• | 2015 capital budget of $1.2 billion, a 43% reduction from 2014 CAPEX excluding acquisitions. |
• | Production guidance of 60.4 - 63.5 MMBOE, or 12% production growth year over year at the midpoint. |
• | Fourth quarter GAAP net income of $331.7 million or $4.91 per diluted share; adjusted net income of $70.9 million, or $1.05 per diluted share. |
• | Fourth quarter GAAP net cash provided by operating activities of $381.5 million; quarterly adjusted EBITDAX of $419.0 million. |
2015 Capital guidance | ||||||||||||
(in millions) | ||||||||||||
Program | Operated | Non-operated | Total | |||||||||
Eagle Ford | $ | 470 | $ | 135 | $ | 605 | ||||||
Bakken/Three Forks | 195 | 60 | 255 | |||||||||
Other | 170 | 15 | 185 | |||||||||
Drilling and Completion Subtotal | $ | 835 | $ | 210 | $ | 1,045 | ||||||
Non-drilling & New Ventures | 185 | |||||||||||
Total | $ | 1,230 |
FY 2015 | |
Production (MMBOE) | 60.4 – 63.5 |
Average daily production (MBOE/d) | 165 – 174 |
LOE ($/BOE) | $4.40 – $4.65 |
Ad Valorem ($/BOE) | $0.50 – $0.55 |
Transportation ($/BOE) | $6.25 – $6.55 |
Production Taxes (% of pre-derivative O&G revenue) | 4.5% – 5.0% |
G&A - cash ($/BOE) | $2.50 – $2.80 |
G&A - non-cash ($/BOE) | $0.30 – $0.40 |
G&A Total ($/BOE) | $2.80 – $3.20 |
DD&A ($/BOE) | $13.00 – $13.80 |
Effective income tax rate range | 36.3% - 37.5% |
% of income tax that is current | <3% |
Guidance Comparison | For the Three Months | For the Twelve Months | |||||||||||||
Ended December 31, 2014 | Ended December 31, 2014 | ||||||||||||||
Actual | Guidance | Actual | Guidance | ||||||||||||
Production | |||||||||||||||
Average daily production (MBOE/d) | 175.8 | 152 | - | 159 | 151.1 | 145 | - | 147 | |||||||
Total production (MMBOE) | 16.17 | 13.9 | - | 14.7 | 55.14 | 52.9 | - | 53.6 | |||||||
Costs | |||||||||||||||
Lease operating expense ($/BOE) | $4.66 | $4.95 | - | $5.20 | $4.74 | $4.85 | - | $4.90 | |||||||
Transportation expense ($/BOE) | $5.77 | $6.05 | - | $6.35 | $6.11 | $6.20 | - | $6.30 | |||||||
Production taxes, as a percentage of pre-derivative oil, gas, and NGL revenue | 4.7 | % | 5.0 | % | - | 5.5% | 4.7 | % | 5.0 | % | - | 5.5% | |||
General and administrative - cash ($/BOE) | $2.80 | $2.25 | - | $2.45 | $2.43 | $2.26 | - | $2.31 | |||||||
General and administrative - cash related to Net Profits Plan ($/BOE) | $0.05 | $0.15 | - | $0.30 | $0.15 | $0.18 | - | $0.22 | |||||||
General and administrative - non-cash ($/BOE) | $0.38 | $0.35 | - | $0.55 | $0.45 | $0.44 | - | $0.50 | |||||||
General and administrative - Total ($/BOE) | $3.23 | $2.75 | - | $3.30 | $3.03 | $2.88 | - | $3.03 | |||||||
Depreciation, depletion, and amortization ($/BOE) | $13.56 | $14.00 | - | $14.75 | $13.92 | $14.05 | - | $14.25 | |||||||
Taxes | |||||||||||||||
Effective income tax rate | 37.4 | % | 37.0 | % | - | 37.5% | |||||||||
% of income tax that is current | 0.2 | % | <3% |
Call Type | Phone Number | Conference ID | ||
Domestic Participant | 877-303-1292 | 70918598 | ||
Domestic Replay | 855-859-2056 | 70918598 | ||
International Participant | 315-625-3086 | 70918598 | ||
International Replay | 404-537-3406 | 70918598 |
Reconciliation of standardized measure (GAAP) to PV-10 (Non-GAAP): | |||
As of December 31, | |||
2014 | |||
(in millions) | |||
Standardized measure of discounted future net cash flows (GAAP) | $ | 5,698.8 | |
Add: 10 percent annual discount, net of income taxes | 3,407.2 | ||
Add: future undiscounted income taxes | 3,511.4 | ||
Undiscounted future net cash flows | 12,617.4 | ||
