SM Energy Company (SM) on Q1 2021 Results - Earnings Call Transcript
Jennifer Samuels: Welcome to SM Energy’s First Quarter 2021 Results Webcast. Before we get started on our prepared remarks, our discussion today will include forward-looking statements. I direct you to Slide 2 of the accompanying slide deck, Page 4 of the accompanying earnings release, and the risk factors section of our most recently filed 10-K and 10-Q, which describe risks associated with forward-looking statements that could cause actual results to differ. We will also be discussing non-GAAP measures. Please see Slides 22 through 24 of the accompanying slide deck and Pages 11 through 14 of the accompanying earnings release for definitions and reconciliations of non-GAAP measures to the most directly comparable GAAP measures, and discussion of forward-looking non-GAAP measures. Today’s prepared remarks will be given by our President and CEO, Herb Vogel; and CFO, Wade Pursell. Herb Vogel: Good afternoon, and thank you for your interest in SM Energy. Today’s call will be brief, given we reported two months ago and provided updates at March conferences. Most importantly, despite a quarter that had a number of moving pieces due to the volatility caused by the February severe weather event in Texas, we are pleased to report that we remain on track with our long-term plan as presented in February. As shown on Slide 3, I will reiterate that our key long-term objectives are to: first, maximize cash flow over the next five years, sustaining a reinvestment rate of less than 75%. Second, improve the balance sheet by applying free cash flow to absolute debt reduction, targeting less than 2 times leverage by year-end 2022 and generating sufficient cash flow to exceed bond maturities due through 2024. Third, maintain top tier high return inventory. And fourth, report differential ESG stewardship. Since we delivered this plan, which was based on January strip prices, the outlook has only improved. Despite the challenges of the first quarter, our 2021 guidance remains in place for capital and production, and we expect to generate substantial free cash flow. I’ll now turn the call over to Wade to add some color on the quarter and the outlook for the year. Wade? Wade Pursell: Thank you, Herb. I’ll start on Slide 4. Yes, the first quarter certainly had several moving pieces related to the February storm. This shows up in production volumes, higher realized pre-hedge prices, and higher hedge settlements. While I think our detailed reporting is largely self-explanatory, I’ll try to provide some color in these areas. Starting with production, repercussions of the storm included shut-in production as well as problems with the supply chain. As a result, there were delays in completions. There were no completions in January and February, all new wells came on late in the quarter and some wells that were fracture stimulated in March were not turned-in-line until April. This impacted production for the quarter, leading to the slightly lower volumes than guidance, and will in turn lead to more flowing completions in the second quarter than originally planned. We now anticipate about 50 net flowing completions in the second quarter. Regarding pricing, our average pre-hedge realized price of $42.11 per Boe was up 48% sequentially, which reflects generally increasing commodity prices as well as the benefits from price spikes in gas and NGLs in February. This was partially offset by our large hedge positions. I don’t want to get too deep in the weeds here, but what happened in February was quite unusual. Herb Vogel: Thanks, Wade. Safety and emissions reduction are among our top objectives as shown in Slide 11. We consider top tier safety, spill and emissions performance as integral components of being a premier operator. We are pleased to report more of our 2020 safety and environmental metrics. Flaring as a percent of gas produced came in under 1%, reflecting a 75% improvement from 2019 in the Permian and negligible flaring in South Texas. We rank ourselves against our peers who report through AXPC. Our Methane emissions intensity of 0.04 metric tonnes of methane per MBoe is top quartile among AXPC peers who have reported this metric for the last three years. If we translate this emissions intensity into the World Economic Forum calculation, which targets 0.2% methane emitted of methane produced by 2025 as the Gold Standard, we are already meeting that target at 0.1% in 2020. Our Greenhouse Gas emissions intensity of 7.8 metric tonnes of CO2 equivalent per MBoe in 2020 is also top quartile, and represents a reduction of 37% from 2019. Spill volumes and safety as measured by TRIR, or total recordable incident rate, also rank top quartile among our AXPC peers. Both our short-term and long-term incentive compensation programs are driven in-part by performance against key environmental and safety metrics. In summary, we are on track for another great year of generating free cash flow and on course for meeting our long-term objectives. We are particularly excited about our success in the Austin Chalk, as we are well into our Austin Chalk delineation and development activity for the year. We will share more details when new wells have been flowing for a sufficient length of time. Thanks again for your interest in SM Energy. Q - : :
SM Energy (NYSE:SM) Quarterly Earnings Preview
- SM Energy is set to release its quarterly earnings on May 1, 2025, with an expected EPS of $1.57 and revenue of approximately $819.8 million.
