·	Company increases 2011 production forecast to a range of 162 – 167 BCFE, up approximately 10% from prior guidance; anticipate year over year production growth of 50%

·	Production for 2012 expected to increase 35% - 40% to a range of 225 – 232 BCFE, based on preliminary 2012 capital program budget of  $1.4 to $1.5 billion

·	Company has closed or entered into over $1.0 billion of transactions in 2011 to fund activity

 

The primary increase to the 2011 capital budget results from differences regarding the size and timing of the Company’s previously announced Eagle Ford shale transactions, compared to assumptions made when they were originally budgeted.  The reduction in SM Energy’s total Eagle Ford shale position will not be as large as was assumed at the beginning of the year.  The scheduled closing dates for these transactions are also later in the year than originally budgeted.  As a result, higher amounts of production and capital expenditures will be recognized by the Company in 2011.  The capital budget is also being increased to reflect the decision to continue drilling in the Company’s operated Haynesville shale position in East Texas until its leasehold position is held by production in 2012.  More detailed production and cost guidance for the remainder of 2011 is provided later in this release.

		Gross Proceeds
		($ in millions)
Eagle Ford LaSalle block		$	225
Non-operated Eagle Ford reimbursements			55
Marcellus shale assets			80
Constitution Field (East Texas) assets			44
Rocky Mountain oil assets			47
Eagle Ford gathering assets			25
Total gross proceeds		$	476

		Estimated Gross Wells				Estimated WI%				Estimated Capital
($ in millions)
Operated Eagle Ford shale			95				100	%		$	670 - 730
Non-Operated Eagle Ford shale			300				14.5	%			-
Operated Bakken/Three Forks			40				57	%			185 - 205
Operated Haynesville			8				95	%			85 - 95
Operated Granite Wash			15				60	%			70 - 75
Other Operated		TBD				Varies					130 - 150
Outside Operated		TBD				Varies					75 - 100
Range of drilling capital										$	1,200 - 1,300
Non-drilling capital										$	200
Range of total capital										$	1,400 - 1,500

 

		Previous FY2011 Guidance				Revised FY2011 Guidance				Preliminary FY2012 Guidance
Production (BCFE)			146 - 152				162 - 167				225 - 232
Production growth (year over year)			33 - 38	%		47 - 52		%			35 - 40	%

($ in millions)		2011				2012
Capital program		$	1,550			$	1,400 – 1,500
Less: Projected operating cash flow*			860				1,200 – 1,300
Less: Transaction proceeds			476				-
Estimated funding gap		$	214			$	200

 

3Q11E

4Q11E

FY 2011E

Production (BCFE)

42.0 – 44.5

44.0 – 47.0

162.0 – 167.0

Average daily production (MMCFE/d)

453 – 481

479 – 509

437 – 464

Oil production (as % of total)

~30%

~31%

~30%

Natural gas production (as % of total)

~55%

~55%

~57%

NGL production (as % of total)

~15%

~14%

~13%

LOE ($/MCFE)

$

0.90 – 0.96

$

0.90 – 0.96

$

0.88 – 0.93

Transportation ($/MCFE)

$

0.59 – 0.62

$

0.58 – 0.61

$

0.50 – 0.53

Production Taxes (% of pre-derivative oil, gas, and NGL revenue)

6 – 7%

6 – 7%

5.5 – 6%

G&A - cash NPP ($/MCFE)

$

0.11 – 0.13

$

0.11 – 0.13

$

0.12 – 0.14

G&A - other cash ($/MCFE)

$

0.47 – 0.50

$

0.47 – 0.50

$

0.47 – 0.50

G&A - non-cash ($/MCFE)

$

0.12 – 0.14

$

0.11 – 0.13

$

0.11 – 0.13

G&A TOTAL ($/MCFE)

$

0.70 – 0.77

$

0.69 – 0.76

$

0.70 – 0.77

DD&A ($/MCFE)

$

2.90 – 3.10

$

2.90 – 3.10

$

2.90 – 3.10

Non-cash interest expense ($MM)

$

3.4

$

3.5

$

18.1

Effective income tax rate range

37.0% - 37.5%

% of income tax that is current

~5%