News Release |
• | Permian production up 31% sequentially, and up 118% since 4Q16 |
• | Total production mix 32% oil; absolute oil production exceeded expectations |
• | RockStar favorable new well results: three pads (eight wells) average peak 30-day IP rates of 1,191 Boe/d, 1,453 Boe/d and 1,333 Boe/d per well on each pad |
• | Initiated Eagle Ford North JV to accelerate use of new technology and build value |
• | Portfolio transition drives margin expansion, raising average realized price to $27.59 (pre-hedge), the highest level since 4Q14 despite sub-$50 oil |
• | Liquidity remains strong at $1.4 billion |
Oil | Natural Gas | NGLs | Total | ||||||||
MMBbls | Bcf | MMBbls | MMBoe | ||||||||
Permian | 2.3 | 3.9 | — | 3.0 | |||||||
Eagle Ford | 0.4 | 24.2 | 2.4 | 6.7 | |||||||
Rockies | 0.7 | 1.0 | — | 1.0 | |||||||
Total | 3.4 | 29.1 | 2.4 | 10.7 |
Oil | Natural Gas | NGLs | Average | ||||
$/Bbl | $/Mcf | $/Bbl | $/Boe | ||||
Permian | 46.26 | 4.13 | 23.36 | 41.53 | |||
Eagle Ford | 38.90 | 2.86 | 22.42 | 20.14 | |||
Rockies | 44.87 | 1.09 | 20.71 | 36.87 | |||
Average Pre-Hedge | 45.20 | 2.96 | 22.40 | 27.59 | |||
Average Post-Hedge | 44.47 | 3.79 | 18.86 | 28.82 |
Full Year 2017 | Implied 4Q17 at Midpoint | ||
Total Capital Spend | ~$875 MM | unchanged | ~$218 MM |
Total Production | 44.2-44.6 MMBoe | updated: to reflect Eagle Ford storm effects and JV; 4Q planned shut-ins Rockies and Eagle Ford, related to workovers and offset operator activity | 10.1-10.5 MMBoe |
Percent Oil in Mix | ~30% | slightly increased | ~35% |
LOE (including ad valorem tax) | $4.60-4.80/Boe | additional storm related costs in 4Q; lower Eagle Ford volumes | $5.20/Boe |
Transportation | $5.40-5.60/Boe | narrowed | $5.00/Boe |
Production Taxes | 4.0-4.5% | unchanged | |
G&A (includes ~$20MM non-cash, stock-based comp expense) | $116-120 MM | reduced | $32.4 MM |
Exploration/capitalized overhead (wholly included in capital spend) | ~$55-60 MM | reclassified certain amounts within total capital spend | $18.2 MM |
DD&A | $12-14/Boe | unchanged | $14.66/Boe |
OIL SWAPS | OIL COLLARS | NATURAL GAS SWAPS | NGL SWAPS | |
Volume/Average Price | Volume/Avg. Ceiling - Floor | Volume /Average Price | Volume/Average Price | |
Period | (MBbls/$Bbl) | (MBbls/$Bbl) | (BBtu/$MMBtu) | (MBbls/$Bbl) |
4Q17 | 1,510/$47.11 | 1,086/$56.05 - $47.51 | 22,001/$3.98 | 2,210/$22.05 |
1Q18 | 1,075/$50.16 | 1,026/$58.46 - $50.00 | 20,788/$3.25 | 2,113/$31.07 |
2Q18 | 1,534/$49.57 | 1,004/$58.37 - $50.00 | 15,712/$2.85 | 1,642/$28.08 |
3Q18 | 1,769/$49.77 | 1,393/$57.93 - $50.00 | 17,147/$2.88 | 1,831/$28.14 |
4Q18 | 1,894/$49.87 | 1,607/$57.75 - $50.00 | 18,646/$2.91 | 2,021/$28.13 |
• | November 8, 2017 - Baird 47th Annual Industrial Conference. Chief Financial Officer Wade Pursell will present at 2:30 p.m. Central time. This event will be webcast. An investor presentation for this event will be posted to the Company’s website on November 7, 2017. |
• | November 14, 2017 - KLR E&P Conference Denver. President and Chief Executive Officer Jay Ottoson will present at 12:05 p.m. Mountain time. This event will not be webcast. |
• | November 29, 2017 - BAML Leveraged Finance Conference. Chief Financial Officer Wade Pursell will present at 10:50 a.m. Eastern time. This event will be webcast. An investor presentation for this event will be posted to the Company’s website on November 28, 2017. |
• | December 6, 2017 - Capital One Securities 12th Annual Energy Conference. President and Chief Executive Officer Jay Ottoson will present at 1:30 p.m. Central time. This event will be webcast. |