- The company's valuation is highlighted by a P/E ratio of 3.47 and a price-to-sales ratio of 1, indicating a potentially attractive investment opportunity.
- Concerns regarding liquidity are noted with a current ratio of 0.55, suggesting potential challenges in meeting short-term obligations.
SM Energy (NYSE:SM) is preparing to release its quarterly earnings on May 1, 2025. Analysts predict an earnings per share (EPS) of $1.57, with revenue expected to reach approximately $819.8 million. SM Energy is a company involved in the exploration and production of oil and natural gas, competing with other energy firms in the industry.
The anticipated year-over-year increase in earnings for SM is driven by higher revenues for the quarter ending March 2025. This positive outlook is supported by the consensus, which suggests a favorable earnings picture. However, the actual results compared to these estimates will play a crucial role in influencing the stock's near-term price movement.
SM's financial metrics provide insight into its valuation. The company has a price-to-earnings (P/E) ratio of 3.47, indicating a relatively low valuation compared to its earnings. Additionally, the price-to-sales ratio is about 1, suggesting that its market value is nearly equal to its sales. These figures highlight the company's current market position.
The enterprise value to sales ratio of 2.01 and the enterprise value to operating cash flow ratio of 3.01 reflect SM's valuation in relation to its cash flow. The earnings yield of 28.86% measures the return on investment for shareholders, indicating a potentially attractive investment opportunity. However, the debt-to-equity ratio of 0.64 shows a moderate level of debt compared to equity.
Despite these positive indicators, SM's current ratio of 0.55 suggests potential liquidity concerns, as it is below the standard threshold of 1. This means the company may face challenges in meeting its short-term obligations. The management's discussion during the earnings call will be crucial in determining the sustainability of any immediate price changes and future earnings expectations.
SM Energy (NYSE:SM) Quarterly Earnings Preview
- SM Energy is set to release its quarterly earnings on May 1, 2025, with an expected EPS of $1.57 and revenue of approximately $819.8 million.
- The company's valuation is highlighted by a P/E ratio of 3.47 and a price-to-sales ratio of 1, indicating a potentially attractive investment opportunity.
- Concerns regarding liquidity are noted with a current ratio of 0.55, suggesting potential challenges in meeting short-term obligations.
SM Energy (NYSE:SM) is preparing to release its quarterly earnings on May 1, 2025. Analysts predict an earnings per share (EPS) of $1.57, with revenue expected to reach approximately $819.8 million. SM Energy is a company involved in the exploration and production of oil and natural gas, competing with other energy firms in the industry.
The anticipated year-over-year increase in earnings for SM is driven by higher revenues for the quarter ending March 2025. This positive outlook is supported by the consensus, which suggests a favorable earnings picture. However, the actual results compared to these estimates will play a crucial role in influencing the stock's near-term price movement.
SM's financial metrics provide insight into its valuation. The company has a price-to-earnings (P/E) ratio of 3.47, indicating a relatively low valuation compared to its earnings. Additionally, the price-to-sales ratio is about 1, suggesting that its market value is nearly equal to its sales. These figures highlight the company's current market position.
The enterprise value to sales ratio of 2.01 and the enterprise value to operating cash flow ratio of 3.01 reflect SM's valuation in relation to its cash flow. The earnings yield of 28.86% measures the return on investment for shareholders, indicating a potentially attractive investment opportunity. However, the debt-to-equity ratio of 0.64 shows a moderate level of debt compared to equity.
Despite these positive indicators, SM's current ratio of 0.55 suggests potential liquidity concerns, as it is below the standard threshold of 1. This means the company may face challenges in meeting its short-term obligations. The management's discussion during the earnings call will be crucial in determining the sustainability of any immediate price changes and future earnings expectations.
SM Energy Company (NYSE:SM) Stock Price Target Trends and Earnings Expectations
- The consensus price target for SM Energy Company (NYSE:SM) has gradually decreased over the past year, indicating analysts' adjusted expectations.
- Analysts predict a decline in earnings for SM Energy in its upcoming report, influencing target price adjustments.
- Investors should consider various factors, including target price trends, company news, and industry developments, to make informed decisions.
