
Ad valorem tax
expense
|
$ 0.97
|
|
$ 0.22
|
|
341 %
|
|
$ 0.79
|
|
$ 0.38
|
|
108 %
|
General and
administrative (2)
|
$ 2.50
|
|
$ 2.55
|
|
(2) %
|
|
$ 2.16
|
|
$ 2.18
|
|
(1) %
|
Derivative settlement
loss
|
$ (8.80)
|
|
$
(18.45)
|
|
52 %
|
|
$
(13.42)
|
|
$
(14.58)
|
|
8 %
|
Depletion,
depreciation, amortization, and asset
retirement obligation liability accretion
|
$ 10.93
|
|
$ 13.74
|
|
(20) %
|
|
$ 11.40
|
|
$ 15.08
|
|
(24) %
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amounts
and percentage changes may not calculate due to
rounding.
|
(2) Includes
non-cash stock-based compensation expense per Boe of $0.30 and
$0.25 for the three months ended December 31, 2022, and 2021,
respectively, and $0.28 and $0.29 for the twelve months ended
December 31, 2022, and 2021, respectively.
|
SM ENERGY
COMPANY
|
FINANCIAL
HIGHLIGHTS
|
December 31,
2022
|
|
Adjusted EBITDAX
Reconciliation (1)
|
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net
income (GAAP) and net cash provided by
operating activities (GAAP) to Adjusted EBITDAX
(non-GAAP):
|
For the Three Months
Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net income
(GAAP)
|
$
258,463
|
|
$
424,900
|
|
$ 1,111,952
|
|
$
36,229
|
Interest
expense
|
22,638
|
|
40,085
|
|
120,346
|
|
160,353
|
Income tax
expense
|
64,867
|
|
10,033
|
|
283,818
|
|
9,938
|
Depletion,
depreciation, amortization, and asset retirement
obligation liability accretion
|
143,611
|
|
200,011
|
|
603,780
|
|
774,386
|
Exploration
(2)
|
9,826
|
|
11,604
|
|
50,978
|
|
35,346
|
Impairment
|
1,002
|
|
8,750
|
|
7,468
|
|
35,000
|
Stock-based
compensation expense
|
4,914
|
|
4,628
|
|
18,772
|
|
18,819
|
Net derivative (gain)
loss
|
(11,168)
|
|
(22,524)
|
|
374,012
|
|
901,659
|
Derivative settlement
loss
|
(115,620)
|
|
(268,696)
|
|
(710,700)
|
|
(748,958)
|
Net loss on
extinguishment of debt
|
—
|
|
—
|
|
67,605
|
|
2,139
|
Other, net
|
(4,679)
|
|
(1,900)
|
|
(9,743)
|
|
507
|
Adjusted EBITDAX
(non-GAAP)
|
$
373,854
|
|
$
406,891
|
|
$ 1,918,288
|
|
$ 1,225,418
|
Interest
expense
|
(22,638)
|
|
(40,085)
|
|
(120,346)
|
|
(160,353)
|
Income tax
expense
|
(64,867)
|
|
(10,033)
|
|
(283,818)
|
|
(9,938)
|
Exploration
(2)(3)
|
(8,851)
|
|
(11,604)
|
|
(36,810)
|
|
(35,346)
|
Amortization of debt
discount and deferred financing costs
|
1,371
|
|
3,925
|
|
10,281
|
|
17,275
|
Deferred income
taxes
|
66,061
|
|
9,847
|
|
269,057
|
|
9,565
|
Other, net
|
2,278
|
|
5,448
|
|
1,817
|
|
(4,260)
|
Net change in working
capital
|
(58,833)
|
|
65,241
|
|
(72,063)
|
|
117,411
|
Net cash provided by
operating activities (GAAP)
|
$
288,375
|
|
$
429,630
|
|
$ 1,686,406
|
|
$ 1,159,772
|
|
|
|
|
|
|
|
|
(1)
|
See "Definitions of
non-GAAP Measures and Metrics as Calculated by the Company"
above.