Less: 10 percent annual discount without tax effect | (5,000.5 | ) | |
PV-10 (Non-GAAP) | $ | 7,616.9 |
SM ENERGY COMPANY | |||||||||||||||||||||
FINANCIAL HIGHLIGHTS | |||||||||||||||||||||
December 31, 2014 | |||||||||||||||||||||
For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | ||||||||||||||||||||
Production Data: | 2014 | 2013 | Percent Change | 2014 | 2013 | Percent Change | |||||||||||||||
Average realized sales price, before the effects | |||||||||||||||||||||
of derivative settlements: | |||||||||||||||||||||
Oil (per Bbl) | $ | 62.60 | $ | 86.48 | (28 | )% | $ | 80.97 | $ | 91.19 | (11 | )% | |||||||||
Gas (per Mcf) | 3.87 | 3.98 | (3 | )% | 4.58 | 3.93 | 17 | % | |||||||||||||
NGL (per Bbl) | 25.97 | 38.63 | (33 | )% | 33.34 | 35.95 | (7 | )% | |||||||||||||
Equivalent (per BOE) | $ | 36.27 | $ | 44.86 | (19 | )% | $ | 45.01 | $ | 45.50 | (1 | )% | |||||||||
Average realized sales price, including the | |||||||||||||||||||||
effects of derivative settlements: | |||||||||||||||||||||
Oil (per Bbl) | $ | 73.55 | $ | 86.12 | (15 | )% | $ | 82.68 | $ | 89.92 | (8 | )% | |||||||||
Gas (per Mcf) | 3.91 | 4.27 | (8 | )% | 4.40 | 4.14 | 6 | % | |||||||||||||
NGL (per Bbl) | 30.71 | 38.34 | (20 | )% | 34.18 | 36.66 | (7 | )% | |||||||||||||
Equivalent (BOE) | $ | 40.94 | $ | 45.57 | (10 | )% | $ | 45.23 | $ | 45.92 | (2 | )% | |||||||||
Production: | |||||||||||||||||||||
Oil (MMBbls) | 5.1 | 3.8 | 36 | % | 16.7 | 13.9 | 19 | % | |||||||||||||
Gas (Bcf) | 43.9 | 39.5 | 11 | % | 152.9 | 149.3 | 2 | % | |||||||||||||
NGL (MMBbls) | 3.8 | 2.9 | 30 | % | 13.0 | 9.5 | 37 | % | |||||||||||||
MMBOE (6:1) | 16.2 | 13.2 | 22 | % | 55.1 | 48.3 | 14 | % | |||||||||||||
Average daily production: | |||||||||||||||||||||
Oil (MBbls/d) | 55.4 | 40.8 | 36 | % | 45.6 | 38.2 | 19 | % | |||||||||||||
Gas (MMcf/d) | 476.9 | 429.3 | 11 | % | 419.0 | 409.2 | 2 | % | |||||||||||||
NGL (MBbls/d) | 40.9 | 31.5 | 30 | % | 35.6 | 26.0 | 37 | % | |||||||||||||
MBOE/d (6:1) | 175.8 | 143.8 | 22 | % | 151.1 | 132.4 | 14 | % | |||||||||||||
Per BOE Data: | |||||||||||||||||||||
Realized price before the effects of derivative settlements | $ | 36.27 | $ | 44.86 | (19 | )% | $ | 45.01 | $ | 45.50 | (1 | )% | |||||||||
Lease operating expense | 4.66 | 4.62 | 1 | % | 4.74 | 4.82 | (2 | )% | |||||||||||||
Transportation costs | 5.77 | 5.67 | 2 | % | 6.11 | 5.34 | 14 | % | |||||||||||||
Production taxes | 1.70 | 2.01 | (15 | )% | 2.13 | 2.19 | (3 | )% | |||||||||||||
General and administrative | 3.23 | 3.63 | (11 | )% | 3.03 | 3.09 | (2 | )% | |||||||||||||
Operating profit, before the effects of derivative settlements | $ | 20.91 | $ | 28.93 | (28 | )% | $ | 29.00 | $ | 30.06 | (4 | )% | |||||||||
Derivative settlement gain | 4.67 | 0.71 | 558 | % | 0.22 | 0.42 | (48 | )% | |||||||||||||
Operating profit, including the effects of derivative settlements | $ | 25.58 | $ | 29.64 | (14 | )% | $ | 29.22 | $ | 30.48 | (4 | )% | |||||||||
Depletion, depreciation, amortization, and asset retirement obligation liability accretion | $ | 13.56 | $ | 15.31 | (11 | )% | $ | 13.92 | $ | 17.02 | (18 | )% |
SM ENERGY COMPANY | |||||||||||||||
FINANCIAL HIGHLIGHTS (UNAUDITED) | |||||||||||||||
December 31, 2014 | |||||||||||||||
Consolidated Statements of Operations | |||||||||||||||
(in thousands, except per share amounts) | For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Operating revenues and other income: | |||||||||||||||
Oil, gas, and NGL production revenue | $ | 586,567 | $ | 593,668 | $ | 2,481,544 | $ | 2,199,550 | |||||||