SM Energy Company (NYSE:SM), based in Denver, Colorado, is an independent energy company that focuses on the acquisition, exploration, development, and production of oil, natural gas, and natural gas liquids. The company operates primarily in Texas, with a significant presence in the Midland Basin and South Texas. Over the past year, SM Energy's stock has experienced fluctuations in its consensus target price, reflecting changes in market conditions and company performance.
The consensus price target for SM Energy's stock has shown a gradual decrease over the past year. Last month, the average price target was $51.5, down from $53 in the previous quarter, and $55.09 a year ago. This trend suggests that analysts have adjusted their expectations, possibly due to various factors affecting the energy sector. As highlighted by Zacks, analysts are predicting a decline in earnings for SM Energy in its upcoming report, which may have influenced these target price adjustments.
John Gerdes from MKM Partners has set a price target of $52 for SM Energy, indicating a cautious outlook. Investors should be aware of the key expectations surrounding the company's upcoming earnings report. SM Energy plans to release its third quarter 2024 financial and operating results after market hours on October 31, 2024. The release will include an earnings report, a pre-recorded webcast discussing the results, and an associated presentation, all of which will be available on the company's website.
Investors interested in SM Energy should consider these target price trends alongside other factors, such as recent company news, earnings reports, and industry developments, to make informed decisions. The anticipated decline in earnings, as noted by Zacks, may impact investor sentiment and influence future price targets. Keeping an eye on the company's performance and market conditions will be crucial for those looking to invest in SM Energy.
SM Energy Company (NYSE:SM) Stock Price Target Trends and Earnings Expectations
- The consensus price target for SM Energy Company (NYSE:SM) has gradually decreased over the past year, indicating analysts' adjusted expectations.
- Analysts predict a decline in earnings for SM Energy in its upcoming report, influencing target price adjustments.
- Investors should consider various factors, including target price trends, company news, and industry developments, to make informed decisions.
SM Energy Company (NYSE:SM), based in Denver, Colorado, is an independent energy company that focuses on the acquisition, exploration, development, and production of oil, natural gas, and natural gas liquids. The company operates primarily in Texas, with a significant presence in the Midland Basin and South Texas. Over the past year, SM Energy's stock has experienced fluctuations in its consensus target price, reflecting changes in market conditions and company performance.
The consensus price target for SM Energy's stock has shown a gradual decrease over the past year. Last month, the average price target was $51.5, down from $53 in the previous quarter, and $55.09 a year ago. This trend suggests that analysts have adjusted their expectations, possibly due to various factors affecting the energy sector. As highlighted by Zacks, analysts are predicting a decline in earnings for SM Energy in its upcoming report, which may have influenced these target price adjustments.
John Gerdes from MKM Partners has set a price target of $52 for SM Energy, indicating a cautious outlook. Investors should be aware of the key expectations surrounding the company's upcoming earnings report. SM Energy plans to release its third quarter 2024 financial and operating results after market hours on October 31, 2024. The release will include an earnings report, a pre-recorded webcast discussing the results, and an associated presentation, all of which will be available on the company's website.
Investors interested in SM Energy should consider these target price trends alongside other factors, such as recent company news, earnings reports, and industry developments, to make informed decisions. The anticipated decline in earnings, as noted by Zacks, may impact investor sentiment and influence future price targets. Keeping an eye on the company's performance and market conditions will be crucial for those looking to invest in SM Energy.
SM Energy Reports Q1 EPS Beat But Revenues Lower Than Expected
SM Energy (NYSE:SM) reported its Q1 results, with EPS of $1.62 beating the Street estimate of $1.28. Revenue was $573.5 million, coming in worse than the Street estimate of $584.7 million.
Production outperformance in Q1 was largely related to improved well performance and bringing on 7 new wells a week early.
The strong performance from the South Texas wells and a good base decline on PDP wells bode well for free cash flow in 2023. Operational efficiency is also improving with faster drilling times resulting from co-development.
SM Energy Reports Q1 EPS Beat But Revenues Lower Than Expected
SM Energy (NYSE:SM) reported its Q1 results, with EPS of $1.62 beating the Street estimate of $1.28. Revenue was $573.5 million, coming in worse than the Street estimate of $584.7 million.
Production outperformance in Q1 was largely related to improved well performance and bringing on 7 new wells a week early.
The strong performance from the South Texas wells and a good base decline on PDP wells bode well for free cash flow in 2023. Operational efficiency is also improving with faster drilling times resulting from co-development.