|
(2)
|
Stock-based
compensation expense is a component of the exploration expense and
general and administrative expense line items on the accompanying
consolidated statements of operations. Therefore, the exploration
line items shown in the reconciliation above will vary from the
amount shown on the accompanying consolidated statements of
operations for the component of stock-based compensation expense
recorded to exploration expense.
|
(3)
|
For the twelve months
ended December 31, 2022, amount is net of certain capital
expenditures related to unsuccessful exploration efforts outside of
our core areas of operations.
|
SM ENERGY
COMPANY
|
FINANCIAL
HIGHLIGHTS
|
December 31,
2022
|
|
Adjusted Net Income
Reconciliation (1)
|
|
|
|
|
|
|
|
(in thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of net
income (GAAP) to adjusted net income (non-GAAP):
|
For the Three
Months
Ended December 31,
|
|
For the Twelve
Months
Ended December 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net income
(GAAP)
|
$
258,463
|
|
$
424,900
|
|
$
1,111,952
|
|
$
36,229
|
Net derivative (gain)
loss
|
(11,168)
|
|
(22,524)
|
|
374,012
|
|
901,659
|
Derivative settlement
loss
|
(115,620)
|
|
(268,696)
|
|
(710,700)
|
|
(748,958)
|
Impairment
|
1,002
|
|
8,750
|
|
7,468
|
|
35,000
|
Net loss on
extinguishment of debt
|
—
|
|
—
|
|
67,605
|
|
2,139
|
Other, net
|
(985)
|
|
(885)
|
|
(3,969)
|
|
2,223
|
Tax effect of
adjustments (2)
|
27,509
|
|
61,488
|
|
57,632
|
|
(41,678)
|
Valuation allowance on
deferred tax assets
|
—
|
|
(61,488)
|
|
—
|
|
41,678
|
Adjusted net income
(non-GAAP)
|
$
159,201
|
|
$
141,545
|
|
$
904,000
|
|
$
228,292
|
|
|
|
|
|
|
|
|
Diluted net income
per common share (GAAP)
|
$
2.09
|
|
$
3.43
|
|
$
8.96
|
|
$
0.29
|
Net derivative (gain)
loss
|
(0.09)
|
|
(0.18)
|
|
3.01
|
|
7.29
|
Derivative settlement
loss
|
(0.94)
|
|
(2.17)
|
|
(5.73)
|
|
(6.06)
|
Impairment
|
0.01
|
|
0.07
|
|
0.06
|
|
0.28
|
Net loss on
extinguishment of debt
|
—
|
|
—
|
|
0.54
|
|
0.02
|
Other, net
|
(0.01)
|
|
(0.01)
|
|
(0.03)
|
|
0.03
|
Tax effect of
adjustments (2)
|
0.22
|
|
0.50
|
|
0.46
|
|
(0.34)
|
Valuation allowance on
deferred tax assets
|
—
|
|
(0.50)
|
|
—
|
|
0.34
|
Adjusted net income
per diluted common share (non-GAAP)
|
$
1.29
|
|
$
1.14
|
|
$
7.29
|
|
$
1.85
|
|
|
|
|
|
|
|
|
Basic weighted-average
common shares outstanding
|
122,485
|
|
121,535
|
|
122,351
|
|
119,043
|
Diluted
weighted-average common shares outstanding
|
123,399
|
|
124,019
|
|
124,084
|
|
123,690
|
|
|
|
|
|
|
|
|
Note: Amounts may not
calculate due to rounding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
See "Definitions of
non-GAAP Measures and Metrics as Calculated by the Company"
above.
|
(2)
|
The tax effect of
adjustments for each of the three and twelve months ended December
31, 2022, and 2021, was calculated using a tax rate of 21.7%. This
rate approximates the Company's statutory tax rate for the
respective periods, as adjusted for ordinary permanent
differences.