Gain on divestiture activity | 594 | 28,484 | 646 | 27,974 | |||||||||||
Marketed gas system revenue | 7,200 | 11,590 | 24,897 | 60,039 | |||||||||||
Other operating revenues | 1,460 | 2,985 | 15,220 | 5,811 | |||||||||||
Total operating revenues and other income | 595,821 | 636,727 | 2,522,307 | 2,293,374 | |||||||||||
Operating expenses: | |||||||||||||||
Oil, gas, and NGL production expense | 196,181 | 162,754 | 715,878 | 597,045 | |||||||||||
Depletion, depreciation, amortization, and asset retirement obligation liability accretion | 219,277 | 202,640 | 767,532 | 822,872 | |||||||||||
Exploration | 49,696 | 21,769 | 129,857 | 74,104 | |||||||||||
Impairment of proved properties | 84,480 | 110,935 | 84,480 | 172,641 | |||||||||||
Abandonment and impairment of unproved properties | 57,151 | 37,646 | 75,638 | 46,105 | |||||||||||
General and administrative | 52,241 | 47,977 | 167,103 | 149,551 | |||||||||||
Change in Net Profits Plan liability | (14,569 | ) | (15,419 | ) | (29,849 | ) | (21,842 | ) | |||||||
Derivative (gain) loss | (616,734 | ) | 11,605 | (583,264 | ) | (3,080 | ) | ||||||||
Marketed gas system expense | 6,759 | 11,642 | 24,460 | 57,647 | |||||||||||
Other operating expenses | 2,854 | 4,889 | 4,658 | 30,076 | |||||||||||
Total operating expenses | 37,336 | 596,438 | 1,356,493 | 1,925,119 | |||||||||||
Income from operations | 558,485 | 40,289 | 1,165,814 | 368,255 | |||||||||||
Non-operating income (expense): | |||||||||||||||
Other, net | (68 | ) | 3 | (2,561 | ) | 67 | |||||||||
Interest expense | (27,703 | ) | (24,541 | ) | (98,554 | ) | (89,711 | ) | |||||||
Income before income taxes | 530,714 | 15,751 | 1,064,699 | 278,611 | |||||||||||
Income tax expense | (198,988 | ) | (8,755 | ) | (398,648 | ) | (107,676 | ) | |||||||
Net income | $ | 331,726 | $ | 6,996 | $ | 666,051 | $ | 170,935 | |||||||
Basic weighted-average common shares outstanding | 67,410 | 66,999 | 67,230 | 66,615 | |||||||||||
Diluted weighted-average common shares outstanding | 67,535 | 68,354 | 68,044 | 67,998 | |||||||||||
Basic net income per common share | $ | 4.92 | $ | 0.10 | $ | 9.91 | $ | 2.57 | |||||||
Diluted net income per common share | $ | 4.91 | $ | 0.10 | $ | 9.79 | $ | 2.51 | |||||||
SM ENERGY COMPANY | |||||||
FINANCIAL HIGHLIGHTS (UNAUDITED) | |||||||
December 31, 2014 | |||||||
Consolidated Balance Sheets | |||||||
(in thousands, except per share amounts) | December 31, | December 31, | |||||
ASSETS | 2014 | 2013 | |||||
Current assets: | |||||||
Cash and cash equivalents | $ | 120 | $ | 282,248 | |||
Accounts receivable | 322,630 | 318,371 | |||||
Derivative asset | 402,668 | 21,559 | |||||
Deferred income taxes | — | 10,749 | |||||
Prepaid expenses and other | 19,625 | 14,574 | |||||
Total current assets | 745,043 | 647,501 | |||||
Property and equipment (successful efforts method): | |||||||
Proved oil and gas properties | 7,348,436 | 5,637,462 | |||||
Less - accumulated depletion, depreciation, and amortization | (3,233,012 | ) | (2,583,698 | ) | |||
Unproved oil and gas properties | 532,498 | 271,100 | |||||
Wells in progress | 503,734 | 279,654 | |||||
Oil and gas properties held for sale, net of accumulated depletion, depreciation and amortization of $22,482 and $7,390, respectively | 17,891 | 19,072 | |||||
Other property and equipment, net of accumulated depreciation of $37,079 and $28,775, respectively | 334,356 | 236,202 | |||||
Total property and equipment, net | 5,503,903 | 3,859,792 | |||||
Noncurrent assets: | |||||||
Derivative asset | 189,540 | 30,951 | |||||