SM ENERGY COMPANY | |||||||||||||||||||||
FINANCIAL HIGHLIGHTS (UNAUDITED) | |||||||||||||||||||||
September 30, 2017 | |||||||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||
Production Data | 2017 | 2016 | Percent Change | 2017 | 2016 | Percent Change | |||||||||||||||
Average realized sales price, before the effects of derivative settlements: | |||||||||||||||||||||
Oil (per Bbl) | $ | 45.20 | $ | 38.81 | 16 | % | $ | 45.77 | $ | 34.69 | 32 | % | |||||||||
Gas (per Mcf) | 2.96 | 2.71 | 9 | % | 2.98 | 2.12 | 41 | % | |||||||||||||
NGLs (per Bbl) | 22.40 | 16.58 | 35 | % | 21.36 | 14.91 | 43 | % | |||||||||||||
Equivalent (per BOE) | $ | 27.59 | $ | 23.25 | 19 | % | $ | 26.76 | $ | 19.87 | 35 | % | |||||||||
Average realized sales price, including the effects of derivative settlements: | |||||||||||||||||||||
Oil (per Bbl) | $ | 44.47 | $ | 50.15 | (11 | )% | $ | 44.32 | $ | 52.31 | (15 | )% | |||||||||
Gas (per Mcf) | 3.79 | 2.98 | 27 | % | 3.63 | 2.86 | 27 | % | |||||||||||||
NGLs (per Bbl) | 18.86 | 16.08 | 17 | % | 18.93 | 15.12 | 25 | % | |||||||||||||
Equivalent (per BOE) | $ | 28.82 | $ | 27.31 | 6 | % | $ | 27.62 | $ | 27.18 | 2 | % | |||||||||
Production: | |||||||||||||||||||||
Oil (MMBbl) | 3.4 | 4.3 | (21 | )% | 9.8 | 12.6 | (22 | )% | |||||||||||||
Gas (Bcf) | 29.1 | 37.1 | (22 | )% | 97.0 | 111.7 | (13 | )% | |||||||||||||
NGLs (MMBbl) | 2.4 | 3.6 | (34 | )% | 8.1 | 10.7 | (24 | )% | |||||||||||||
MMBOE (6:1) | 10.7 | 14.2 | (25 | )% | 34.1 | 41.9 | (19 | )% | |||||||||||||
Average daily production: | |||||||||||||||||||||
Oil (MBbl/d) | 37.1 | 47.2 | (21 | )% | 36.1 | 45.9 | (21 | )% | |||||||||||||
Gas (MMcf/d) | 316.1 | 403.0 | (22 | )% | 355.4 | 407.8 | (13 | )% | |||||||||||||
NGLs (MBbl/d) | 26.2 | 39.5 | (34 | )% | 29.6 | 39.0 | (24 | )% | |||||||||||||
MBOE/d (6:1) | 116.0 | 153.9 | (25 | )% | 124.9 | 152.9 | (18 | )% | |||||||||||||
Per BOE data: | |||||||||||||||||||||
Realized price, before the effects of derivative settlements | $ | 27.59 | $ | 23.25 | 19 | % | $ | 26.76 | $ | 19.87 | 35 | % | |||||||||
Lease operating expense | 4.81 | 3.29 | 46 | % | 4.22 | 3.46 | 22 | % | |||||||||||||
Transportation costs | 5.24 | 6.24 | (16 | )% | 5.62 | 6.08 | (8 | )% | |||||||||||||
Production taxes | 1.15 | 1.04 | 11 | % | 1.11 | 0.88 | 26 | % | |||||||||||||
Ad valorem tax expense | 0.29 | 0.21 | 38 | % | 0.34 | 0.22 | 55 | % | |||||||||||||
General and administrative (excluding stock-compensation) | 2.16 | 1.96 | 10 | % | 2.15 | 1.85 | 16 | % | |||||||||||||
Net, before the effects of derivative settlements | $ | 13.94 | $ | 10.51 | 33 | % | $ | 13.32 | $ | 7.38 | 80 | % | |||||||||
Derivative settlement gain | 1.23 | 4.06 | (70 | )% | 0.86 | 7.31 | (88 | )% | |||||||||||||
Margin, including the effects of derivative settlements | $ | 15.17 | $ | 14.57 | 4 | % | $ | 14.18 | $ | 14.69 | (3 | )% | |||||||||
Depletion, depreciation, amortization, and asset retirement obligation liability accretion | $ | 12.61 | $ | 13.70 | (8 | )% | $ | 12.48 | $ | 14.78 | (16 | )% |
SM ENERGY COMPANY | |||||||
FINANCIAL HIGHLIGHTS (UNAUDITED) | |||||||
September 30, 2017 | |||||||
Condensed Consolidated Balance Sheets | |||||||
(in thousands, except share amounts) | September 30, | December 31, | |||||
ASSETS | 2017 | 2016 | |||||
Current assets: | |||||||
Cash and cash equivalents | $ | 441,415 | $ | 9,372 | |||
Accounts receivable | 146,056 | 151,950 | |||||