|
SM ENERGY
COMPANY
|
FINANCIAL
HIGHLIGHTS
|
December 31,
2022
|
|
|
|
|
|
|
|
Regional proved oil
and gas reserve quantities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Midland
Basin
|
|
South
Texas
|
|
Total
|
Year-end 2022
estimated proved reserves
|
|
|
|
|
|
|
Oil (MMBbl)
|
|
153.1
|
|
52.7
|
|
205.8
|
Gas (Bcf)
|
|
625.1
|
|
777.8
|
|
1,402.9
|
NGL (MMBbl)
|
|
0.2
|
|
97.6
|
|
97.8
|
MMBoe
|
|
257.4
|
|
280.0
|
|
537.4
|
% Proved
developed
|
|
64 %
|
|
55 %
|
|
59 %
|
|
|
|
|
|
|
|
Note: Amounts may not
calculate due to rounding.
|
|
|
|
|
|
|
Pre-tax PV-10
Reconciliation (1)
|
|
|
(in
millions)
|
|
|
|
|
As of December
31,
|
Reconciliation of
standardized measure of discounted future net cash flows (GAAP) to
Pre-tax PV-10 (non-GAAP):
|
2022
|
|
2021
|
Standardized measure
of discounted future net cash flows (GAAP)
|
$
9,962.1
|
|
$
6,962.6
|
Add: 10 percent annual
discount, net of income taxes
|
7,551.5
|
|
4,844.9
|
Add: future
undiscounted income taxes
|
3,888.3
|
|
2,130.3
|
Pre-tax undiscounted
future net cash flows
|
21,401.9
|
|
13,937.8
|
Less: 10 percent
annual discount without tax effect
|
(9,247.4)
|
|
(5,779.2)
|
Pre-tax PV-10
(non-GAAP)
|
$
12,154.5
|
|
$
8,158.6
|
|
|
|
|
(1) See
"Definitions of non-GAAP Measures and Metrics as Calculated by the
Company" above.
|
Reconciliation of
Total Principal Amount of Debt to Net
Debt (1)
|
|
|
|
(in
thousands)
|
|
|
|
|
As of December
31,
|
|
2022
|
|
2021
|
Principal amount of
Senior Secured Notes (2)
|
$
—
|
|
$
446,675
|
Principal amount of
Senior Unsecured Notes (2)
|
1,585,144
|
|
1,689,913
|
Revolving credit
facility (2)
|
—
|
|
—
|
Total principal amount
of debt (GAAP)
|
1,585,144
|
|
2,136,588
|
Less: Cash and cash
equivalents
|
444,998
|
|
332,716
|
Net Debt
(non-GAAP)
|
$
1,140,146
|
|
$
1,803,872
|
|
|
|
|
(1) See
"Definitions of non-GAAP Measures and Metrics as Calculated by the
Company" above.
|
(2) Amounts
are from Note 5 - Long-term Debt in Part II, Item 8 of the
Company's Form 10-K for the years ended December 31, 2022, and
2021, respectively.
|
SM ENERGY
COMPANY
|
FINANCIAL
HIGHLIGHTS
|
December 31,
2022
|
|
|
|
|
|
|
|
|
Adjusted Free Cash
Flow (1)
|
|
|
|
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net cash provided by
operating activities (GAAP)
|
$
288,375
|
|
$
429,630
|
|
$
1,686,406
|
|
$
1,159,772
|
Net change in working
capital
|
58,833
|
|
(65,241)
|
|
72,063
|
|
(117,411)
|
Cash flow from
operations before net change in working capital
(non-GAAP)
|
347,208
|
|
364,389
|
|
1,758,469
|
|
1,042,361
|
|
|
|
|
|
|
|
|
Capital expenditures
(GAAP)
|
288,088
|
|
124,576
|
|
879,934
|
|
674,841
|
Increase (decrease) in
capital expenditure accruals and other
|
(20,801)
|
|
(19,711)
|
|
29,789
|
|
(10,826)
|
Capital expenditures
before accruals and other (non-GAAP)
|
267,287
|
|
104,865
|
|
909,723
|
|
664,015
|
|
|
|
|
|
|
|
|
Adjusted free cash
flow (non-GAAP)
|
$
79,921
|
|
$
259,524
|
|
$
848,746
|
|
$
378,346
|
|
|
|
|
|
|
|
|
(1) See
"Definitions of non-GAAP Measures and Metrics as Calculated by the
Company" above.
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/sm-energy-reports-2022-results-and-2023-operating-plan-301753559.html
SOURCE SM Energy Company