Restricted cash | — | 96,713 | |||||
Other noncurrent assets | 78,214 | 70,208 | |||||
Total other noncurrent assets | 267,754 | 197,872 | |||||
Total Assets | $ | 6,516,700 | $ | 4,705,165 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 640,684 | $ | 606,751 | |||
Derivative liability | — | 26,380 | |||||
Deferred tax liability | 142,976 | — | |||||
Other current liabilities | 1,000 | 6,000 | |||||
Total current liabilities | 784,660 | 639,131 | |||||
Noncurrent liabilities: | |||||||
Revolving credit facility | 166,000 | — | |||||
Senior Notes | 2,200,000 | 1,600,000 | |||||
Asset retirement obligation | 120,867 | 118,692 | |||||
Net Profits Plan liability | 27,136 | 56,985 | |||||
Deferred income taxes | 891,681 | 650,125 | |||||
Derivative liability | 70 | 4,640 | |||||
Other noncurrent liabilities | 39,631 | 28,771 | |||||
Total noncurrent liabilities | 3,445,385 | 2,459,213 | |||||
Stockholders' equity: | |||||||
Common stock, $0.01 par value - authorized: 200,000,000 shares; issued: 67,463,060 and 67,078,853 shares outstanding, respectively; net of treasury shares: 67,463,060 and 67,056,441, respectively | 675 | 671 | |||||
Additional paid-in capital | 283,295 | 257,720 | |||||
Treasury stock, at cost: zero and 22,412 shares, respectively | — | (823 | ) | ||||
Retained earnings | 2,013,997 | 1,354,669 | |||||
Accumulated other comprehensive loss | (11,312 | ) | (5,416 | ) | |||
Total stockholders' equity | 2,286,655 | 1,606,821 | |||||
Total Liabilities and Stockholders' Equity | $ | 6,516,700 | $ | 4,705,165 |
SM ENERGY COMPANY | |||||||||||||||
FINANCIAL HIGHLIGHTS (UNAUDITED) | |||||||||||||||
December 31, 2014 | |||||||||||||||
Consolidated Statements of Cash Flows | |||||||||||||||
(in thousands) | For the Three Months | For the Twelve Months | |||||||||||||
Ended December 31, | Ended December 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income | $ | 331,726 | $ | 6,996 | $ | 666,051 | $ | 170,935 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Gain on divestiture activity | (594 | ) | (28,484 | ) | (646 | ) | (27,974 | ) | |||||||
Depletion, depreciation, amortization, and asset retirement obligation liability accretion | 219,277 | 202,640 | 767,532 | 822,872 | |||||||||||
Exploratory dry hole expense | 21,583 | (32 | ) | 44,427 | 5,846 | ||||||||||
Impairment of proved properties | 84,480 | 110,935 | 84,480 | 172,641 | |||||||||||
Abandonment and impairment of unproved properties | 57,151 | 37,646 | 75,638 | 46,105 | |||||||||||
Stock-based compensation expense | 8,126 | 6,852 | 32,694 | 32,347 | |||||||||||
Change in Net Profits Plan liability | (14,569 | ) | (15,419 | ) | (29,849 | ) | (21,842 | ) | |||||||
Derivative (gain) loss | (616,734 | ) | 11,605 | (583,264 | ) | (3,080 | ) | ||||||||
Derivative cash settlements | 39,375 | 9,347 | (28,419 | ) | 22,062 | ||||||||||
Amortization of debt discount and deferred financing costs | 1,713 | 1,476 | 6,146 | 5,390 | |||||||||||
Deferred income taxes | 199,600 | 6,936 | 397,780 | 105,555 | |||||||||||
Plugging and abandonment | (2,603 | ) | (2,493 | ) | (8,796 | ) | (9,946 | ) | |||||||
Other, net | 4,003 | (154 | ) | 1,069 | 2,775 | ||||||||||
Changes in current assets and liabilities: | |||||||||||||||
Accounts receivable | 14,705 | (33,285 | ) | 24,088 | (78,494 | ) | |||||||||
Prepaid expenses and other | (2,056 | ) | 2,559 | (1,822 | ) | 98 | |||||||||
Accounts payable and accrued expenses | 36,270 | 20,520 | 9,466 | 93,224 | |||||||||||
Net cash provided by operating activities | 381,453 | 337,645 | 1,456,575 | 1,338,514 | |||||||||||