Derivative asset | 63,685 | 54,521 | |||||
Prepaid expenses and other | 17,756 | 8,799 | |||||
Total current assets | 668,912 | 224,642 | |||||
Property and equipment (successful efforts method): | |||||||
Proved oil and gas properties | 5,938,351 | 5,700,418 | |||||
Less - accumulated depletion, depreciation, and amortization | (3,243,072 | ) | (2,836,532 | ) | |||
Unproved oil and gas properties | 2,321,508 | 2,471,947 | |||||
Wells in progress | 287,106 | 235,147 | |||||
Oil and gas properties held for sale, net | 7,144 | 372,621 | |||||
Other property and equipment, net of accumulated depreciation of $50,468 and $42,882, respectively | 106,046 | 137,753 | |||||
Total property and equipment, net | 5,417,083 | 6,081,354 | |||||
Noncurrent assets: | |||||||
Derivative asset | 60,035 | 67,575 | |||||
Other noncurrent assets | 32,896 | 19,940 | |||||
Total other noncurrent assets | 92,931 | 87,515 | |||||
Total Assets | $ | 6,178,926 | $ | 6,393,511 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 348,885 | $ | 299,708 | |||
Derivative liability | 87,791 | 115,464 | |||||
Total current liabilities | 436,676 | 415,172 | |||||
Noncurrent liabilities: | |||||||
Revolving credit facility | — | — | |||||
Senior Notes, net of unamortized deferred financing costs | 2,768,346 | 2,766,719 | |||||
Senior Convertible Notes, net of unamortized discount and deferred financing costs | 137,012 | 130,856 | |||||
Asset retirement obligation | 100,958 | 96,134 | |||||
Asset retirement obligation associated with oil and gas properties held for sale | — | 26,241 | |||||
Deferred income taxes | 208,720 | 315,672 | |||||
Derivative liability | 67,676 | 98,340 | |||||
Other noncurrent liabilities | 47,497 | 47,244 | |||||
Total noncurrent liabilities | 3,330,209 | 3,481,206 | |||||
Stockholders’ equity: | |||||||
Common stock, $0.01 par value - authorized: 200,000,000 shares; issued and outstanding: 111,624,029 and 111,257,500 shares, respectively | 1,116 | 1,113 | |||||
Additional paid-in capital | 1,734,217 | 1,716,556 | |||||
Retained earnings | 691,915 | 794,020 | |||||
Accumulated other comprehensive loss | (15,207 | ) | (14,556 | ) | |||
Total stockholders’ equity | 2,412,041 | 2,497,133 | |||||
Total Liabilities and Stockholders’ Equity | $ | 6,178,926 | $ | 6,393,511 |
SM ENERGY COMPANY | |||||||||||||||
FINANCIAL HIGHLIGHTS (UNAUDITED) | |||||||||||||||
September 30, 2017 | |||||||||||||||
Condensed Consolidated Statements of Operations | |||||||||||||||
(in thousands, except per share amounts) | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Operating revenues and other income: | |||||||||||||||
Oil, gas, and NGL production revenue | $ | 294,459 | $ | 329,165 | $ | 912,596 | $ | 832,130 | |||||||
Net gain (loss) on divestiture activity | (1,895 | ) | 22,388 | (131,565 | ) | 3,413 | |||||||||
Other operating revenues | 2,815 | 1,107 | 7,807 | 2,007 | |||||||||||
Total operating revenues and other income | 295,379 | 352,660 | 788,838 | 837,550 | |||||||||||
Operating expenses: | |||||||||||||||
Oil, gas, and NGL production expense | 122,651 | 152,524 | 385,073 | 445,658 | |||||||||||
Depletion, depreciation, amortization, and asset retirement obligation liability accretion | 134,599 | 193,966 | 425,643 | 619,193 | |||||||||||
Exploration | 14,243 | 13,482 | 39,293 | 41,942 | |||||||||||
Impairment of proved properties | — | 8,049 | 3,806 | 277,834 | |||||||||||
Abandonment and impairment of unproved properties | — | 3,568 | 157 | 5,917 | |||||||||||
