SM Energy Misses Q3 Earnings Estimates as Expenses Rise
Independent oil and gas company SM Energy Company’s (SM) third-quarter 2014 adjusted earnings of $1.44 per share missed the Zacks Consensus Estimate of $1.50. Moreover, the bottom line fell almost 9% from $1.58 earned in the year-ago quarter. Higher transportation and lease operating expenses (:LOE) primarily hurt the results.
Sm Energy Company - Earnings Surprise | FindTheBest
Total revenue was approximately $618.8 million in the quarter, showing an improvement from $613.1 million in the prior-year quarter. Revenues, however, failed to surpass the Zacks Consensus Estimate of $634 million.
Operational Performance
The company’s third-quarter production came in at 142.5 thousand barrels of oil equivalent per day (MBoe/d), reflecting an improvement of 3% from the year-ago level of 138.8 MBoe/d.
SM Energy produced 386.5 million cubic feet per day (MMcf/d) of natural gas in the quarter, down almost 8% year over year. Oil production, on the other hand, grew 5% year over year to 43.5 thousand barrels per day (MBbls/d). Moreover, natural gas liquids contributed 34.6 MBbls/d to the total volume, up 26% from the third quarter of 2013.
Including the effect of derivative cash settlements, the average equivalent price per Boe was $47.04 compared with $46.99 in the year-ago period. Average realized prices were $4.44 per Mcf of natural gas (up 8% from the comparable quarter last year), $86.44 per barrel of oil (down 7%) and $35.47 per barrel of natural gas liquid (up 3%).
On the cost front, unit LOE was $5.07, up almost 6% from $4.77 in the year-ago quarter. Transportation expenses increased to $6.22 per Boe (from $5.38 per Boe in the year-ago period), general and administrative expenses were $3.18 per Boe (20% higher), while depletion, depreciation and amortization (DD&A) expenses decreased 9% to $13.97 per Boe from the year-earlier level of $15.33 per Boe.
Liquidity
Net cash generated from operating activities decreased to $360 million during the quarter from $404.5 million in the year-ago quarter. As of Sep 30, 2014, SM Energy had a cash balance of $0.3 million and long-term debt of $1,600.0 million, with a debt-to-capitalization ratio of 45%.
Guidance
SM Energy expects production of 152–159 MBoe/d and 145–147 MBoe/d for the fourth quarter and full year, respectively.
Zacks Rank
SM Energy currently carries a Zacks Rank #3 (Hold).
Meanwhile, one can look at better-ranked players in the energy sector like Magellan Midstream Partners LP (MMP), Cobalt International Energy Inc. (CIE) and Delek Logistics Partners LP (DKL). All the stocks sport a Zacks Rank #1 (Strong Buy).
Read the Full Research Report on MMP
Read the Full Research Report on SM
Read the Full Research Report on CIE
Read the Full Research Report on DKL
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