Cash flows from investing activities: | |||||||||||||||
Net proceeds from sale of oil and gas properties | 1,990 | 404,351 | 43,858 | 424,849 | |||||||||||
Capital expenditures | (656,936 | ) | (432,181 | ) | (1,974,798 | ) | (1,553,536 | ) | |||||||
Acquisition of proved and unproved oil and gas properties | (85,276 | ) | 404 | (544,553 | ) | (61,603 | ) | ||||||||
Other, net | (2,542 | ) | 896 | (3,256 | ) | (2,613 | ) | ||||||||
Net cash used in investing activities | (742,764 | ) | (26,530 | ) | (2,478,749 | ) | (1,192,903 | ) | |||||||
Cash flows from financing activities: | |||||||||||||||
Proceeds from credit facility | 749,000 | 226,500 | 1,285,500 | 1,203,000 | |||||||||||
Repayment of credit facility | (973,000 | ) | (254,500 | ) | (1,119,500 | ) | (1,543,000 | ) | |||||||
Debt issuance costs related to credit facility | (3,388 | ) | — | (3,388 | ) | (3,444 | ) | ||||||||
Net proceeds from Senior Notes | 589,991 | (89 | ) | 589,991 | 490,185 | ||||||||||
Repayment of 3.50% Senior Convertible Notes | — | — | — | — | |||||||||||
Proceeds from sale of common stock | 1,979 | 2,408 | 4,877 | 6,858 | |||||||||||
Dividends paid | (3,370 | ) | (3,349 | ) | (6,723 | ) | (6,663 | ) | |||||||
Net share settlement from issuance of stock awards | (48 | ) | (17 | ) | (10,624 | ) | (16,220 | ) | |||||||
Other, net | (2 | ) | 4 | (87 | ) | (5 | ) | ||||||||
Net cash provided by (used in) financing activities | 361,162 | (29,043 | ) | 740,046 | 130,711 | ||||||||||
Net change in cash and cash equivalents | (149 | ) | 282,072 | (282,128 | ) | 276,322 | |||||||||
Cash and cash equivalents at beginning of period | 269 | 176 | 282,248 | 5,926 | |||||||||||
Cash and cash equivalents at end of period | $ | 120 | $ | 282,248 | $ | 120 | $ | 282,248 | |||||||
SM ENERGY COMPANY | |||||||||||||||
FINANCIAL HIGHLIGHTS | |||||||||||||||
December 31, 2014 | |||||||||||||||
Adjusted Net Income | |||||||||||||||
(in thousands, except per share data) | |||||||||||||||
Reconciliation of net income (GAAP) | For the Three Months | For the Twelve Months | |||||||||||||
to adjusted net income (Non-GAAP): | Ended December 31, | Ended December 31, | |||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Actual net income (GAAP) | 331,726 | $ | 6,996 | $ | 666,051 | $ | 170,935 | ||||||||
Adjustments net of tax: (1) | |||||||||||||||
Change in Net Profits Plan liability | (9,164 | ) | (9,683 | ) | (18,775 | ) | (13,411 | ) | |||||||
Derivative (gain) loss | (387,926 | ) | 7,288 | (366,873 | ) | (1,891 | ) | ||||||||
Derivative settlement gain | 47,495 | 5,870 | 7,935 | 13,546 | |||||||||||
Gain on divestiture activity | (374 | ) | (17,888 | ) | (406 | ) | (17,176 | ) | |||||||
Impairment of proved properties | 53,138 | 69,667 | 53,138 | 106,002 | |||||||||||
Abandonment and impairment of unproved properties | 35,948 | 23,642 | 47,576 | 28,309 | |||||||||||
Other (3) | 68 | — | (5,032 | ) | — | ||||||||||
Adjusted net income (Non-GAAP) (2) | $ | 70,911 | $ | 85,892 | $ | 383,614 | $ | 286,314 | |||||||
Adjusted net income per diluted common share | $ | 1.05 | $ | 1.26 | $ | 5.64 | $ | 4.21 | |||||||
Diluted weighted-average shares outstanding | 67,535 | 68,354 | 68,044 | 67,998 | |||||||||||