General and administrative(1) | 27,880 | 32,679 | 85,564 | 93,117 | |||||||||||
Net derivative (gain) loss(2) | 80,599 | (28,037 | ) | (89,364 | ) | 121,086 | |||||||||
Other operating expenses, net | 999 | (5,917 | ) | 6,303 | 7,731 | ||||||||||
Total operating expenses | 380,971 | 370,314 | 856,475 | 1,612,478 | |||||||||||
Loss from operations | (85,592 | ) | (17,654 | ) | (67,637 | ) | (774,928 | ) | |||||||
Non-operating income (expense): | |||||||||||||||
Interest expense | (44,091 | ) | (47,206 | ) | (135,639 | ) | (112,329 | ) | |||||||
Gain (loss) on extinguishment of debt | — | — | (35 | ) | 15,722 | ||||||||||
Other, net | 1,301 | 221 | 2,901 | 232 | |||||||||||
Loss before income taxes | (128,382 | ) | (64,639 | ) | (200,410 | ) | (871,303 | ) | |||||||
Income tax benefit | 39,270 | 23,732 | 65,825 | 314,505 | |||||||||||
Net loss | $ | (89,112 | ) | $ | (40,907 | ) | $ | (134,585 | ) | $ | (556,798 | ) | |||
Basic weighted-average common shares outstanding | 111,575 | 78,468 | 111,366 | 71,574 | |||||||||||
Diluted weighted-average common shares outstanding | 111,575 | 78,468 | 111,366 | 71,574 | |||||||||||
Basic net loss per common share | $ | (0.80 | ) | $ | (0.52 | ) | $ | (1.21 | ) | $ | (7.78 | ) | |||
Diluted net loss per common share | $ | (0.80 | ) | $ | (0.52 | ) | $ | (1.21 | ) | $ | (7.78 | ) | |||
(1) Non-cash stock-based compensation component included in: | |||||||||||||||
Exploration expense | $ | 1,495 | $ | 1,590 | $ | 3,898 | $ | 5,037 | |||||||
G&A expense | $ | 4,852 | $ | 4,980 | $ | 12,262 | $ | 15,448 | |||||||
(2) The net derivative (gain) loss line item consists of the following: | |||||||||||||||
Settlement gain | $ | (13,092 | ) | $ | (57,496 | ) | $ | (29,402 | ) | $ | (306,234 | ) | |||
(Gain) loss on fair value changes | $ | 93,691 | $ | 29,459 | $ | (59,962 | ) | $ | 427,320 | ||||||
Total net derivative (gain) loss | $ | 80,599 | $ | (28,037 | ) | $ | (89,364 | ) | $ | 121,086 |
SM ENERGY COMPANY | ||||||||||||||||||||||
FINANCIAL HIGHLIGHTS (UNAUDITED) | ||||||||||||||||||||||
September 30, 2017 | ||||||||||||||||||||||
Condensed Consolidated Statement of Stockholders' Equity | ||||||||||||||||||||||
(in thousands, except share amounts) | ||||||||||||||||||||||
Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | ||||||||||||||||||||
Common Stock | Retained Earnings | |||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||
Balances, December 31, 2016 | 111,257,500 | $ | 1,113 | $ | 1,716,556 | $ | 794,020 | $ | (14,556 | ) | $ | 2,497,133 | ||||||||||
Net loss | — | — | — | (134,585 | ) | — | (134,585 | ) | ||||||||||||||
Other comprehensive loss | — | — | — | — | (651 | ) | (651 | ) | ||||||||||||||
Dividends, $0.10 per share | — | — | — | (11,144 | ) | — | (11,144 | ) | ||||||||||||||
Issuance of common stock under Employee Stock Purchase Plan | 123,678 | 1 | 1,737 | — | — | 1,738 | ||||||||||||||||
Issuance of common stock upon vesting of restricted stock units, net of shares used for tax withholdings | 171,278 | 1 | (1,241 | ) | — | — | (1,240 | ) | ||||||||||||||
Stock-based compensation expense | 71,573 | 1 | 16,159 | — | — | 16,160 | ||||||||||||||||
Cumulative effect of accounting change | — | — | 1,108 | 43,624 | — | 44,732 | ||||||||||||||||
Other | — | — | (102 | ) | — | — | (102 | ) | ||||||||||||||
Balances, September 30, 2017 | 111,624,029 | $ | 1,116 | $ | 1,734,217 | $ | 691,915 | $ | (15,207 | ) | $ | 2,412,041 |
SM ENERGY COMPANY | |||||||||||||||
FINANCIAL HIGHLIGHTS (UNAUDITED) | |||||||||||||||
September 30, 2017 | |||||||||||||||
Condensed Consolidated Statements of Cash Flows | |||||||||||||||
(in thousands) | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net loss | $ | (89,112 | ) | $ | (40,907 | ) | $ | (134,585 | ) | $ | (556,798 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||||||
Net (gain) loss on divestiture activity | 1,895 | (22,388 | ) | 131,565 | (3,413 | ) | |||||||||
Depletion, depreciation, amortization, and asset retirement obligation liability accretion | 134,599 | 193,966 | 425,643 | 619,193 | |||||||||||
Impairment of proved properties | — | 8,049 | 3,806 | 277,834 | |||||||||||
Abandonment and impairment of unproved properties | — | 3,568 | 157 | 5,917 | |||||||||||
Stock-based compensation expense | 6,347 | 6,570 | 16,160 | 20,485 | |||||||||||
Net derivative (gain) loss | 80,599 | (28,037 | ) | (89,364 | ) | 121,086 | |||||||||
Derivative settlement gain | 13,092 | 57,496 | 29,402 | 306,234 | |||||||||||
Amortization of debt discount and deferred financing costs | 3,799 | 3,757 | 12,478 | 5,687 | |||||||||||
Non-cash (gain) loss on extinguishment of debt, net | — | — | 22 | (15,722 | ) | ||||||||||
Deferred income taxes | (36,668 | ) | (23,756 | ) | (67,458 | ) | (314,770 | ) | |||||||
Plugging and abandonment | (486 | ) | (2,506 | ) | (2,095 | ) | (5,222 | ) | |||||||
Other, net | 2,446 | (11,374 | ) | 4,713 | (8,857 | ) | |||||||||
Changes in current assets and liabilities: | |||||||||||||||
Accounts receivable | (25,491 | ) | 12,441 | 21,502 | 1,221 | ||||||||||
Prepaid expenses and other | 366 | (835 | ) | (8,955 | ) | 7,652 | |||||||||
Accounts payable and accrued expenses | 30,533 | (3,439 | ) | 21,560 | (65,166 | ) | |||||||||
Accrued derivative settlements | 6,563 | 5,534 | 6,046 | 19,651 | |||||||||||
Net cash provided by operating activities | 128,482 | 158,139 | 370,597 | 415,012 | |||||||||||
Cash flows from investing activities: | |||||||||||||||
Net proceeds from the sale of oil and gas properties | 12,118 | 188,862 | 778,365 | 201,829 | |||||||||||
Capital expenditures | (258,226 | ) | (147,224 | ) | (624,969 | ) | (492,794 | ) | |||||||
Acquisition of proved and unproved oil and gas properties | 751 | (4,102 | ) | (87,389 | ) | (21,853 | ) | ||||||||
Acquisition deposit held in escrow | — | (49,000 | ) | 3,000 | (49,000 | ) | |||||||||
Other, net | — | 900 | — | — | |||||||||||
Net cash provided by (used in) investing activities | (245,357 | ) | (10,564 | ) | 69,007 | (361,818 | ) | ||||||||
Cash flows from financing activities: | |||||||||||||||
Proceeds from credit facility | — | 158,000 | 406,000 | 743,000 | |||||||||||
Repayment of credit facility | — | (488,500 | ) | (406,000 | ) | (945,000 | ) | ||||||||
Debt issuance costs related to credit facility | — | — | — | (3,132 | ) | ||||||||||
Net proceeds from Senior Notes | — | 492,397 | — | 492,397 | |||||||||||
Cash paid to repurchase Senior Notes | — | — | (2,344 | ) | (29,904 | ) | |||||||||
Net proceeds from Senior Convertible Notes | — | 166,681 | — | 166,681 | |||||||||||
Cash paid for capped call transactions | — | (24,109 | ) | — | (24,109 | ) | |||||||||
Net proceeds from sale of common stock | — | 530,912 | 1,738 | 533,266 | |||||||||||
Dividends paid | — | — | (5,563 | ) | (3,404 | ) | |||||||||
Other, net | (1,231 | ) | (2,308 | ) | (1,392 | ) | (2,341 | ) | |||||||
Net cash provided by (used in) financing activities | (1,231 | ) | 833,073 | (7,561 | ) | 927,454 | |||||||||