(1) For the three and twelve-month periods ended December 31, 2014, adjustments are shown net of tax and are calculated using a tax rate of 37.1%, which approximates the Company's statutory tax rate adjusted for ordinary permanent differences. For the three-month period ended December 31, 2013, adjustments are shown net of tax and are calculated using a tax rate of 37.2%, which approximates the Company's statutory tax rate adjusted for ordinary permanent differences. For the twelve-month period ended December 31, 2013, adjustments are shown net of tax using the Company's effective rate of 38.6%, as calculated by dividing income tax expense by income before income taxes shown on the consolidated statement of operations. | |||||||||||||||
(2) Adjusted net income excludes certain items that the Company believes affect the comparability of operating results. Items excluded generally are non-recurring items or are items whose timing and/or amount cannot be reasonably estimated. These items include non-cash and other adjustments, such as the change in the Net Profits Plan liability, derivative (gain) loss, net of derivative settlement gains, impairment of proved properties, abandonment and impairment of unproved properties, and (gain) loss on divestiture activity. The non-GAAP measure of adjusted net income is presented because management believes it provides useful additional information to investors for analysis of SM Energy's fundamental business on a recurring basis. In addition, management believes that adjusted net income is widely used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the oil and gas exploration and production industry, and many investors use the published research of industry research analysts in making investment decisions. Adjusted net income should not be considered in isolation or as a substitute for net income, income from operations, cash provided by operating activities, or other income, profitability, cash flow, or liquidity measures prepared under GAAP. Since adjusted net income excludes some, but not all, items that affect net income and may vary among companies, the adjusted net income amounts presented may not be comparable to similarly titled measures of other companies. | |||||||||||||||
(3) For the three and twelve-month periods ended December 31, 2014, adjustments include items related to settlements from the previously disclosed litigation against Endeavour Operating Corporation. These items are included as a portion of other operating revenues and non-operating income (expense), other, net, on the Company's consolidated statement of operations. |
SM ENERGY COMPANY | |||||||||||||||
FINANCIAL HIGHLIGHTS | |||||||||||||||
December 31, 2014 | |||||||||||||||
Adjusted EBITDAX (4) | |||||||||||||||
(in thousands) | |||||||||||||||
Reconciliation of net income (GAAP) to adjusted EBITDAX (non-GAAP) to net cash provided by operating activities (GAAP): | For the Three Months | For the Twelve Months | |||||||||||||
Ended December 31, | Ended December 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net income (GAAP) | $ | 331,726 | $ | 6,996 | $ | 666,051 | $ | 170,935 | |||||||
Interest expense | 27,703 | 24,541 | 98,554 | 89,711 | |||||||||||
Other non-operating (income) expense, net | 68 | (3 | ) | 2,561 | (67 | ) | |||||||||
Income tax expense | 198,988 | 8,755 | 398,648 | 107,676 | |||||||||||
Depletion, depreciation, amortization, and asset retirement obligation liability accretion | 219,277 | 202,640 | 767,532 | 822,872 | |||||||||||
Exploration (5) | 47,881 | 20,105 | 122,577 | 65,888 | |||||||||||
Impairment of proved properties | 84,480 | 110,935 | 84,480 | 172,641 | |||||||||||
Abandonment and impairment of unproved properties | 57,151 | 37,646 | 75,638 | 46,105 | |||||||||||
Stock-based compensation expense | 8,126 | 6,852 | 32,694 | 32,347 | |||||||||||