Net change in cash and cash equivalents | (118,106 | ) | 980,648 | 432,043 | 980,648 | ||||||||||
Cash and cash equivalents at beginning of period | 559,521 | 18 | 9,372 | 18 | |||||||||||
Cash and cash equivalents at end of period | $ | 441,415 | $ | 980,666 | $ | 441,415 | $ | 980,666 |
SM ENERGY COMPANY | |||||||||||||||
FINANCIAL HIGHLIGHTS (UNAUDITED) | |||||||||||||||
September 30, 2017 | |||||||||||||||
Adjusted EBITDAX(1) | |||||||||||||||
(in thousands) | |||||||||||||||
Reconciliation of net loss (GAAP) to adjusted EBITDAX (Non-GAAP) to net cash provided by operating activities (GAAP) | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net loss (GAAP) | $ | (89,112 | ) | $ | (40,907 | ) | $ | (134,585 | ) | $ | (556,798 | ) | |||
Interest expense | 44,091 | 47,206 | 135,639 | 112,329 | |||||||||||
Other non-operating income, net | (1,301 | ) | (221 | ) | (2,901 | ) | (232 | ) | |||||||
Income tax benefit | (39,270 | ) | (23,732 | ) | (65,825 | ) | (314,505 | ) | |||||||
Depletion, depreciation, amortization, and asset retirement obligation liability accretion | 134,599 | 193,966 | 425,643 | 619,193 | |||||||||||
Exploration(2) | 12,748 | 11,892 | 35,395 | 36,905 | |||||||||||
Impairment of proved properties | — | 8,049 | 3,806 | 277,834 | |||||||||||
Abandonment and impairment of unproved properties | — | 3,568 | 157 | 5,917 | |||||||||||
Stock-based compensation expense | 6,347 | 6,570 | 16,160 | 20,485 | |||||||||||
Net derivative (gain) loss | 80,599 | (28,037 | ) | (89,364 | ) | 121,086 | |||||||||
Derivative settlement gain | 13,092 | 57,496 | 29,402 | 306,234 | |||||||||||
Net (gain) loss on divestiture activity | 1,895 | (22,388 | ) | 131,565 | (3,413 | ) | |||||||||
(Gain) loss on extinguishment of debt | — | — | 35 | (15,722 | ) | ||||||||||
Other | 785 | (8,314 | ) | 5,620 | (4,757 | ) | |||||||||
Adjusted EBITDAX (Non-GAAP) | $ | 164,473 | $ | 205,148 | $ | 490,747 | $ | 604,556 | |||||||
Interest expense | (44,091 | ) | (47,206 | ) | (135,639 | ) | (112,329 | ) | |||||||
Other non-operating income, net | 1,301 | 221 | 2,901 | 232 | |||||||||||
Income tax benefit | 39,270 | 23,732 | 65,825 | 314,505 | |||||||||||
Exploration(2) | (12,748 | ) | (11,892 | ) | (35,395 | ) | (36,905 | ) | |||||||
Amortization of debt discount and deferred financing costs | 3,799 | 3,757 | 12,478 | 5,687 | |||||||||||
Deferred income taxes | (36,668 | ) | (23,756 | ) | (67,458 | ) | (314,770 | ) | |||||||
Plugging and abandonment | (486 | ) | (2,506 | ) | (2,095 | ) | (5,222 | ) | |||||||
Other, net | 1,661 | (3,060 | ) | (920 | ) | (4,100 | ) | ||||||||
Changes in current assets and liabilities | 11,971 | 13,701 | 40,153 | (36,642 | ) | ||||||||||
Net cash provided by operating activities (GAAP) | $ | 128,482 | $ | 158,139 | $ | 370,597 | $ | 415,012 | |||||||
(1) Adjusted EBITDAX represents net loss before interest expense, other non-operating income and expense, 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 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 we present because we believe 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 financial covenants under our Credit Agreement based on adjusted EBITDAX ratios. 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 other 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. Our credit facility provides a material source of liquidity for us. Under the terms of our Credit Agreement, if we failed to comply with the covenants that establish a maximum permitted ratio of senior secured debt to adjusted EBITDAX and a minimum permitted ratio of adjusted EBITDAX to interest, we would be in default, an event that would prevent us from borrowing under our credit facility and would therefore materially limit our sources of liquidity. In addition, if we are in default under our credit facility and are unable to obtain a waiver of that default from our lenders, lenders under that facility and under the indentures governing our outstanding Senior Notes and Senior Convertible Notes would be entitled to exercise all of their remedies for default. | |||||||||||||||
(2) 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 Company's condensed consolidated statements of operations for the component of stock-based compensation expense recorded to exploration expense. |
SM ENERGY COMPANY | |||||||||||||||
FINANCIAL HIGHLIGHTS (UNAUDITED) | |||||||||||||||
September 30, 2017 | |||||||||||||||
Adjusted Net Loss (Non-GAAP) | |||||||||||||||
(in thousands, except per share data) | |||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net loss (GAAP) | $ | (89,112 | ) | $ | (40,907 | ) | $ | (134,585 | ) | $ | (556,798 | ) | |||
Net derivative (gain) loss | 80,599 | (28,037 | ) | (89,364 | ) | 121,086 | |||||||||
Derivative settlement gain | 13,092 | 57,496 | 29,402 | 306,234 | |||||||||||
Net (gain) loss on divestiture activity | 1,895 | (22,388 | ) | 131,565 | (3,413 | ) | |||||||||
Impairment of proved properties | — | 8,049 | 3,806 | 277,834 | |||||||||||
Abandonment and impairment of unproved properties | — | 3,568 | 157 | 5,917 | |||||||||||
(Gain) loss on extinguishment of debt | — | — | 35 | (15,722 | ) | ||||||||||
Termination fee on temporary second lien facility | — | 10,000 | — | 10,000 | |||||||||||
Other, net(2) | 785 | (10,008 | ) | 5,620 | (7,425 | ) | |||||||||
Tax effect of adjustments(1) | (34,790 | ) | (6,818 | ) | (29,321 | ) | (253,497 | ) | |||||||
Adjusted net loss (Non-GAAP)(3) | $ | (27,531 | ) | $ | (29,045 | ) | $ | (82,685 | ) | $ | (115,784 | ) | |||
Diluted net loss per common share (GAAP) | $ | (0.80 | ) | $ | (0.52 | ) | $ | (1.21 | ) | $ | (7.78 | ) | |||
Net derivative (gain) loss | 0.72 | (0.36 | ) | (0.80 | ) | 1.69 | |||||||||
Derivative settlement gain | 0.12 | 0.73 | 0.27 | 4.28 | |||||||||||
Net (gain) loss on divestiture activity | 0.02 | (0.29 | ) | 1.18 | (0.05 | ) | |||||||||
Impairment of proved properties | — | 0.10 | 0.03 | 3.88 | |||||||||||
Abandonment and impairment of unproved properties | — | 0.05 | — | 0.08 | |||||||||||
(Gain) loss on extinguishment of debt | — | — | — | (0.22 | ) | ||||||||||
Termination fee on temporary second lien facility | — | 0.13 | — | 0.14 | |||||||||||
Other, net(2) | — | (0.12 | ) | 0.05 | (0.10 | ) | |||||||||
Tax effect of adjustments(1) | (0.31 | ) | (0.09 | ) | (0.26 | ) | (3.54 | ) | |||||||
Adjusted net loss per diluted common share (Non-GAAP)(4) | $ | (0.25 | ) | $ | (0.37 | ) | $ | (0.74 | ) | $ | (1.62 | ) | |||
Diluted weighted-average common shares outstanding (GAAP) | 111,575 | 78,468 | 111,366 | 71,574 | |||||||||||
(1) The tax effect of adjustments is calculated using a tax rate of 36.1% for the three-month and nine-month periods ended September 30, 2017, and a tax rate of 36.5% for the three-month and nine-month periods ended September 30, 2016. These rates approximate the Company's statutory tax rate for the respective periods, as adjusted for ordinary permanent differences. | |||||||||||||||