Derivative (gain) loss | (616,734 | ) | 11,605 | (583,264 | ) | (3,080 | ) | ||||||||
Derivative settlement gain (6) | 75,509 | 9,347 | 12,615 | 22,062 | |||||||||||
Change in Net Profits Plan liability | (14,569 | ) | (15,419 | ) | (29,849 | ) | (21,842 | ) | |||||||
Gain on divestiture activity | (594 | ) | (28,484 | ) | (646 | ) | (27,974 | ) | |||||||
Adjusted EBITDAX (Non-GAAP) | $ | 419,012 | $ | 395,516 | $ | 1,647,591 | $ | 1,477,274 | |||||||
Interest expense | (27,703 | ) | (24,541 | ) | (98,554 | ) | (89,711 | ) | |||||||
Other non-operating income (expense), net | (68 | ) | 3 | (2,561 | ) | 67 | |||||||||
Income tax expense | (198,988 | ) | (8,755 | ) | (398,648 | ) | (107,676 | ) | |||||||
Exploration (5) | (47,881 | ) | (20,105 | ) | (122,577 | ) | (65,888 | ) | |||||||
Exploratory dry hole expense | 21,583 | (32 | ) | 44,427 | 5,846 | ||||||||||
Amortization of debt discount and deferred financing costs | 1,713 | 1,476 | 6,146 | 5,390 | |||||||||||
Deferred income taxes | 199,600 | 6,936 | 397,780 | 105,555 | |||||||||||
Plugging and abandonment | (2,603 | ) | (2,493 | ) | (8,796 | ) | (9,946 | ) | |||||||
Other, net | 4,003 | (154 | ) | 1,069 | 2,775 | ||||||||||
Changes in current assets and liabilities | 12,785 | (10,206 | ) | (9,302 | ) | 14,828 | |||||||||
Net cash provided by operating activities (GAAP) | $ | 381,453 | $ | 337,645 | $ | 1,456,575 | $ | 1,338,514 | |||||||
(4) Adjusted EBITDAX represents income (loss) before interest expense, interest income, income taxes, depreciation, depletion, amortization, and accretion, exploration expense, property impairments, non-cash stock compensation expense, derivative gains and losses net of settlements, change in the Net Profits Plan liability, and gains and losses on divestitures. Adjusted EBITDAX excludes certain items that we believe affect the comparability of operating results and can exclude items that are generally one-time in nature or whose timing and/or amount cannot be reasonably estimated. Adjusted EBITDAX is a non-GAAP measure that is presented because we believe that it 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. We are also subject to a financial covenant under our credit facility based on our debt to adjusted EBITDAX ratio. In addition, adjusted EBITDAX is widely used by professional research analysts and others in the valuation, comparison, and investment recommendations of companies in the oil and gas exploration and production industry, and many investors use the published research of industry research analysts in making investment decisions. Adjusted EBITDAX should not be considered in isolation or as a substitute for net income (loss), income (loss) from operations, net cash provided by operating activities, or profitability or liquidity measures prepared under GAAP. Because adjusted EBITDAX excludes some, but not all items that affect net income (loss) and may vary among companies, the adjusted EBITDAX amounts presented may not be comparable to similar metrics of other companies. | |||||||||||||||
(5) Stock-based compensation expense is a component of exploration expense and general and administrative expense on the accompanying statements of operations. Therefore, the exploration line items shown in the reconciliation above will vary from the amount shown on the accompanying statements of operations for the component of stock-based compensation expense recorded to exploration. | |||||||||||||||
(6) Derivative settlement gain represents the portion of derivatives which were settled as of December 31, 2014. This amount is comprised of derivative cash settlements and a portion of changes in the accounts receivable and changes in accounts payable and accrued expenses line items on the accompanying statements of cash flows. The portion of changes in accounts receivable and changes in accounts payable and accrued expenses included in Derivative settlement gain was $36.1 million and $41.0 million for the three and twelve-month periods ended December 31, 2014, respectively. |
SM ENERGY COMPANY | ||||||||||||||||||||
FINANCIAL HIGHLIGHTS | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Proved oil and gas reserve quantities: | ||||||||||||||||||||
For the Year Ended | ||||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Oil or Condensate | Gas | NGLs | Equivalents | Proved Developed | Proved Undeveloped | |||||||||||||||
(MMBbl) | (Bcf) | (MMBbl) | (MMBOE) | (MMBOE) | (MMBOE) | |||||||||||||||
Total proved reserves | ||||||||||||||||||||
Beginning of year | 126.6 | 1,189.3 | 103.9 | 428.7 | 208.9 | 219.9 | ||||||||||||||
Revisions of previous estimates | (5.1 | ) | 46.0 | 7.8 | 10.4 | 8.1 | 2.3 | |||||||||||||
Discoveries and extensions | 15.0 | 103.5 | 10.5 | 42.7 | 14.7 | 28.0 | ||||||||||||||
Infill | 32.0 | 270.8 | 24.1 | 101.2 | 16.2 | 85.0 | ||||||||||||||
Sales of reserves | (1.9 | ) | (1.1 | ) | — | (2.1 | ) | (2.1 | ) | — | ||||||||||
Purchases of minerals in place | 19.8 | 10.9 | 0.2 | 21.9 | 7.9 | 13.9 | ||||||||||||||
Production | (16.7 | ) | (152.9 | ) | (13.0 | ) | (55.1 | ) | (55.1 | ) | — | |||||||||
Conversions | — | — | — | — | 88.2 | (88.2 | ) | |||||||||||||
End of year | 169.7 | 1,466.5 | 133.5 | 547.7 | 286.8 | 260.9 | ||||||||||||||
PV-10 (in millions) | $ | 7,616.9 | $ | 5,253.0 | $ | 2,363.9 | ||||||||||||||
Proved developed reserves | ||||||||||||||||||||
Beginning of year | 70.2 | 569.2 | 43.8 | 208.9 | ||||||||||||||||
End of year | 89.3 | 784.6 | 66.7 | 286.8 | ||||||||||||||||
*Totals may not sum due to rounding. |
Regional proved oil and gas reserve quantities: | |||||||||||||||
South Texas & Gulf Coast | Rocky Mountain | Permian | Mid-Continent | Total | |||||||||||
Year-end 2014 proved reserves | |||||||||||||||
Oil (MMBbl) | 64.5 | 91.5 | 13.5 | 0.2 | 169.7 | ||||||||||
Gas (Bcf) | 1,193.3 | 89.6 | 38.9 | 144.8 | 1,466.5 | ||||||||||
NGL (MMBbl) | 131.2 | 2.0 | — | 0.4 | 133.5 | ||||||||||
Total (MMBOE) | 394.6 | 108.4 | 20.0 | 24.7 | 547.7 | ||||||||||
% Proved developed | 48 | % | 56 | % | 76 | % | 83 | % | 52 | % | |||||
Year-end 2013 proved reserves | |||||||||||||||
Oil (MMBbl) | 50.6 | 64.0 | 11.8 | 0.2 | 126.6 | ||||||||||
Gas (Bcf) | 947.3 | 72.1 | 26.9 | 142.9 | 1,189.3 | ||||||||||
NGL (MMBbl) | 102.7 | — | — | 1.2 | 103.9 | ||||||||||
Total (MMBOE) | 311.2 | 76.0 | 16.3 | 25.2 | 428.7 | ||||||||||
% Proved developed | 42 | % | 59 | % | 91 | % | 78 | % | 49 | % | |||||
*Totals may not sum due to rounding. |
SM ENERGY COMPANY | |||
FINANCIAL HIGHLIGHTS | |||
December 31, 2014 | |||
Costs incurred in oil and gas producing activities: | |||
(in thousands) | |||
For the Year Ended December 31, 2014 | |||
Development costs (1) | $ | 1,782,324 | |
Exploration costs | 288,270 | ||
Acquisition costs: | |||
Proved properties | 272,902 | ||
Unproved properties | 368,208 | ||
Total, including asset retirement obligation (2)(3) | $ | 2,711,704 | |
(1) Includes facility costs of $75.1 million. | |||
(2) Includes capitalized interest of $16.0 million. | |||
(3) Includes amounts relating to estimated asset retirement obligations of $11.4 million. |