(2) For the three-month and nine-month periods ended September 30, 2017, the adjustment is related to impairment on materials inventory, the change in Net Profits Plan liability, and bad debt expense. For the three-month and nine-month periods ended September 30, 2016, the adjustment relates to the change in Net Profits Plan liability, impairment of materials inventory, and an adjustment relating to claims on royalties on certain Federal and Indian leases. These items are included in other operating expenses on the Company's condensed consolidated statements of operations. | |||||||||||||||
(3) Adjusted net loss 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 derivative gains and losses net of settlements, impairments, net (gain) loss on divestiture activity, materials inventory loss, and gains or losses on extinguishment of debt. The non-GAAP measure of adjusted net income (loss) 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 (loss) 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 (loss) should not be considered in isolation or as a substitute for net income (loss), income (loss) from operations, cash provided by operating activities, or other income, profitability, cash flow, or liquidity measures prepared under GAAP. Since adjusted net income (loss) excludes some, but not all, items that affect net income (loss) and may vary among companies, the adjusted net income (loss) amounts presented may not be comparable to similarly titled measures of other companies. | |||||||||||||||
(4) For periods where the Company reports adjusted net loss, basic weighted-average common shares outstanding are used in the calculation of adjusted net loss per diluted common share. |
SM ENERGY COMPANY | |||||||
FINANCIAL HIGHLIGHTS (UNAUDITED) | |||||||
September 30, 2017 | |||||||
Total Capital Spend Reconciliation | |||||||
(in millions) | |||||||
Reconciliation of costs incurred in oil & gas activities (GAAP) to total capital spend (Non-GAAP)(1)(3) | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||
2017 | 2017 | ||||||
Costs incurred in oil and gas activities (GAAP): | $ | 226.6 | $ | 741.6 | |||
Asset retirement obligation | 0.4 | (1.0 | ) | ||||
Capitalized interest | (3.5 | ) | (8.6 | ) | |||
Proved property acquisitions(2) | 0.4 | (1.0 | ) | ||||
Unproved property acquisitions | — | (75.6 | ) | ||||
Other | 2.9 | 1.6 | |||||
Total capital spend (Non-GAAP): | $ | 226.8 | $ | 657.0 | |||
(1) The non-GAAP measure of total capital spend is presented because management believes it provides useful information to investors for analysis of SM Energy's fundamental business on a recurring basis. In addition, management believes that total capital spend 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. Total capital spend should not be considered in isolation or as a substitute for Costs Incurred or other capital spending measures prepared under GAAP. The total capital spend amounts presented may not be comparable to similarly titled measures of other companies. | |||||||
(2) Includes approximately $0 and $887,000 of ARO associated with proved property acquisitions for the three and nine months ended September 30, 2017, respectively. | |||||||
(3) The Company completed several primarily non-monetary acreage trades in the Midland Basin during the first nine months of 2017 totaling $283.7 million of value attributed to the properties surrendered. This non-monetary consideration is not reflected in the costs incurred or capital spend amounts presented above. |